Agenda of Audit and Risk Committee

Audit and Risk Committee - 15 March 2018 - Open Agenda

ORDER OF BUSINESS

Apologies

Nil

Conflicts of interest

Public forum

Nil

Announcements by the Mayor

Announcements by the Chairperson

Announcements by the management

Confirmation of minutes

That the Minutes of the Audit and Risk Committee meeting held on Thursday, 7 December 2017 be taken as a true and accurate record of the meeting (page 42 refers).

Notification and justification of matters of extraordinary business

(Strictly for information and/or referral purposes only).

Agenda items

1 Insurance Arrangements ................................................................................................ 3

Presentation – JLT Insurance

2 Reappointment of Chair and Independent Member......................................................... 4

3 Draft Long Term Plan 2018-28 Underlying Documents................................................... 7

4 Risk Management Report March 2018............................................................................ 9

5 Health and Safety Report ending 28 February 2018...................................................... 19

6 Investment and Debt Report......................................................................................... 23

7 Sensitive Expenditure - Mayor and Chief Executive...................................................... 26

8 Audit Arrangements for Year Ending June 2018 ........................................................... 39

9 Renaming Napier Conference Centre........................................... late paper, to be tabled

Presentation – Lucy Dobbs, Strategy and Marketing Consultant

General Business

1 Confirmation of Items to be taken to Council .............................................................. N/A

Public excluded ............................................................................................................. 41

Audit and Risk Committee - 15 March 2018 - Open Agenda Item 1

Agenda Items

1. Insurance Arrangements

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	433370
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

1.1 Purpose of Report

To receive an update from JLT our insurance brokers on the key issues to the Local Government Sector and to consider insurance requirements for Napier City Council for the upcoming financial year 2018/19

Officer’s Recommendation

a. That the presentation by JLT be received.

b. That the Committee make recommendations on changes (if any) regarding the appropriateness of the proposed cover for 2018/19.

Committee’s Recommendation

That the Committee resolve that the officer’s recommendation be adopted.

Risk

That Council do not provide sufficient insurance to cover their risks to an appropriate level to ensure the ability to recover from risks associated with Local Government activities.

1.2 Attachments

Nil

Audit and Risk Committee - 15 March 2018 - Open Agenda Item 3

3. Draft Long Term Plan 2018-28 Underlying Documents

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	433361
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

3.1 Purpose of Report

That the Committee review and provide feedback to Council on the Long Term Plan 2018-28 underlying documents prior to the final adoption of the reports.

Officer’s Recommendation

That the Committee

a. Receive the Long Term Plan 2018-28 underlying documents

· Significance and Engagement Policy

· Significant Planning assumptions

· Capital Plan

· Community Outcomes

· Contribution to decision-making processes by Māori

· Council controlled organisations

· Draft Infrastructure Strategy

· Draft Financial Strategy – to be tabled

· Statement of Accounting Policies

· Prospective Financial Statements – to be tabled

· Draft Funding Impact Statement

· Financial Prudence benchmarks – to be tabled

· Council Funding Policies

b. Document feedback from the review of these documents to be provided to the next available Council meeting.

Committee’s Recommendation

That the Committee resolve that the officer’s recommendation be adopted.

3.2 Attachments

a Significance and Engagement Policy (Under Separate Cover) ⇨

b Significant Planning Assumptions (Under Separate Cover) ⇨

c Capital Plan (Under Separate Cover) ⇨

d Community Outcomes (Under Separate Cover) ⇨

e Contribution to Decision Making Processes by Maori (Under Separate Cover) ⇨

f Council Controlled Organisations (Under Separate Cover) ⇨

g Draft Infrastructure Strategy (Under Separate Cover) ⇨

h Statement of Accounting Policies (Under Separate Cover) ⇨

i Draft Funding Impact Statement (Under Separate Cover) ⇨

j Council Funding Policies (Under Separate Cover) ⇨

Audit and Risk Committee - 15 March 2018 - Open Agenda Item 4

4. Risk Management Report March 2018

Type of Report:	Information
Legal Reference:	N/A
Document ID:	433364
Reporting Officer/s & Unit:	Rachael Horton, Manager Business Excellence & Transformation Caroline Thomson, Chief Financial Officer Adele Henderson, Director Corporate Services

4.1 Purpose of Report

To provide the Audit and Risk Committee (Committee) with an update on progress with risk management work and to report on the highest rated risks.

