Agenda of Audit and Risk Committee

Audit and Risk Committee - 5 December 2019 - Attachments

Item 1

Attachments a

INFORMATION PAPER

TO:	NCC Staff
REPORT DATE:	1 November 2019
PREPARED BY:	Michelle Warren
SUBJECT:	Health & Safety Statistics
AGENDA ITEM	OCTOBER H&S REPORTING

PURPOSE

The purpose of this report is to provide all NCC Staff, Council and Risk & Audit with an overview of the health and safety performance as at 31^st October 2019.

SUMMARY – KEY PERFORMANCE INDICATORS

October LTIs = 0

Reported Incidents (Total Company)	Aug 2018	Aug 2019	Sept 2018	Sept 2019	Oct 2018	Oct 2019	YTD 2018	YTD 2019	Targets FY20	On Target
Lost time injuries (LTIs):	1	0	0	0	0	0	1	1	<=8	·
Medically treated injuries (MTIs):	2	0	5	3	1	3	9	3	<=40	·
Total recordable injuries (MTIs + LTIs):	3	0	5	3	1	3	10	4	<=48	·
Near miss/hit & property damage reporting	15	14	10	16	11	13	50	48	>=180	·
Incidents Involving Public using our facilities	4	5	4	11	16	13	38	30	<=200	·
Significant Incidents or Accidents involving Contractors	1	0	1	1	0	0	3	1	<=5	·

LTIs and MTIs YTD as at 31 October 2019 (Comparison between FY19 and FY20)

· No change to LTIs 54 days since last LTI

· 66.6% decrease MTIs

· 60% decrease in TRIs

	Jul	Aug	Sept	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Total
FY13	0	2	1	1	1	1	0	1	0	1	1	1	10
FY14	2	0	1	1	1	0	0	0	1	1	0	1	8
FY15	0	1	1	2	0	0	3	2	0	0	0	0	9
FY16	1	2	0	1	1	2	1	2	3	0	4	3	20
FY17	1	1	2	0	2	2	1	2	0	0	0	1	12
FY18	0	0	2	1	2	3	0	0	1	0	0	1	10
FY19	0	1	0	0	1	1	0	1	0	1	1	2	8
FY20	0	0	1	0									1

Health and Safety Performance Lead Indicators as at october 2019

Lead Indicators	Detail	Aug 19	Sept 19	Oct 19	YTD FY20	Full Year Target FY20	On Target
Body discomfort reporting (1 in 5 people)	An early intervention programme to resolve the cause of the discomfort in the workplace and/or medical treatment before developing into chronic pain and an injury. Online e-learning videos are part of the programme. Resolutions:	4	1	2	10	=>50	·
Work Station Assessments (10 / 10)	New employees receive workstation assessments and e-learning videos. Re assessments completed as required or where new areas or equipment set up. · New Employees · Existing Employees in different BU/Area/New desks or chairs	7	2	4	16	100%	·
Near miss incident reporting	Near miss incidents reported	14	16	13	58	180	·
Incident investigations	All LTIs and MTIs investigations commenced within seven days of the event. · N/A	0	0	0	0	100%	·
Health and Safety Meetings	Health and safety meetings at each workplace. · N/A	4	0	4	12	30	·
Internal Health and Safety Audits (1 per week)	Health and safety audit of health and safety management system at nominated workplaces. · Waterworks – Chlorine Dosing · City Strategy – Mural Painting	1	4	2	11	48	·
Contractor Health & Safety Audits and/or Safety Observations	Contractor Audits / Safety Observations · Demo 1 Asbestos Removal · Berkett Earthmovers – New Aquatic · Rocket Scaffolding – Post Office Bldg · Garden Depot – Tree Planting Te Awa	3	5	4	17	26	·
Planned visible leadership - workplace health & safety observation &conversation	Workplace health and safety observations, including a conversation with staff during a workplace visit by a core management team member. Walk around chats HS safety observation 1 per quarter Attend HS mtgs e.g. toolbox 3 per year	36	33	38	154	240	·
Planned visible leadership – participating in a health and safety meeting	SLT team member participating in a workplace or work group health and safety meeting at the workplace or joining a conference call.	31	50	25	121	250	·
Inductions	New Staff inducted to Napier City Council or staff who have moved business unit and re-inducted	5	7	6	28	100%	·
Safety Alerts	Safety alerts published to educate and prevent the same or similar injury occurring again. · N/A	0	0	0	0	6	·

Lead Indicators

Detail

Aug

Sept

Oct

YTD

FY20

Full Year Target

FY20

On Target

Body discomfort reporting

(1 in 5 people)

An early intervention programme to resolve the cause of the discomfort in the workplace and/or medical treatment before developing into chronic pain and an injury.

