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

Date:

Time:

Meeting Room:

Venue:

Monday, 21 August 2023

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	Bruce Robertson
Deputy Chairperson	Cr Lotu Fuli
Members	Paul Connell
	Cassandra Crowley
	Cr Angela Dalton
	Cr Christine Fletcher, QSO
	Cr Shane Henderson
	Martin Matthews
Ex-officio	Mayor Wayne Brown
	IMSB Member Tony Kake, MNZM
	Deputy Mayor Cr Desley Simpson, JP

(Quorum 3 members)

Mike Giddey

Kaitohutohu Mana Whakahaere / Governance Advisor

15 August 2023

Contact Telephone: +64 9 890 8143

Email: Mike.Giddey@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

Audit and Risk Committee

21 August 2023

ITEM TABLE OF CONTENTS PAGE

1 Ngā Tamōtanga | Apologies 5

2 Te Whakapuaki i te Whai Pānga | Declaration of Interest 5

3 Te Whakaū i ngā Āmiki | Confirmation of Minutes 5

4 Ngā Petihana | Petitions 5

5 Ngā Kōrero a te Marea | Public Input 5

6 Ngā Kōrero a te Poari ā-Rohe Pātata | Local Board Input 5

7 Ngā Pakihi Autaia | Extraordinary Business 5

8 Forward Work Programme August 2023 7

9 IMSB Treaty Audit monitoring update 9

10 Strategic Risk Update 13

11 Health, Safety, and Wellbeing Performance Report 17

12 Climate disclosure work programme update August 2023 21

13 Water Services Reform update 25

14 The Auditor-General's report to management on the interim audit for the year ended 30 June 2023 31

15 Auckland Council Group's NZX preliminary announcement and financial results to 30 June 2023 35

16 Te Whakaaro ki ngā Take Pūtea e Autaia ana | Consideration of Extraordinary Items

PUBLIC EXCLUDED

17 Te Mōtini ā-Tukanga hei Kaupare i te Marea | Procedural Motion to Exclude the Public 41

C1 CONFIDENTIAL: Substantive Council-Controlled Organisations' Quarterly Risk Update - August 2023 41

C2 CONFIDENTIAL: Insurance Renewal Placement for 2023-2024 42

C3 CONFIDENTIAL: Internal Audit and Integrity Update 42

C4 CONFIDENTIAL: Climate disclosure work programme update August 2023 42

C5 CONFIDENTIAL: Auckland Council Group's NZX preliminary announcement and financial results to 30 June 2023 43

C6 CONFIDENTIAL: Office of the Auditor-General and Audit New Zealand briefing 43

Audit and Risk Committee

21 August 2023

Forward Work Programme August 2023

File No.: CP2023/09704

Te take mō te pūrongo

Purpose of the report

1. To review and approve the remaining elements of the Audit and Risk Committee’s three-year forward work programme 2022-2023 (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 remains relevant and can be adapted to changes in Auckland Council’s risk profile.

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

· A Strategic Risk Process update will be reported at this meeting to update the committee on the current reassessment progress.

· A new item has been added on the forward work programme. Auckland Council’s Sustainability-Linked Loan update will be presented in the confidential agenda of this committee in September 2023 to discuss and disclose whether we have met our sustainable performance targets identified for the loan.

· The two insurance updates planned for this committee; update to the committee post placement of the insurance programme and the indicative insurance renewal report will be presented as one insurance update.

· The LTP Project update report has been moved to the meeting in September 2023 and will be renamed “Long-term Plan 2024-2034 (LTP) approach to risk and assurance” to provide more detail to the committee on the risk management approach for the LTP which is scheduled for sign-off by the Project Control Group at the end of August.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) whakaae / approve the Audit and Risk Committee forward work programme, noting that:

i) a Strategic Risk Process Update will be reported at this meeting

ii) Auckland Council’s Sustainability-Linked Loan Update will be presented in the confidential agenda of this committee in September 2023 as a new agenda item

iii) the two insurance updates planned for this committee will be presented as one insurance update

iv) the LTP Project update report has been moved to the meeting of this committee in September 2023 and will be renamed “Long-term Plan 2024-2034 (LTP) approach to risk and assurance”.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Forward Work Programme August 2023

Ngā kaihaina

Signatories

Authors

Simon Stewart - Senior Risk Advisor

Sathya Ashok - Head of Risk and Audit

Authorisers

Emma Burke - General Manager Risk and Assurance

Anna Bray - Acting Director - Governance and CCO Partnerships

Audit and Risk Committee

21 August 2023

IMSB Treaty Audit monitoring update

File No.: CP2023/09208

Te take mō te pūrongo

Purpose of the report

1. This monitoring report covers the period from February 2023 to July 2023 and provides an update on:

· The recommendations contained in the Te Tiriti o Waitangi Audits (Treaty Audits) of Auckland Council which are commissioned by the Independent Māori Statutory Board every three years.

· The Treaty Audit Response Programme 2021-2024 (Attachment A) which has been developed by Ngā Mātārae on behalf of the Chief Executive and received by the Joint Governing Body and Independent Māori Statutory Board in response to the recommendations contained in He Waka Kōtuia / Te Tiriti o Waitangi 2021.

Whakarāpopototanga matua

Executive summary

2. Two recommendations from the 2021 Treaty Audit report have been closed since the February 2023 report to this committee.

3. There are a total of 13 open treaty audit recommendations:

· Four relating to the pre-2021 treaty audits and remain overdue.

· One relating to the 2021 Treaty Audit report and are on track.

· Eight relating to the 2021 Treaty Audit report with a status of “Overdue / Delayed”.

4. The Treaty Audit Response Programme 2021-2024 (Attachment A) will continue to be used by Ngā Mātārae as the basis to monitor progress in implementing the remaining and new recommendations from all treaty audits.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) whiwhi / receive the update on the monitoring and progress of the Treaty Audit Response Programme 2021-2024

b) tuhi ā-taipitopito / note that the Risk and Assurance department will continue to report on a six-monthly basis on progress against the Treaty Audit Response Programme 2021-2024 (Attachment A) to this committee.

Horopaki

Context

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

6. The third treaty audit was completed and received by the Finance and Performance Committee in July 2018, and by the Audit and Risk Committee in September 2018. It identified a total of 80 recommendations, of which 76 have now been closed.