Officer’s Recommendation

That the Committee

a. Note the risk management work being undertaken by the NCC Risk Committee

b. Receive the reports titled: NCC Risk Maturity Roadmap and Highest rated risks report 2 March 2018.

Committee’s Recommendation

That the Committee resolve that the officer’s recommendation be adopted.

4.2 Background Summary

Napier City Council (NCC) is committed to improving its capability to identify and manage risks as an integral part of business practices, and has an ongoing programme of work to achieve this.

The Committee supports NCC’s risk commitment by acting in a risk monitoring advisory and improver role. Regular reporting to the Committee on NCC’s risk work is undertaken to seek advice and direction to improving risk management practices and appropriate management of the highest rated risks.

4.3 Improving risk management practices

Since our last report to the Committee, the NCC Risk Committee have completed the following:

· Developed a Risk Maturity Roadmap

· Established the Risk Champion role

· Completed Risk training for NCC Risk Committee and Risk Champions

· Reviewed extreme risk actions and treatments

Risk Maturity Roadmap

At the last meeting, the Committee requested officers to provide a way to measure and track improvements to NCC’s risk capability and culture. A Risk Maturity Roadmap has been developed for this purpose (Attachment A).

The roadmap is set against a five year timeline based on advice from Camms Risk Specialist that to reach a mature level in a mid-size organisation can take between 5 and 7 years.

The roadmap compares seven competencies from the AS/NZS 31000:2009 Risk Management - Principles and Guidelines against a four stage maturity model. Each stage is described and NCC’s level of maturity is assessed and evidenced for each competency.

Risk Champions

The purpose of the risk champion role is to:

· Work with risk owners to review risks and risk actions annually, and risk treatments six-monthly.

· Provide training on risk and the risk module in Sycle.

· Make recommendations to the NCC Risk Committee to add new or retire risks.

· Regularly discuss risk matters amongst staff and in team meetings.

· Prompt staff to identify new risks.

The Risk Champion role has now been initiated and 17 Risk Champions have been appointed from staff across NCC business units.

Risk Training

Risk training has been provided to the NCC Risk Committee and Risk Champions. The training covered risk theory, understanding of NCC’s risk strategy and how to use the Sycle risk module.

Review of Extreme Risks

Sycle is set for risks (risk and actions) to be reviewed annually and risk treatments reviewed six-monthly. In addition to this review cycle, the risks require some refinement following the initial set up of the risk register as part of Sycle implementation in 2017. The NCC Risk Committee have focused on reviewing the Extreme risks for this quarter. This has resulted in a two previously reported Extreme risks being downgraded to Medium and High.

4.4 Reporting the highest rated risks

There are currently 145 strategic and operational risks in the risk register.

There are three risks to report to the Committee as the highest rated risks across the two registers; one is an operational risk rated Extreme (OR56, OR67) and two are strategic risks rated High (SR2, SR3).

These risks are reported in the attached spreadsheet (Attachment B).

Extreme Risk

The Extreme risk in the operational risk register is:

· OR67 Pandora Pond – customer drowning

The risk of a customer drowning at Pandora Pond is currently rated Extreme. We have identified a number of risk treatments that will be put in place to reduce the likelihood of this risk occurring. The facility will be closed from the end of February and it is intended that the risk treatments are completed before the facility is re-opened for the next summer season.

High Risks

The two High risks in the strategic risk register are:

· SR2 Removal of three waters delivery and management

· SR3 Increased number and/or severity of major/natural disaster events

These risks have not altered since the last report to the Committee as the risks are outside the control of NCC. The risk treatments listed against these risks are ongoing.

4.5 Significance and Consultation

There are no external consultation requirements for this report.

4.6 Attachments

a NCC Highest Rated Risks 2 March 2018 ⇩

b NCC Risk Maturity Roadmap ⇩

Audit and Risk Committee - 15 March 2018 - Open Agenda Item 7

7. Sensitive Expenditure - Mayor and Chief Executive

Type of Report:	Operational and Procedural
Legal Reference:	N/A
Document ID:	450263
Reporting Officer/s & Unit:	Talia Foster, Corporate Accountant Caroline Thomson, Chief Financial Officer

7.1 Purpose of Report

To provide the information required for the Committee to review Sensitive Expenditure of the Mayor and Chief Executive for compliance with Council’s Sensitive Expenditure Policy.

Officer’s Recommendation

a. That committee receive the report of Sensitive Expenditure for the Mayor and Chief Executive and review for compliance with the Sensitive Expenditure Policy.

Chairperson’s Recommendation

That the Committee resolve that the officer’s recommendation be adopted.