Online e-learning videos are part of the programme.

Resolutions:

=>50

Work Station Assessments

(10 / 10)

New employees receive workstation assessments and e-learning videos. Re assessments completed as required or where new areas or equipment set up.

· New Employees

· Existing Employees in different BU/Area/New desks or chairs

100%

Near miss incident reporting

Near miss incidents reported

180

Incident investigations

All LTIs and MTIs investigations commenced within seven days of the event.

· N/A

100%

Health and Safety Meetings

Health and safety meetings at each workplace.

· N/A

Internal Health and Safety Audits

(1 per week)

Health and safety audit of health and safety management system at nominated workplaces.

· Waterworks – Chlorine Dosing

· City Strategy – Mural Painting

Contractor Health & Safety Audits and/or Safety Observations

Contractor Audits / Safety Observations

· Demo 1 Asbestos Removal

· Berkett Earthmovers – New Aquatic

· Rocket Scaffolding – Post Office Bldg

· Garden Depot – Tree Planting Te Awa

Planned visible leadership - workplace health & safety observation &conversation

Workplace health and safety observations, including a conversation with staff during a workplace visit by a core management team member.

Walk around chats

HS safety observation 1 per quarter

Attend HS mtgs e.g. toolbox 3 per year

154

240

Planned visible leadership – participating in a health and safety meeting

SLT team member participating in a workplace or work group health and safety meeting at the workplace or joining a conference call.

121

250

Inductions

New Staff inducted to Napier City Council or staff who have moved business unit and re-inducted

100%

Safety Alerts

Safety alerts published to educate and prevent the same or similar injury occurring again.

· N/A

Health and Safety Other Reporting

Other	Detail	Aug 19	Sept 19	Oct 19	Full Year Target FY20
Significant incident	An event in a different circumstance may result in serious harm. · N/A	1	0	0	0
Significant Issues or Incidents Involving Contractors	An event involving a Contractors causing significant concern. · N/A	0	0	0	0
HSWA, Regulations, WorkSafe Updates and/or notifications	Any updates communicated to management. · N/A	2	0	0	N/A
Return To Work in Progress	Employees who are on a return to work programme. · Aquarium 2 · MTG 1 · Kennedy Park 1 · Depot 4	13	15	8

Other

Detail

Aug

Sept

Oct

Full Year Target

FY20

Significant incident

An event in a different circumstance may result in serious harm.

· N/A

Significant Issues or Incidents Involving Contractors

An event involving a Contractors causing significant concern.

· N/A

HSWA, Regulations, WorkSafe Updates and/or notifications

Any updates communicated to management.

· N/A

N/A

Return To Work in Progress

Employees who are on a return to work programme.

· Aquarium 2

· MTG 1

· Kennedy Park 1

· Depot 4

Training

No Staff

First Aid

Traffic Controller

Total trainings

Wellbeing

· Health Monitoring

o Asbestos Register

o Hearing screening

o Vaccination follow ups

1. Contents

Key messages. 3

1 Recommendations. 5

2 Our audit report. 7

3 Matters raised in the Audit Plan. 9

4 Items noted during the audit. 15

5 Public sector audit. 19

6 Changes to the Government Rules of Sourcing. 20

7 Helping you to understand your risks: procurement and contract management. 21

8 Useful publications. 26

Appendix 1: Status of previous recommendations. 29

Appendix 2: Corrected misstatements. 38

Appendix 3: Disclosures. 40

Key messages

3. We have completed the audit for the year ended 30 June 2019. This report sets out our findings from the audit and draws attention to areas where the City Council is doing well and where we have made recommendations for improvement.

Audit opinion

4. We issued an unmodified audit opinion dated 26 September 2019. We also issued an unmodified audit report on the City Council’s summary annual report on 24 October 2019.

Matters identified during the audit

The following significant issues were considered during the audit.

· Weathertightness claim – We are satisfied with the disclosure of a weather tightness claim as a contingent liability, rather than a provision, on the basis that there is no reliable estimate of the likely cost.