7. He Waka Kōtuia – Te Tiriti o Waitangi Audit 2021 was the fourth treaty audit to be undertaken by the Independent Māori Statutory Board.

8. The Enablement Board provides oversight of the Treaty Audit Response Programme, including monitoring and guidance to action owners and their executives, and agrees closure of recommendations. The Enablement Board has representatives from the Risk and Assurance department, Ngā Mātārae and the Independent Māori Statutory Board Secretariat attending meetings.

9. The Treaty Audit Response Programme 2021-2024 (Attachment A) is the basis for the Risk and Assurance department’s monitoring and reporting to this committee.

10. Planning for the Te Tiriti o Waitangi Audit 2024 is underway and the Independent Māori Statutory Board is engaging with the external auditors to agree process and dates.

Tātaritanga me ngā tohutohu

Analysis and advice

11. 14 recommendations were identified in the 2021 treaty audit, building on previous audit findings.

12. The current status of treaty audit recommendations is as follows. Refer to Attachment A for further details:

Original (pre-2021) recommendations needing action	80
Closed prior February 2023	(76)
Closed February 2023 – July 2023	--
Open as at July 2023 (overdue)	4

Fourth treaty audit (2021) recommendations	14
Closed prior to February 2023	(3)
February 2023 to July 2023	(2)
Open as at July 2023	9
Overdue as at July 2023	8*

* Indications from Ngā Mātārae are that three of these will be presented for closure at the next Enablement Board meeting scheduled for 28 August and two others are almost completed.

13. The Independent Māori Statutory Board informed us that the scope of the Te Tiriti o Waitangi Audit 2024 is currently being developed, including proposed dates for the audit engagement and the audit process. The Independent Māori Statutory Board Secretariat will work with Auckland Council to provide regular updates on the Te Tiriti o Waitangi Audit 2024 audit progress.

Tauākī whakaaweawe āhuarangi

Climate impact statement

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

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

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

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

Local impacts and local board views

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

Tauākī whakaaweawe Māori

Māori impact statement

17. The closure of treaty audit findings through the Treaty Audit Response Programme will have a positive impact on Māori as it leads to stronger responsiveness to Māori through targeted actions and improvements described in the Māori Outcomes Framework. For example: Recommendation 1.1 and 2.1 (See Attachment A) will improve Kia ora te hononga – Effective Māori participation. Recommendation 4.2 will improve amongst others, the following Māori Outcomes: Kia ora te umanga – Māori business, tourism, and employment; Kia ora te reo – Te reo Māori and Kia ora te ahurea – Māori identity and culture.

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

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

· lack of resources and capability remain constraints

· lack of a mechanism to confirm and close historical recommendations that are no longer relevant.

20. Key mitigations of these risks include:

· setting clear roles and responsibilities for action owners and action sponsors, and receiving regular follow-ups from them

· support and guidance by Ngā Mātārae

· oversight and support by the Enablement Board

· six-monthly reporting on progress to this committee.

Ngā koringa ā-muri

Next steps

21. The Risk and Assurance department will continue to attend Enablement Board meetings to encourage progress towards implementation of the recommendations in the Treaty Audit Response Programme 2021 – 2024 and to monitor progress.

22. Three recommendations will be presented for closure at the next Enablement Board meeting scheduled for 28 August and Ngā Mātārae will continue to progress the remaining open recommendations.

23. The Independent Māori Statutory Board and Ngā Mātārae will continue planning for the Te Tiriti o Waitangi Audit 2024.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Treaty Audit Response Work Programme 2021-2024

Ngā kaihaina

Signatories

Authors

Sathya Ashok - Head of Risk and Audit

Andre de Wet - Senior Risk Advisor

Authorisers

Emma Burke - General Manager Risk and Assurance

Anna Bray - Acting Director - Governance and CCO Partnerships

Audit and Risk Committee

21 August 2023

Strategic Risk Update

File No.: CP2023/10385

Te take mō te pūrongo

Purpose of the report

1. To update the Audit and Risk Committee on progress related to the review of Auckland Council’s strategic risks since the last update in May 2023.

Whakarāpopototanga matua

Executive summary

2. Auckland Council’s strategic risks were reviewed by the Executive Leadership team (ELT) at a workshop conducted by the Risk team on 3 July 2023.

3. The review identified eight strategic risk themes – assets, climate change response, information and communications technology (ICT) security, sustainable business model, people, political decision-making, social licence and strategic relationships.

4. The risk themes, their descriptions, controls, actions and other relevant details will be assessed to arrive at residual risk and target risk ratings. These risk profiles will be presented to the ELT in November 2023.

5. The confirmed and assessed set of Auckland Council strategic risks will be presented to this committee on 5 December 2023.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) tuhi ā-taipitopito / note the progress update of the review of Auckland Council’s strategic risks.

Horopaki

Context

6. The strategic risks were last reviewed by the ELT between February 2023 and April 2023 in accordance with the regular six-monthly reporting cycle and the risk management framework.

7. Noting significant changes from internal and external factors, the Risk team proposed a re-examination of the strategic risks with the ELT.

8. This report provides an update to the committee on the progress of the review of Auckland Council’s strategic risks for the period from April 2023 to July 2023.

Tātaritanga me ngā tohutohu

Analysis and advice

9. A comprehensive review of the strategic risks was conducted with the ELT on 3 July 2023, following which a draft set of strategic risks themes, risk descriptions and a proposed set of risk sponsors and risk leads were collated by the Risk team.

10. The draft strategic risks were discussed by the ELT on 7 August 2023, with changes suggested to risk sponsorship and risk leads. See Attachment A.

11. The draft strategic risks will be discussed in detail by the identified risk sponsors to arrive at risk descriptions, controls, control effectiveness and proposed actions to support residual and target risk ratings.

12. The final Auckland Council strategic risks will be presented to the ELT in November and this committee on 5 December 2023 as part of the Enterprise Risk Update in line with the Forward Work Programme of this committee and the six-monthly review cycle.

13. Please refer to Attachment A for the current draft set of risk themes and descriptions.

Tauākī whakaaweawe āhuarangi

Climate impact statement

14. Climate change and its impacts remain a strategic risk for the council group and mitigations and responses remain a priority for Auckland Council.