7.2 Background Summary

As per the Sensitive Expenditure Policy approved by the Senior Leadership Team on 27 March 2017, a report of all sensitive expenditure by the Chief Executive and by the Mayor will be provided to Audit and Risk Committee meetings (clauses 6.3 and 6.5). The policy also states that the expenditure items will be reviewed by the Chairperson or the Deputy Chairperson of the Audit and Risk Committee for compliance with this policy.

7.3 Issues

No Issues.

7.4 Significance and Consultation

N/A

7.5 Implications

Financial

N/A

Social & Policy

N/A

Risk

N/A

7.6 Attachments

a Report on Sensitive Expenditure of Mayor and Chief Executive ⇩

b 2017-03-27 Sensitive Expenditure Policy ⇩

Audit and Risk Committee - 15 March 2018 - Open Agenda Item 8

8. Audit Arrangements for Year Ending June 2018

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	433369
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

8.1 Purpose of Report

To outline the audit arrangements for the audit of the Napier City Council for the year ending 30 June 2018.

Officer’s Recommendation

a. That the Committee resolve that the audit arrangements for the year ending 30 June 2018 as set out in the audit arrangement letter from Audit New Zealand is received.

Committee’s Recommendation

That the Council resolve that the officer’s recommendation be adopted.

8.2 Background Summary

Napier City Council’s auditors, Audit New Zealand, have identified the key areas (both financial and non financial) that will be the focus of the audit for the year ending 30 June 2018. These are set out in the audit arrangement letter to be tabled at the meeting.

The final audit is scheduled to begin on 13 August 2018 and is expected to last two weeks on site.

8.3 Attachments

a Audit Arrangement Letter for the year ending 30 June 2018 - TO BE TABLED ⇩

PUBLIC EXCLUDED ITEMS

That the public be excluded from the following parts of the proceedings of this meeting, namely:

AGENDA ITEMS

1. Internal Audit Data Analytics - Management Actions

The general subject of each matter to be considered while the public was excluded, the reasons 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 were as follows:

General subject of each matter to be considered.

Reason for passing this resolution in relation to each matter.

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

1. Internal Audit Data Analytics - Management Actions

7(2)(a) Protect the privacy of natural persons, including that of a deceased person

48(1)A That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist:
(i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.

Audit and Risk

Committee

Open Minutes

Meeting Date:

Thursday 7 December 2017

Time:

1pm – 1.10pm

Venue

Council Chamber

Hawke’s Bay Regional Council

159 Dalton Street

Napier

Present:

John Palairet (In the Chair), Mayor Bill Dalton, Geoff Foster, Councillor Kirsten Wise, Councillor Claire Hague

In Attendance:

Chief Executive, Director Corporate Services, Director City Infrastructure, Director Community Services, Manager Asset Strategy, Manager Business Transformation and Excellence, Manager People and Capability [Item 1]

Stephen Lucy – Audit New Zealand

Administration:

Governance Team

Audit and Risk Committee - 07 December 2017 - Open Minutes

Apologies

Nil

Conflicts of interest

Nil

Public forum

Nil

Announcements by the Mayor

Nil

Announcements by the Chairperson

Nil

Announcements by the management

Nil

Confirmation of minutes

Councillors Hague / Wise

That the Minutes of the meeting held on 12 October 2017 were taken as a true and accurate record of the meeting.

Carried

Notification and justification of matters of extraordinary business

(Strictly for information and/or referral purposes only).

Transfer of items

Councillors Hague / Wise

That the Committee

a. Transfer the following papers form the Public Excluded to the Open agenda of this meeting:

Item 2 – Health and Safety Report 31 October 2017

Item 3 – Audit and Risk Meeting Schedule 2017-18

Item 6 – Napier City Council Investments and Debt Report

Item 9 – Audit and Risk Charter Review

Carried

Agenda Items

2. Health and Safety Report 31 October 2017

*Type of Report:*	Information
*Legal Reference:*	N/A
*Document ID:*	340075
*Reporting Officer/s & Unit:*	Adele Henderson, Director Corporate Services
Reason for Exclusion	Section 7(2)(d) Avoid prejudice to measures protecting the health and safety of members of the public.

2.1 Purpose of Report

To table to the Committee the Napier City Council Health & Safety report as at 31 October 2017 for their review.

At the Meeting

The Manager People and Capability spoke to the report noting:

· There has been one lost time injury this quarter

· The intention is to provide systems that will allow for real time reporting via a variety of devices

· There remains some education needs in identifying what is a ‘near miss’ and ensuring that they are reported

· It is now possible to begin identifying trends from the reporting; to date there have been no expected trends observed.