· Revalued assets – We were satisfied with the robustness of the valuations undertaken this year by the City Council. The classes of assets revalued were the roading assets and the land and buildings assets.

· Assets that are revalued but were not revalued this year – We reviewed, and are satisfied with, the robustness of management’s assessments as to why there is no material difference between the fair value and the carrying value of these assets.

· Mandatory performance measures – We are satisfied that the reporting of mandatory measures, as required by the Non-Financial Performance Rules 2013 (the rules), fairly represented the City Council’s performance and complied with the intentions of the rules. We were also satisfied with the explanations and commentary that were included in the Annual Report in relation to measures that had not been achieved.

· Deferred tax liability – As in its prior years’ financial statements, the City Council has not accounted for deferred tax liabilities in relation to its revalued port assets on the basis that the inner harbour assets are highly unlikely to be sold. However this is not an acceptable argument under the relevant accounting standard, PBE IAS 12 Income Taxes. The accounting standard requires all deferred tax liabilities to be recognised. We also note that the unrecognised deferred tax liability is close to our materiality thresholds (i.e. a possible impact on our audit opinion in future years).

5. We are pleased to note that there has been an improvement in the delivery of the draft Annual Report and the supporting work papers in the current year. There is still some room for improvement as there were issues (detail and timing of delivery) with the information provided.

There are six new recommendations raised in the management report (see section 4) but it is pleasing to note that the City Council continues to work on clearing previous recommendations.

Thank you

6. We would like to thank the Council, management and staff for their help and assistance throughout the audit.

9. Stephen Lucy

10. Appointed Auditor

11.

1 Recommendations

Our recommendations for improvement and their priority are based on our assessment of how far short current practice is from a standard that is appropriate for the size, nature, and complexity of your business. We use the following priority ratings for our recommended improvements.

Priority	Explanation
12. Urgent	*13.* Needs to be addressed urgently 14. These recommendations relate to a significant deficiency that exposes the City Council to significant risk or for any other reason need to be addressed without delay.
15. Necessary	16. Address at the earliest reasonable opportunity, generally within six months 17. These recommendations relate to deficiencies that need to be addressed to meet expected standards of best practice. These include any control weakness that could undermine the system of internal control.
18. Beneficial	*19.* Address, generally within six to 12 months 20. These recommendations relate to areas where the City Council is falling short of best practice. In our view it is beneficial for management to address these, provided the benefits outweigh the costs.

1.1 New recommendations

The following table summarises our recommendations and their priority.

Recommendation	Reference	Priority
Rate Assessment Notice compliance with legislation A formal review should be completed on the rates assessment notice to ensure all legislative requirements have been met.	4.1	Necessary
Financial statements should be prepared directly from the trial balance The financial statements should be prepared directly from the trial balance (i.e. adjustments should be made to the general ledger prior to the financial statements being produced).	4.2	Necessary
Revaluations The City Council should ensure that all assets in a class of assets are revalued at the same time and that all valuation reports are examined for accuracy.	4.3	Necessary
International travel approval All international travel should be pre-approved by the Chief Executive with information on what the benefit and purpose to Council is, ensuring all expenditure incurred for travel is Council expenditure.	4.4	Necessary
Approval of the Mayor’s expenditure Documentation setting out the Mayor’s expenditure provided to the Audit and Risk committee should be retained.	4.5	Necessary
Need for a QA over performance measure report The City Council should complete a monthly review of all the service requests relating to wastewater and water supply, to ensure the correct attendance and completed times are recorded.	4.6	Necessary

1.2 Status of previous recommendations

Set out below is a summary of the action taken against previous recommendations. Appendix 2 sets out the status of previous recommendations in detail.

Priority	Priority
Priority	Urgent	Necessary	Beneficial	Total
Open	-	7	5	12
Implemented or closed	-	2	-	2
Issues raised in 2019 interim management letter that we will follow-up as part of our 2019/20 audit		4	2	6
Total	-	13	7	20

2 Our audit report

2.1 We issued an unmodified audit report

We issued an unmodified audit report on 26 September 2019. This means we were satisfied that the financial statements and the non-financial performance information in the activity groups present fairly the City Council’s activity for the year and its financial position at the end of the year.

We also issued an unmodified audit report on the City Council’s summary annual report on 24 October 2019. This means that we were satisfied that the summary of the annual report fairly represents the information regarding the major matters dealt with in the annual report.