15. The Risk and Assurance department continue to collaborate with the Chief Sustainability Office, Finance Division, and relevant departments across the council group to support Auckland Council’s adaptation and mitigation workstreams and to progress with the group’s task force on climate-related financial disclosures by 2023.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

16. The Risk and Assurance department works with risk managers and key staff in the council controlled organisations to collaborate and share knowledge on common risks. The risk profiles and updates from council controlled organisations are covered in a separate report in this meeting.

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

Local impacts and local board views

17. There are no direct impacts on Local Boards.

Tauākī whakaaweawe Māori

Māori impact statement

18. The current reflection is that the risk around delivery of Māori outcomes is managed primarily at a directorate level. The risk received a medium residual risk rating when it was last assessed as a strategic risk for Auckland Council and while achieving Māori outcomes is an important success factor, was not deemed a strategic level risk.

19. Māori outcomes will be managed through the other strategic risks and represented through assigned Māori outcomes risk leads.

Ngā ritenga ā-pūtea

Financial implications

20. Financial management in the shape of a sustainable business model continues to be a strategic risk for Auckland Council.

21. The Risk team, in collaboration with the Group Chief Financial Officer and the Finance Directorate team, closely monitors the drivers and impacts associated with this risk.

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

23. The Risk and Assurance department continuously reviews the external and internal environment to identify emerging or heightened risks and trends, which are presented to the Executive Leadership team on a regular basis.

Ngā koringa ā-muri

Next steps

24. The risk themes, their descriptions, controls, actions and other relevant details will be assessed to arrive at residual risk and target risk ratings.

25. The confirmed and assessed set of Auckland Council strategic risks will be presented to the ELT in November and this committee on 5 December 2023.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Strategic Risks Update - August 2023

Ngā kaihaina

Signatories

Authors

Sathya Ashok - Head of Risk and Audit

Andre de Wet - Senior Risk Advisor

Authorisers

Emma Burke - General Manager Risk and Assurance

Anna Bray - Acting Director - Governance and CCO Partnerships

Audit and Risk Committee

21 August 2023

Health, Safety, and Wellbeing Performance Report

File No.: CP2023/10303

Te take mō te pūrongo

Purpose of the report

1. To provide an update on initiatives underway to improve health, safety, and wellbeing, and the current state of selected key performance indicators as at 31 July 2023.

Whakarāpopototanga matua

Executive summary

2. This is a standard report provided to the Audit and Risk Committee to enable members to understand and make recommendations relating to the management of health, safety, and wellbeing risk at Auckland Council.

3. There are several projects that are underway across the council to improve the health, safety, and wellbeing of kaimahi (staff), and to deliver on the recommendations of the hauora (wellbeing) review.

4. Key performance indicators are provided in Attachment A, alongside historical data to show changes over time. This report provides further analysis and commentary on these key indicators for the committee’s information.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) tuhi ā-taipitopito / note the information in this report and the associated health, safety, and wellbeing indicators.

b) whakaae / agree to refer this report to the Governing Body, along with any commentary the committee deems appropriate, and recommend that the Governing Body forwards this report to local boards for their information.

Horopaki

Context

5. This report provides commentary and a range of health, safety, and wellbeing performance indicators to enable the Audit and Risk Committee to provide objective advice and allow Auckland Council’s officers (as defined within the Health and Safety at Work Act 2015) to exercise due diligence obligations.

6. Recommendations on the adequacy and functioning of the council’s health, safety, and wellbeing risk management system and associated programmes are subsequently shared with the Governing Body. Health, safety, and wellbeing key performance indicators are in Attachment A.

Tātaritanga me ngā tohutohu

Analysis and advice

Project Hīra

7. Project Hīra is the work programme underway to improve Auckland Council’s management of health, safety, and wellbeing through the replacement of Risk Manager with Donesafe (our online health and safety reporting and management tool). This programme includes the procurement and platform configuration, alongside change management, process improvement, people leader training, and an awareness campaign.

8. Risk information is the current focus of the project, with a risk management module now configured. Master and local risk registers are being developed which outline the types of risks that kaimahi are exposed to, alongside the specific controls that are used to eliminate or minimise the risk of harm.

9. A module supporting the management of hazardous substances has been released within the platform, and a list of all hazardous substances has been created showing the quantities, properties, and locations of these. This will be used to improve the controls associated with these chemicals and gives kaimahi access to more immediate information about the safety requirements and response procedures for their use.

10. Modules for technical competency management, health monitoring, and contractor management are in the final stages of configuration in preparation for testing and release.

11. Tātaki Auckland Unlimited is in the process of integrating into the Auckland Council Donesafe platform and exiting from their use of Risk Manager. This was identified as an opportunity to align systems to reduce costs and duplication between the two organisations. It is expected that this will be in place by the end of August 2023 in line with the next renewal date for their licences.

Wellbeing

12. Pastoral care resources have been engaged to provide early intervention and support to kaimahi where they are undertaking work under emotionally stressful situations, or during a crisis.

13. The Manaaki Support Network launched in June, with the first tranche of peer-to-peer support volunteers provided with training at a 2-day noho marae at Te Mahurehure marae. With 27 members, this network is representative of the diversity of teams across the organisation, and the intention is to grow this network within the next six months. The one-day training initially provided for the Manaaki Support Network has also been provided to upskill other teams such as People and Culture business partnering and advisory teams who also need to have the capability and capacity to respond effectively to concerns raised in a safe and supported way.

14. Eight out of the 11 “immediate” actions within the Iti Kahurangi mental health plan have now been completed, with remaining actions delayed due to resource constraints. Focus will be shifted onto “medium-term” actions once short-term actions have been completed with plans to deliver these over FY24.

Critical Risk Management

15. An ongoing programme of work to improve the management of critical risks (those risks that have the potential to cause fatalities or life-altering injuries) is continuing. Six critical risk standards are now complete and are undergoing change impact analysis prior to release. This will be followed by a gap analysis and ongoing critical control verification activity to ensure that all critical controls are either in place or are being implemented.

16. As critical controls are defined and confirmed, verification and assurance tools for use by operational kaimahi and the HSW assurance team are being developed. When implemented, the results of these will be included in future HSW performance reports to increase the focus on the effective management of controls for those risks. These verifications will involve staff using an online checklist to verify the presence of critical controls in the workplace and identifying any gaps in those control systems.