· There have been improvements in the Health and Safety practices of our contractors as they work through the SiteWise programme.

Committee's recommendation

Councillors Wise / Hague

That the Committee

a. Receive the Napier City Council Health and Safety report as at 31 October 2017.

Carried

3. Audit and Risk Meeting Schedule 2017-18

*Type of Report:*	Operational and Procedural
*Legal Reference:*	N/A
*Document ID:*	424601
*Reporting Officer/s & Unit:*	Adele Henderson, Director Corporate Services
Reason for Exclusion	Section 7(2)(g) Maintain legal professional privilege.

3.1 Purpose of Report

To consider the proposed timetable of meetings for the Audit and Risk Committee in 2018, as detailed below.

At the Meeting

It was agreed that the proposed June meeting will be moved to mid-July as The Chair will be away during the month of June.

Committee's recommendation

Councillors Wise / Hague

That the Committee

a. Receive the proposed timetable of meetings for the Audit and Risk Committee for 2018.

Carried

6. Napier City Council Investment and Debt Report

*Type of Report:*	Information
*Legal Reference:*	N/A
*Document ID:*	340069
*Reporting Officer/s & Unit:*	Adele Henderson, Director Corporate Services
Reason for Exclusion	Section 7(2)(b)(ii) Protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.

6.1 Purpose of Report

To consider the snapshot report on Napier City Council’s Investment and Debt as at 31 October 2017.

At the Meeting

The report was taken as read.

Committee's recommendation

Councillor Wise / Mr Foster

That the Committee

a. Receive the snapshot report on Napier City Council’s Investment and Debt as at 31 October 2017.

Carried

9. Audit and Risk Charter Review

*Type of Report:*	Information
*Legal Reference:*	N/A
*Document ID:*	426002
*Reporting Officer/s & Unit:*	Adele Henderson, Director Corporate Services
Reason for Exclusion	Section 7(2)(g) Maintain legal professional privilege.

9.1 Purpose of Report

To present and make recommendations on amendments to the Audit and Risk Committee Charter and Terms of Reference.

At the Meeting

The proposed amendments were taken as read and agreed to be logical recommendations by the Committee.

Decision of Council

Mayor Dalton / Mr Foster

That the Committee

a. Receive the report titled Audit and Risk Charter Review.

b. Recommend to Council that the amendments to the Audit and Risk Committee Charter and Terms of Reference be approved.

Carried

Audit and Risk Committee - 15 March 2018 - Open Agenda

PUBLIC EXCLUDED ITEMS

That the public be excluded from the following parts of the proceedings of this meeting, namely:

1. Update on Water Supply- Drinking Water Quality Improvements

4. Audit NZ - Management Letter 2016/17

5. Risk Management Report December 2017

7. Internal Audit Data Analytics

8. Tax Risk Governance Framework

General subject of each matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground(s) under section 48(1) to the passing of this resolution.
1. Update on Water Supply- Drinking Water Quality Improvements	7(2)(f)(ii) Maintain the effective conduct of public affairs through the protection of such members, officers, employees and persons from improper pressure or harassment	48(1)A That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.
4. Audit NZ - Management Letter 2016/17	7(2)(g) Maintain legal professional privilege	48(1)A That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.
5. Risk Management Report December 2017	7(2)(e) Avoid prejudice to measures that prevent or mitigate material loss to members of the public	48(1)A That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.
7. Internal Audit Data Analytics	7(2)(a) Protect the privacy of natural persons, including that of a deceased person	48(1)A That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.
8. Tax Risk Governance Framework	7(2)(e) Avoid prejudice to measures that prevent or mitigate material loss to members of the public	48(1)A That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist: (i) Where the local authority is named or specified in Schedule 1 of this Act, under Section 6 or 7 (except 7(2)(f)(i)) of the Local Government Official Information and Meetings Act 1987.

The meeting moved into committee at 1.10pm

Committee Members	John Palairet (In the Chair), Mayor Bill Dalton, Geoff Foster, Councillor Claire Hague, and Councillor Kirsten Wise
Officer Responsible	Director Corporate Services
Administration	Governance Team
	Next Audit and Risk Committee Meeting Thursday 13 September 2018

Meeting Date:	Thursday 15 March 2018
Time:	1.00pm
Venue:	Council Chamber Hawke’s Bay Regional Council 159 Dalton Street Napier