2.2 Uncorrected misstatements

The financial statements are free from material misstatements, including omissions. During the audit, we have discussed with management any misstatements that we found, other than those which were clearly trivial. The misstatements that have not been corrected are listed below along with management’s reasons for not adjusting these misstatements. We are satisfied that these misstatements are individually and collectively immaterial.

	Assets	Liabilities	Equity	Financial performance
	Dr (Cr)	Dr (Cr)	Dr (Cr)	Dr (Cr)
Tax on revaluations Tax expense Deferred tax liability		(1,152)		1,854 (702)
Total	0	(1,152)	0	1,152

Explanation of uncorrected misstatements:
To recognise the income tax/deferred tax relating to the port assets.

Management explanation for not correcting the misstatement:
It is highly unlikely that the Inner Harbour assets will ever be sold by Council. Consequently, there will be no asset or liability in the future.

Audit New Zealand comment on management explanation
The basis upon which the City Council is not accounting for deferred tax liability is not an acceptable argument under the relevant accounting standard, PBE IAS 12 Income Taxes. The accounting standard requires all deferred tax liabilities to be recognised. We also note that the deferred tax liability is close to our materiality thresholds (i.e. a possible impact on our audit opinion in future years).

2.3 Corrected misstatements

We also identified misstatements that were corrected by management. These corrected misstatements had the net effect of increasing expenditure by $430,174 and to decrease the associated asset by the same amount compared to the draft financial statements. The corrected misstatements are listed in Appendix 2.

2.4 Quality and timeliness of information provided for audit

Management needs to provide information for audit relating to the annual report of the City Council. This includes the draft annual report with supporting working papers. We provided a listing of information we required to management. This included the dates we required the information to be provided to us.

We are pleased to note that there has been an improvement in the delivery of the draft Annual Report and the supporting work papers in the current year. The staff were generally prompt and responses to audit queries were of good quality. There is still some room for improvement as there were issues (detail and timing of delivery) with the information provided, e.g. fixed assets revaluations and service requests KPIs.

3 Matters raised in the Audit Plan

21. In our Audit Plan of 8 April 2019, we identified the following matters as the main audit risks and issues:

22.