Violence and Aggression

17. The health, safety, and wellbeing function has continued to work with high-risk teams to implement action plans developed after several workshops with a wide range of kaimahi and their leaders. These actions focus on the design of tasks, or situations, which contribute to the escalation of aggressive behaviours.

18. Of the agreed actions, 47 have been completed, with 34 currently in progress. 10 are on hold pending completion of other activities, and 6 have been scheduled but not started.

19. Kaimahi continue to be subjected to violence and aggression at work while working with members of the community, with 159 reported incidents occurring in June and July 2023.

Worker Engagement, Participation, and Representation

20. As a result of the recent work to improve the engagement and participation of kaimahi in health and safety, Auckland Council won the Engagement Category at the recent 2023 NZ Health and Safety Awards.

21. This work has been focussed on providing kaimahi with genuine opportunities to improve the health, safety, and wellbeing of the organisation by addressing issues such as role clarity, leader engagement, and training. It has also established kaimahi health and safety representation alongside senior leaders at executive leadership meetings about HSW leading to better understanding of issues that can result in harm.

Key Performance Indicator Commentary

22. Incident reporting within 24 hours has decreased slightly to 72 percent in June and 81 percent in July (from 81 percent in April). Incident numbers continue to be higher as a result of improvements made through Project Hīra, with an average of approximately 475 incidents reported each month.

23. The number of open actions currently overdue within Donesafe has increased significantly from 20 percent to 72 percent due to a number of actions being scheduled for completion by the end of the financial year. Some of these actions have been completed, but not closed in Donesafe, and others have not yet been completed. The health, safety, and wellbeing team will continue to work with people leaders to ensure that actions are monitored and closed on completion.

24. Violent and/or aggressive behaviour continues to be the predominant risk type involved in incidents, with 159 reported incidents over June and July 2023. A review of the longer term trend shows a decreasing number of incidents involving these behaviours however, with the daily average number of incidents reducing from approximately 3.6 to 2.6 over the past 12 months.

Tauākī whakaaweawe āhuarangi

Climate impact statement

25. Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan acknowledges that if we do not take care of the environment, we are not taking care of our own health and wellbeing. While there are no climate impacts specifically arising from this performance report, the services the council provides, and related health, safety, and wellbeing risk controls will have varying climate impacts that need to be considered on a case-by-case basis.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

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

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

Local impacts and local board views

27. 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.

28. It is recommended that this report is referred to the Governing Body and (as with previous health, safety, and wellbeing reports) that the Governing Body then forwards the report to local boards for their information.

Tauākī whakaaweawe Māori

Māori impact statement

29. While this report does not have specific impacts on Māori, staff acknowledge the importance of taking a holistic, Kaupapa Māori approach to health and wellbeing.

30. In particular, the hauora programme arising from the hauora (wellbeing) review is utilising a approach that reflects Kaupapa Māori values and interventions. The council’s current mental health programme, Iti Kahurangi, is based on ‘Te Whare Tapa Whā’ a holistic Māori health model. This model acknowledges the different elements needed to sustain hauora, including wairua (spiritual), hinengaro (mental and emotional), tinana (physical), whanau (family and social), and whenua (land and roots).

Ngā ritenga ā-pūtea

Financial implications

31. 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

32. 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

33. Following the 21 August 2023 Audit and risk Committee meeting, it is recommended that this report be referred to the Governing Body for its information. It is also recommended that the Governing Body forwards this report to local boards for their information.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇨	Health, Safety, and Wellbeing Performance Dashboard

Ngā kaihaina

Signatories

Author

Paul Robertson – General Manager Health Safety and Wellbeing

Authorisers

Richard Jarrett - Director Group Services

Anna Bray - Acting Director - Governance and CCO Partnerships

Audit and Risk Committee

21 August 2023

Climate disclosure work programme update August 2023

File No.: CP2023/10487

Te take mō te pūrongo

Purpose of the report

1. To update on the Auckland Council Group’s progress towards compliance with climate disclosure standards and associated legislation which comes into effect for the year ended 30 June 2024.

Whakarāpopototanga matua

Executive summary

2. This report provides information that informs the Audit and Risk Committee of the climate reporting team’s progress. It should be read in conjunction with the confidential report of the same name. The confidential report includes information that will be released to the NZX as part of the annual report in September 2023.

3. Several projects have been delivered or are currently being delivered as part of the climate disclosure work programme for 2023, including:

· the development of three climate scenarios for the group, bringing together the work undertaken in the prior year

· prioritisation of the group’s 28 climate-related risks.

4. The output of both projects was then used to test the resilience of the group to the impact of climate change. These projects support the group’s progress towards achieving compliance with climate standards for the year ended 30 June 2024.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) tuhi ā-taipitopito / note the council’s progress towards compliance with climate disclosure standards and associated legislation which comes into effect for the year ended 30 June 2024.

Horopaki

Context

5. The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 amended the Financial Markets Conduct Act 2013 (FMC Act) and the Financial Reporting Act 2013, requiring the Auckland Council Group to make annual climate-related disclosures based on standards published by the External Reporting Board (XRB) for the year ended 30 June 2024.

6. In December 2022 the XRB issued the New Zealand Aotearoa Climate Standards (climate standards) which are broadly based on the Taskforce for Climate Related Financial Disclosures (TCFD) framework.

7. As the financial market’s regulator, the Financial Markets Authority has been actively issuing guidance to confirm their approach and expectations of climate reporting entities. The most recent include draft guidance on record keeping and a scenario analysis information sheet.

8. The Auckland Council climate reporting team is a virtual team within the Group Treasury and Sustainability teams. It has an ongoing work programme to ensure that the group’s climate statement will be fully compliant with the climate standards for the year ended 30 June 2024, that the statement will reflect the group’s positive intent to embed the consideration of climate risk within its systems, processes and operations and that any reporting on climate matters is an unbiased and accurate reflection of the group’s position and activities.

9. This report informs the committee of the climate reporting team’s progress. It should be read in conjunction with the confidential report of the same name. The confidential report includes information that will be released to the NZX as part of the annual report in September 2023.