Audit risk/issue	Outcome
Weathertightness
In its 2017/18 financial statements, the City Council included disclosure on the weather-tightness claims in its contingent liability note and appropriate provision for these claims within the financial statements. The City Council is involved in litigation for weather-tightness issues on an ongoing basis. We are of the view that a liability should be recognised in the City Council’s financial statements where the estimated figure for the potential liability is known. We understand one of the litigation claims has been settled during the year.	We are satisfied with the disclosure of a weather tightness claim as a contingent liability, rather than a provision, on the basis that there is no reliable estimate of the likely cost. The Council has advised us, including a specific representation in the year end representation letter, that the reasons for the uncertainty include: · The plaintiff is still quantifying the claim at this point in time which is unusual for these cases. · There is significant uncertainty in determining the costs of these cases. Council’s experience in settling a recent weather tightness claim was that the final settlement considerably exceeded its best estimate as at 30 June 2018. Therefore the City Council has recognised a contingent liability based on the amount of the known claim at this time. We reviewed the documentation to support Council’s position and also discussed the claim with Council’s external legal representatives.
Fair value of property, plant and equipment
Infrastructural assets and other revalued assets need to be revalued with sufficient regularity to ensure that the carrying amount does not differ materially from fair value. The relevant accounting standard is PBE IPSAS 17, Property, Plant and Equipment. The City Council revalues its assets on a three yearly cycle with the exception of roading and library collection which is done annually. The last full revaluation for the City Council was 30 June 2017. As such, the only assets that City Council is due to revalue as at 30 June 2018 are the roading assets and library collection. In a non-revaluation year the City Council must consider whether there has been any significant movement in the fair value of the assets that are not being revalued. In addition, the value of work in progress (WIP) on projects that span an extended period of time needs to be assessed for impairment regularly over the period of each project. We expect that the City Council will have done a comprehensive analysis to determine whether there is a significant variance between the fair value as at 30 June 2019 and the carrying value that would trigger the need for the City Council to revalue or impair its assets.	Revalued assets – land and buildings, and roading We were satisfied with the robustness of the valuations undertaken this year by the City Council. For land and buildings ($550 million) and the roading assets ($247 million) we: · Reviewed how the City Council ensured completeness over the asset data; · Reviewed the City Council’s explanations of variances between the latest and prior years’ valuations for reasonableness; · Obtained a confirmation from the Independent valuers (Opus and Telfer Young); · Confirmed our understanding of the valuation methodology and key assumptions. We assessed these for compliance with PBE IPSAS 17 and evaluated their reasonableness based on our experience and knowledge of other roading, and land and building valuations; · Determined how the age and condition of the assets had been determined, and how this had been reflected in the determination of the remaining useful life of the assets and the valuation calculation for those assets; · Determined how unit rates for replacement costs have been determined for roading assets. We confirmed the reasonableness of a sample of unit costs by reference to recent capital works undertaken by the City Council; and · Reviewed how changes in the value of roading, and land and buildings are accounted for and disclosed in the financial statements. The roading valuation report noted some areas for the City Council to continue to improve its records however these were not material to the value of the assets and the revaluation amounts were appropriately included into the financial statements. Assets that are revalued but were not revalued this year We were satisfied with management’s assessment that a full revaluation was not required to be undertaken for the asset classes that were not revalued this year. We reviewed the robustness of management’s assessments as to why there is no material difference between the fair value and the carrying value of these assets, with a focus on the significant assets that were not revalued (3 waters). The City Council obtained advice from a 3rd party (AECOM) for the 3 waters assets. We sighted a report from AECOM who advised that, based on the Capital Goods Price Indices published by Statistics New Zealand, they assessed the indicative associated movement of 3 waters facilities infrastructure assets over the period since the last valuation as approximately 4.65% (being 1.6% for this year and 3.05% for the previous year).
Risk of management override of internal controls
There is an inherent risk in every organisation of fraud resulting from management override of internal controls. Management are in a unique position to perpetrate fraud because of their ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. Auditing standards require us to treat this as a risk on every audit.	To address the risk of material misstatement due to fraud to an acceptable level we completed the following audit work: · Tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements. · Reviewed accounting estimates (e.g. weather tightness provision) for biases and evaluated whether the circumstances producing the bias, if any, represent a risk of material misstatement due to fraud. · Maintained awareness of any significant transactions that were outside the normal course of business, or that otherwise appear to be unusual given our understanding of the City Council and its environment, and other information obtained during the audit. From our testing we did not identify any issues that indicated management override.
Systems for mandatory performance measures
The measures set out in the Non-financial Performance Measures Rules 2013 (the Rules) were reported on for the first time in the 2016 Annual Report. The Rules came into force under s261B of the Local Government Act 2002, and mandated a total of 19 measures across water supply, wastewater, storm water drainage, flood protection, and roading and footpath activities. We again assessed the systems in place to measure performance, and reviewed the reporting in the Annual Report, against the measures during our 2017/18 audit. We noted in this review that there had been improvements in this area when compared to the 2016/17 audit. We found that improvements could still be made in relation to the reporting against mandatory measures for complaints and median response times.	We continue to recommend improvements in this area. We: · followed up on the City Council’s progress in implementing the recommendations we made in last year’s management report; and · performed testing on the reported median response times to ensure appropriate reporting in the Annual Report. We found that some of the records included in the system were not complete. We found as we followed these through that the supporting job sheets had the required data but that this had either not been recorded in the system at all or had not been recorded accurately. We also reviewed any required additional commentary where necessary to ensure the City Council is reporting fairly on its performance during the year.
Capital projects
The City Council continues to undertake an intensive capital programme. Council has recognised the risk with the level of projects being undertaken and is taking positive actions to mitigate these. A project manager has been contracted to co-ordinate and oversee the capital programme. A process to regularly report on the progress of the capital projects has also been implemented.	The level of carry forwards from this year to next year has increased by $10.5 million over the prior year to $15.2 million. We have no significant concerns over the carry-forwards as there were some major projects that were delayed such as the National Aquarium expansion project and the Aquatic Centre Expansion project. The Aquarium delay is due to final designs still being a work in progress and the need for the City Council to secure external funding for the project. The Aquatic Centre delay is due to the current legal case around the project being taken by a number of residents against the City Council about whether there was adequate/appropriate consultation in making the decision to proceed with the project. The major projects included in the carry forward work do not affect the levels of service.
Investment property revaluation
Investment properties need to be revalued annually. The relevant accounting standard is PBE IPSAS 16, Investment Properties.	We assessed the revaluation as being fair value and that it had been appropriately included into the financial statements. We reviewed the valuation and assessed whether the underlying assumptions and data were consistent with the City Council’s management and knowledge of the assets.
Deferred tax liability
In its prior years’ financial statements, the City Council has not accounted for deferred tax liabilities in relation to its revalued port assets on the basis that the inner harbour assets are highly unlikely to be sold. This was noted in Council's Letter of Representation as an uncorrected misstatement of $1.278 million in 2017/18. The basis upon which the Council is not accounting for deferred tax liability is not an acceptable argument under the relevant accounting standard, PBE IAS 12 Income Taxes. The standard requires all deferred tax liabilities to be recognised. We note that the deferred tax liability calculations are getting closer to our materiality thresholds (i.e. a possible impact on our audit opinion).	We continue to recommend that the City Council comply with Generally Accepted Accounting Practice. As noted in section 2.2, this remains an outstanding issue in the current year with the deferred tax liability being understated by $1.152 million.
Reporting of bribery and corruption
Parliament’s Finance and Expenditure Committee has expressed an interest in understanding whether the public sector has effective corruption prevention and detection processes in place.	We assessed the controls the City Council has in place to reduce the risk of wrongdoing – particularly bribery and corruption. We found that City Council's policies and procedures in relation to bribery and corruption have elements of good practice but on balance, for an organisation the size of the City Council, some improvements are required. We recommend that: · the City Council carry out an assessment to identify areas that are at risk for bribery and corruption. Mitigating actions should be put in place to ensure the risk is lowered. · the City Council ensure the fraud policy is included in the induction pack for new employees. · the fraud policy be expanded to be explicit about reporting requirements in relation to attempted bribery and corruption, and should also include who the members of the Fraud Management Group are. · the mechanism in ensuring controls in relation to fraud is adequate be expanded so that it is specific to bribery and corruption. We would expect at least annual reporting that would consider mechanisms indicating the adequacy of controls to be presented to those charged with governance (Council or the Audit and Risk Committee), including consideration by senior management of any changes required.