Tātaritanga me ngā tohutohu

Analysis and advice

10. The 2023 climate disclosure work programme has several projects and activities scheduled for the calendar year.

11. Besides the projects mentioned above, the remaining projects scheduled for this calendar year are:

· implementing processes for managing climate risks – Auckland Council led with council controlled organisations (CCOs)/ Ports of Auckland Limited (POAL) input for their entities

· testing the resilience of the group to climate change – Auckland Council led with CCO/POAL input for their entities

· implementing recommendations from a climate governance review completed by Tonkin + Taylor / InformedCity as part of the 2022 work programme – both Auckland Council and entity led

· creating group climate scenarios that comply with the requirements of the climate standards

· developing a group organisational strategy that incorporated transition plan aspects – both Auckland Council and entity led

· consolidating group greenhouse gas emissions (GHG)

· developing metrics and targets that demonstrate our performance in addressing our top climate risks – both Auckland Council and entity led.

12. During the current year we have made significant progress in the following areas:

· consolidating and then prioritising climate risks that were identified in the 2022 work programme

· testing the group’s resilience to climate change – we engaged PwC who:

o developed three climate scenarios for the group, bringing together the work undertaken in the prior year

o assisted testing the resilience of the group’s business focusing on five key areas - Service Delivery, Community Outcomes, Funding, Reputation and Strategic Priorities

· developing a GHG calculation policy and scope of work for the consolidation of group GHGs

· transitioning the group’s climate statement from the Taskforce for Climate-related Financial Disclosures framework to the New Zealand Aotearoa Climate Standards.

Tauākī whakaaweawe āhuarangi

Climate impact statement

13. This report is for noting, and therefore does not contain any decision that might have an impact on the climate. However, the work programme includes activities that will highlight and quantify the impacts of the most material climate risks on the group and seeks to ensure that measures are put in place to avoid, reduce, eliminate or mitigate those impacts.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

14. The climate reporting team regularly engages with all group entities at a leadership and operational level through its working and governance groups. All group entities are supportive of the climate disclosure work programme, but resourcing is a challenge.

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

Local impacts and local board views

15. Local board views have not been sought as the current work is aimed at an overall group level.

Tauākī whakaaweawe Māori

Māori impact statement

16. This report has no impact on Māori, although the impact of climate risks on Māori has been considered throughout the work programme.

Ngā ritenga ā-pūtea

Financial implications

17. This report is for noting, and therefore does not contain any decision that might have a financial impact on the council. It should be noted however that climate disclosures are relatively new in New Zealand and abroad, so there is limited best practise to learn from, and no established ways of doing some of the complex pieces of work that are required such as scenario development, strategy resilience testing, risk assessment and quantification etc. As a result, the work programme will continue to require input from highly skilled climate scientists and practitioners who have skills and knowledge that are unavailable in the team, or where there is inadequate resourcing in the climate reporting, sustainability or risk teams. This work will be funded from existing departmental consultancy budgets.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

18. This report is for noting, and therefore does not contain any decision that might have associated risks. Risks relating to progressing the climate disclosure work programme are discussed in the confidential report of the same name on this agenda.

Ngā koringa ā-muri

Next steps

19. The confidential report of the same name includes further detail related to the climate disclosure programme and will be discussed later in the meeting.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Authors

Tracy Gers - Group Accounting & Reporting Manager

Helen Mahoney – Manager Group Sustainable Finance

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Anna Bray - Acting Director - Governance and CCO Partnerships

Audit and Risk Committee

21 August 2023

Water Services Reform update

File No.: CP2023/10744

Te take mō te pūrongo

Purpose of the report

1. To update the committee on Auckland Council’s Water Services Reform Programme, including key risks and how they are being managed.

Whakarāpopototanga matua

Executive summary

2. The Government’s Water Services Reform (previously known as Three Waters) aims to improve the safety, affordability and reliability of drinking water, wastewater and stormwater services. It involves a new service delivery model, and quality, economic and consumer protection regulation for the sector.

3. The Government announced a reset of the reform in April 2023. However, the boundary of the new water services entity that will serve Auckland and Northland communities remains unchanged. The Minister has announced that Auckland Council and Watercare water infrastructure and services are scheduled to transfer to Entity A on 1 July 2024.

4. Three Bills are currently before Parliament to implement the reform and give effect to the reset. The Government intends to pass these before the end of the current parliamentary term.

5. The Water Services Reform may be repealed or significantly changed if there is a change in government following the general election.

6. The key risk for council remains the transition phase. Risk monitoring and oversight is led by the Water Services Reform Governance Group, comprised of executive leadership from Auckland Council, Watercare and Auckland Transport.

7. Watercare is managing its own risks and includes its risks as part of its standard risk reporting to the Audit and Risk Committee. Staff continue to work closely with Watercare to ensure that risk management approaches are coordinated across the group.

Ngā tūtohunga

Recommendation

That the Audit and Risk Committee:

a) whiwhi / receive the update on risk management activity related to the Water Services Reform programme.

Horopaki

Context

8. This is the second audit and risk report on Water Services Reform. A report was previously provided to the committee on Three Waters Reform (the previous name of the Government’s reform) in December 2022.

Government’s Water Services Reform

9. The Government’s Water Services Reform programme aims to improve the safety, affordability and reliability of drinking water, wastewater and stormwater services. It involves a new service delivery model, and quality, economic and consumer protection regulation for the sector.

10. The Government announced a reset of the reform on 13 April 2023. The changes include increasing the number of water services entities from four to ten and establishing them in a staged approach from 2024 to 2026. The second tranche of Better Off funding was cancelled - Auckland Council had been earmarked $381.4 million of this funding.

11. The boundary of Water Services Entity A, encompassing Auckland, Far North, Kaipara and Whangārei councils, and its establishment date of 1 July 2024, remains unchanged.

12. Auckland Council recognises the need for reform but opposes the form of the proposal. It does not support the reform’s service delivery changes, the separation of stormwater from core local government functions and considers the governance and accountability arrangements to be complex and inadequate.

13. The Water Services Entities Act 2022 established the Water Services Entities and their functions, objectives and accountability arrangements. It also sets transitional oversight arrangements with the Department of Internal Affairs (DIA) to review and where applicable confirm local government decisions if these will prejudice the water services reform, or have a negative impact on assets or liabilities that will be transferred to the new entities. These oversight arrangements have now taken effect.

14. Three other Bills are currently before Parliament to implement the reform and incorporate the reset, including the establishment date for Entity A. The Government intends to pass the Water Services Entities Amendment Bill, the Water Services Legislation Bill and the Water Services Economic Efficiency and Consumer Protection Bill before the end of the current parliamentary term.

15. DIA’s National Transition Unit (NTU) is currently revising its detailed project plans in light of the reform reset.

Establishment of Entity A

16. The Government has appointed an Establishment Board to work with the Establishment Chief Executive, Jon Lamonte, and oversee the transition to the new entity on 1 July 2024. Establishment Board members are Murray Bain (Chair), Hinerangi Raumati Tu’ua and Brendon Green.

17. An establishment plan for Entity A will be developed.

18. Auckland Council continues to respond to NTU requests for information and Entity A establishment tasks. To mitigate resourcing impacts in responding to these requests, council has sought transition funding from Government’s support packages.

Tātaritanga me ngā tohutohu

Analysis and advice

Council’s risk management process

19. The key risks identified for Auckland Council are:

· transition risk during the establishment period.

· risk that the Water Services Reform is repealed or significantly changed, due to a change in government following the general election.

20. A change in government is outside the control of Auckland Council. The legislation currently before Parliament specifically addresses and directs Entity A councils to remove drinking water, wastewater and stormwater from the long-term plan 2024-2034. Currently, three waters will be included as part of the 30-year Infrastructure Strategy but not in the 10-year budget. Should the reform not proceed and the legislation is repealed or varied post October 2023, Auckland Council will need to work with the Government on any practical and legislative changes that may be needed for the long-term plan or other requirements.

21. The highest risk for council remains the risk associated with transition during the establishment period and that customers and communities continue to be served without disruption during and after the transition. This includes the facilitation of the transfer of land, assets, staff and contracts to Entity A on 1 July 2024 and ensuring that council can deliver against its land use, and environmental planning, recovery activities, regulation/monitoring and remaining stormwater obligations.

22. The council has a Water Reform Transition Office and governance process for overseeing the transition process. A Programme Director has recently been appointed to drive the Water Services Reform work at Auckland Council.

23. Risk monitoring and oversight is led by the Water Services Reform Governance Group, comprised of executive leadership from Auckland Council, Watercare and Auckland Transport. The Establishment Chief Executive of Entity A also attends when appropriate. The Governance Group meets monthly, and more frequently as required. The Governance Group’s role is to provide assurance that the programme has processes in place to appropriately monitor progress and to identify and mitigate risk. Risk management responsibilities are led by the Water Reform Transition Office which manages and updates risks regularly and reports on these to the Governance Group.

24. The key transition risks and controls are provided in the following table.

Risk category	Key controls
Timeframes and planning	Working with the NTU and Entity A establishment team to understand their detailed plans and scope for delivery and to continually update our plans Monitoring the impact of changes to the bills as they go through the House
Inability to meet scope within establishment timelines	Development of internal workplans to meet scope Resource planning through Enterprise Portfolio Governance Group and Enterprise Recruitment Oversight Group Clear communications with NTU and Entity A
Change management	Implementing Change Management Plan. Change Manager role being recruited
Retention of people and capabilities	Continue to work with NTU people and workforce workstream in support of staff transition arrangements Clear communications to affected staff
Impact on business as usual	Development of formal agreements with Entity A on functional splits to ensure role clarity and to address any delivery overlaps or gaps Mandate responses to NTU requests and DIA oversight through Executive approval and Governance Group Inform NTU and Entity A establishment team on resourcing impacts of transition work
Political and reputational	Executive engagement with key stakeholders to ensure levels of support and confidence are maintained Ensure there is clear ownership of elected member engagement and communication and input throughout the transition. Engage with mana whenua throughout the transition to ensure levels of support and confidence are maintained Engage with NTU and Entity A establishment team to understand their engagement timelines Support direct political engagement between the Mayor and the Minister

Tauākī whakaaweawe āhuarangi

Climate impact statement

25. The Government is responsible for the consideration of climate change impacts within the Water Services Reform. The Water Services Entities Act 2022, s12(g) includes that an objective of the new water services entities is to deliver water services in a sustainable and resilient manner that seeks to:

(i) mitigate the effects of climate change and natural hazards; and

(ii) support and enable climate change adaptation.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

26. Water Services Reform will have a significant impact on Auckland Council, Auckland Transport and Watercare.

27. Watercare has its own reform transition office and is working closely with council on transition. Auckland Transport is part of the council group’s Water Services Reform Governance Group. Auckland Transport will retain responsibility for the management of transport stormwater under the reform.

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

Local impacts and local board views

28. Local board views were not requested for this report.

Tauākī whakaaweawe Māori

Māori impact statement

29. The Water Services Reform gives statutory effect to Te Mana o Te Wai and the Treaty of Waitangi.

30. The regional representative groups that will provide strategic oversight and direction of the new water services entities are made up of equal numbers of iwi and council representatives.

31. Auckland Council continues to engage with and update mana whenua on the progress of the reform through regular hui.

32. Iwi engagement is a separate workstream in the NTU’s programme.

Ngā ritenga ā-pūtea

Financial implications

33. Implementing the Government’s reform programme has resourcing, cost and balance sheet implications for council. The Government has introduced a number of funding packages to assist councils in undertaking the transition work and to ensure no council is worse off.

34. Auckland Council is yet to agree key financial parameters with Government. This includes the quantum of debt to transfer, the timing of debt repayments from Entity A to Auckland Council and the interest rate associated with the debt.

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 risks in the Water Services Reform.

Ngā koringa ā-muri

Next steps

37. Continue monitoring and providing updates to the council group’s Water Services Reform Governance Group on risks.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Author

Trudi Fava – Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Megan Tyler - Chief of Strategy

Anna Bray - Acting Director - Governance and CCO Partnerships

Audit and Risk Committee

21 August 2023

The Auditor-General's report to management on the interim audit for the year ended 30 June 2023

File No.: CP2023/08885

Te take mō te pūrongo

Purpose of the report

1. To summarise the matters identified by Audit New Zealand on behalf of the Deputy Auditor-General during the interim audit for the year ended 30 June 2023 and outline how Auckland Council is addressing the matters.

Whakarāpopototanga matua

Executive summary

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

3. There is one new recommendation since the last audit report, that council keeps support for changes made to council’s vendor masterfiles, including those processed by superusers, and that the council implements a process to regularly monitor the activities of superusers.

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

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) tuhi ā-taipitopito / note the matters identified in the Deputy Auditor-General’s report to management, for the interim audit of the year ended 30 June 2023, and management’s responses.

Horopaki

Context

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

6. On completion of the interim audit, the Deputy Auditor-General provides a report to management which outlines areas in which internal controls and financial disclosures can be improved. The report for the 30 June 2023 interim audit of the group’s annual report (Attachment A) will be provided prior to the meeting.

7. This report summarises the matters identified by Audit New Zealand (on behalf of the Deputy Auditor-General) during their interim audit and outlines management’s response.

8. Recommendations are categorised as:

· Urgent - address urgently

· Necessary - address at the earliest reasonable opportunity, generally within six months

· Beneficial - address, generally within six to 12 months

Tātaritanga me ngā tohutohu

Analysis and advice

9. Audit New Zealand completed their first and second interim audit visits for the 2022/2023 financial year in June 2023. Their focus was on:

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

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

· maintaining an awareness of key issues impacting the council.

10. Key messages relate to improvements required in the control environment and service performance of non-notified resource consents.

11. There is one new recommendation since the last audit report in relation to controls over the council’s vendor masterfile, where a superuser from the ICT team made changes to the vendor masterfile on 15 July 2022. The recommendation is that the council keeps support for changes made to the vendor masterfile and that monitoring controls are put in place in relation to activity of superusers. It has a priority of “necessary”.

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

Recommendation	Management’s response
Building and non-notified resource consents timeliness measures We recommend management continues with their process to improve the system for recording and reporting compliance with statutory timeframes for the processing of non-notified resource consents.	Council will deliver the plan as agreed by September 2023. As the performance information is reliant on interpretation of the Resource Management Act, and accurate communication with the applicant (with sufficient evidence retained), regular training has been, and will continue to be provided to the Resource Consent department members.
Review of Delegated Financial Authority (DFA) Policy and SAP delegation · Management should review identified breaches and if necessary, ensure these breaches are regularised. · Changes to DFAs should be properly authorised and updated in SAP. · Management should implement a review of purchase orders approved beyond delegations. · Management should document policy or procedure that provides rules and guidelines for sub-delegation of DFAs.	Legal Services has undertaken a full review of the CE Delegations Register, with an updated Register due to be signed off by the Chief Executive later this month. Following approval of the updated register, the DFAs in SAP will be reviewed to ensure alignment with the updated register. The updated register clarifies the process for when a delegate is unavailable or on leave. There are currently system limitations in SAP for which a solution is being sought. A recent internal audit review has highlighted the need for better process documentation, guidance and training to ensure that all staff are aware of their accountabilities and responsibilities as DFAs or as substitutes for DFAs. This process documentation and accompanying training is being developed within the Procurement Department.
Payroll processes and controls · Adequate support should be retained for all payroll related payments. · Payroll review processes should be standardised and should be performed consistently.	Council is implementing standard processes that include having all checklists for payroll related payments registered through our workflow system to ensure correct signoffs, accurate information and systematic retention.
Valuation of investment properties Valuation reports should include supporting calculations, comparable sales and rental evidence to support the valuations.	Council has appointed new valuers from financial year 2023/24. The new valuers are required to provide more information in their “short form” valuation reports to support their valuations.
“One-up” approvals of the chief executive, deputy mayor and mayor expenses The policy should be updated to reflect that approval of the Chief Executive expenditure is delegated to the Mayor, approval of the Mayor’s and Deputy Mayor’s expenditure is delegated to the Audit and Risk Committee Chair.	The Elected Members’ Expense Policy adopted by the Governing Body on 30 July 2020 already reflects these approval processes. Governance Services will remind the Mayoral Office of the importance of following the Elected Members’ Expense Policy and ensure appropriate approval is obtained from the Audit and Risk Committee Chair.
Greenhouse gas emissions The council’s baseline greenhouse gas emissions should be restated when changes are made to emissions sources and/or emissions factors. This is to ensure comparability in the performance information reported. The reason for any such change in the baseline should be explained in the performance report.	Management is developing a GHG emissions calculation policy which will clarify in which circumstances baselines should be restated.

Recommendation

Management’s response

Building and non-notified resource consents timeliness measures

We recommend management continues with their process to improve the system for recording and reporting compliance with statutory timeframes for the processing of non-notified resource consents.

Council will deliver the plan as agreed by September 2023. As the performance information is reliant on interpretation of the Resource Management Act, and accurate communication with the applicant (with sufficient evidence retained), regular training has been, and will continue to be provided to the Resource Consent department members.

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

· Management should review identified breaches and if necessary, ensure these breaches are regularised.

· Changes to DFAs should be properly authorised and updated in SAP.

· Management should implement a review of purchase orders approved beyond delegations.

· Management should document policy or procedure that provides rules and guidelines for sub-delegation of DFAs.

Legal Services has undertaken a full review of the CE Delegations Register, with an updated Register due to be signed off by the Chief Executive later this month. Following approval of the updated register, the DFAs in SAP will be reviewed to ensure alignment with the updated register.

The updated register clarifies the process for when a delegate is unavailable or on leave.

There are currently system limitations in SAP for which a solution is being sought.

A recent internal audit review has highlighted the need for better process documentation, guidance and training to ensure that all staff are aware of their accountabilities and responsibilities as DFAs or as substitutes for DFAs. This process documentation and accompanying training is being developed within the Procurement Department.

Payroll processes and controls

· Adequate support should be retained for all payroll related payments.

· Payroll review processes should be standardised and should be performed consistently.

Council is implementing standard processes that include having all checklists for payroll related payments registered through our workflow system to ensure correct signoffs, accurate information and systematic retention.

Valuation of investment properties

Valuation reports should include supporting calculations, comparable sales and rental evidence to support the valuations.

Council has appointed new valuers from financial year 2023/24.

The new valuers are required to provide more information in their “short form” valuation reports to support their valuations.

“One-up” approvals of the chief executive, deputy mayor and mayor expenses

The policy should be updated to reflect that approval of the Chief Executive expenditure is delegated to the Mayor, approval of the Mayor’s and Deputy Mayor’s expenditure is delegated to the Audit and Risk Committee Chair.

The Elected Members’ Expense Policy adopted by the Governing Body on 30 July 2020 already reflects these approval processes. Governance Services will remind the Mayoral Office of the importance of following the Elected Members’ Expense Policy and ensure appropriate approval is obtained from the Audit and Risk Committee Chair.

Greenhouse gas emissions

The council’s baseline greenhouse gas emissions should be restated when changes are made to emissions sources and/or emissions factors. This is to ensure comparability in the performance information reported. The reason for any such change in the baseline should be explained in the performance report.

Management is developing a GHG emissions calculation policy which will clarify in which circumstances baselines should be restated.

Tauākī whakaaweawe āhuarangi

Climate impact statement

13. There are no items covered in this report that have an impact on climate change, however one of the recommendations raised relates to the calculation of the council’s greenhouse gas inventory which is a measure of the council’s impact on the climate.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

14. The council-controlled organisations which use our SAP platform are aware of the matter related to DFAs in SAP. Once our new DFA policy is implemented this will be shared with them. Their structures tend to be simpler than the council’s, however they have been going through organisational change so will need to consider the impact on their DFAs in SAP.

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

Local impacts and local board views

15. There are no issues relating to reporting at a local board level. Accordingly, the views of local boards have not been sought.

Tauākī whakaaweawe Māori

Māori impact statement

16. The report does not affect the achievement of or reporting on the group’s contributions towards Māori outcomes. The group’s contributions to Māori outcomes are reported in the annual report, and there have been no recommendations in relation to that disclosure.

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

18. The council is actively addressing the issues raised. Apart from the matter related to building and resource consents, management has assessed that the matters will not impact on the audit opinion of the Auckland Council Group’s 2022/2023 annual report. Work is ongoing to assess the effect of the control gaps in the consenting area on the audit opinion.

Ngā koringa ā-muri

Next steps

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

Ngā tāpirihanga

Attachments

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

Anna Bray - Executive Officer, Governance & CCO Partnerships

Audit and Risk Committee

21 August 2023

Auckland Council Group's NZX preliminary announcement and financial results to 30 June 2023

File No.: CP2023/11004

Te take mō te pūrongo

Purpose of the report

1. To inform the Audit and Risk Committee of the process followed to prepare the draft NZX announcement (including the group’s primary financial statements and notes) and media release for the financial year ended 30 June 2023.

Whakarāpopototanga matua

Executive summary

2. The draft Auckland Council Group NZX preliminary announcement (which includes the group’s primary financial statements and notes) and media release (collectively called the “draft 2023 NZX release”) have been prepared for the financial year ended 30 June 2023.

3. This report confirms the quality assurance processes undertaken in preparation of the draft 2023 NZX release.

4. The 2023 NZX preliminary announcement will be released to the NZX on Monday 29 August 2023.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) tuhi ā-taipitopito / note that there are no significant outstanding issues relating to the process for the preparation of the draft 2023 NZX release

b) tuhi ā-taipitopito / note that the draft 2023 NZX release will be discussed in the confidential part of this agenda.

Horopaki

Context

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

6. The Governing Body reviews the financial and performance of the group to ensure the integrity and reliability of financial and performance information.

7. This report along with the associated confidential report, the Deputy Auditor-General’s briefing paper and his comments at this meeting, assist the Audit and Risk Committee to fulfil its duty as noted above.

8. Following the completion of the audit, Audit New Zealand will provide a report to those charged with governance which includes any matters arising from their final audit such as process or control deficiencies.

9. In accordance with the NZX listing rules, the group must lodge a results announcement with the NZX within 60 days of balance date.

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

· a statement of financial performance

· a statement of financial position

· a statement of cash flows

· a statement of movements in equity

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

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

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

· the impact of any changes in accounting policies.

11. The draft 2023 NZX release is materially based on consolidated information obtained from the council, council-controlled organisations and Ports of Auckland Limited’s reporting packs. Reporting packs have been supported by assurances obtained in representation letters which were signed by their respective chief financial officer/chief executive officers and chairs of their audit committee/boards.

12. At this meeting, Audit New Zealand, on behalf of the Auditor-General as the group’s auditor, will confirm clearance on the draft 2023 NZX release pursuant to the issue of their opinion on the group’s annual report in September 2023.

Tātaritanga me ngā tohutohu

Analysis and advice

13. The draft 2023 NZX release will be presented in the confidential NZX agenda item later in this meeting.

14. The following reporting milestones provide an outline of the process underway to prepare, review and issue the audited financial results for year ended 30 June 2023.

Tauākī whakaaweawe āhuarangi

Climate impact statement

15. This report relates to the group’s financial statements only and as such has no climate implications. Information relating to the group’s impact on the climate, and the climate’s impact on the group will be included in the annual report and summary annual report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

16. The draft 2023 NZX release consolidates financial information provided by the substantive council-controlled organisations and Ports of Auckland Limited.

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

Local impacts and local board views

17. The draft 2023 NZX release relates to reporting at a group level. Accordingly, the views of the local boards have not been sought.

Tauākī whakaaweawe Māori

Māori impact statement

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

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

Risk of error, omission or non-compliance in preparation of the draft 2023 NZX release

20. There is a risk that errors or inaccuracies could occur in the preparation of the draft 2023 NZX release. To mitigate this risk, quality assurance reviews were performed on the consolidated results and commentary and the year-end reports. The reviews focused on accuracy, completeness and reasonableness of disclosures, legislative compliance and adherence to Auckland Council communications standards. A summary of the reviews is as follows:

Reviewer	Consolidated results and commentary	Media release	Preliminary NZX release
Group chief financial officer
Group treasurer
Group financial controller
External stakeholder group reporting manager
Senior group reporting technical accountant
Financial accounting manager
General manager financial strategy and planning
Manager group performance reporting
Manager financial stakeholder relations
Senior specialist corporate communications and media
Senior solicitor and Mayne Wetherell

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

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

Ngā koringa ā-muri

Next steps

23. The draft 2023 NZX release will be presented to the deputy mayor on 25 August 2023 to recommend the mayor and chief executive approve the documents be released on 29 August 2023.

24. The draft 2023 NZX release will then be presented to the mayor and chief executive on 28August 2023 for approval before release on 29 August 2023.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Author

Tracy Gers - Group Accounting & Reporting Manager

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Anna Bray - Acting Director - Governance and CCO Partnerships

Audit and Risk Committee

21 August 2023

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

That the Audit and Risk Committee

a) whakaae / agree to 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: Substantive Council-Controlled Organisations' Quarterly Risk Update - August 2023

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