Audit risk/issue

Outcome

Weathertightness

In its 2017/18 financial statements, the City Council included disclosure on the weather-tightness claims in its contingent liability note and appropriate provision for these claims within the financial statements.

The City Council is involved in litigation for weather-tightness issues on an ongoing basis. We are of the view that a liability should be recognised in the City Council’s financial statements where the estimated figure for the potential liability is known.

We understand one of the litigation claims has been settled during the year.

We are satisfied with the disclosure of a weather tightness claim as a contingent liability, rather than a provision, on the basis that there is no reliable estimate of the likely cost.

The Council has advised us, including a specific representation in the year end representation letter, that the reasons for the uncertainty include:

· The plaintiff is still quantifying the claim at this point in time which is unusual for these cases.

· There is significant uncertainty in determining the costs of these cases. Council’s experience in settling a recent weather tightness claim was that the final settlement considerably exceeded its best estimate as at 30 June 2018.

Therefore the City Council has recognised a contingent liability based on the amount of the known claim at this time.

We reviewed the documentation to support Council’s position and also discussed the claim with Council’s external legal representatives.

Fair value of property, plant and equipment

Infrastructural assets and other revalued assets need to be revalued with sufficient regularity to ensure that the carrying amount does not differ materially from fair value. The relevant accounting standard is PBE IPSAS 17, Property, Plant and Equipment.

The City Council revalues its assets on a three yearly cycle with the exception of roading and library collection which is done annually. The last full revaluation for the City Council was 30 June 2017. As such, the only assets that City Council is due to revalue as at 30 June 2018 are the roading assets and library collection.

In a non-revaluation year the City Council must consider whether there has been any significant movement in the fair value of the assets that are not being revalued.

In addition, the value of work in progress (WIP) on projects that span an extended period of time needs to be assessed for impairment regularly over the period of each project.

We expect that the City Council will have done a comprehensive analysis to determine whether there is a significant variance between the fair value as at 30 June 2019 and the carrying value that would trigger the need for the City Council to revalue or impair its assets.

Revalued assets – land and buildings, and roading

We were satisfied with the robustness of the valuations undertaken this year by the City Council.

For land and buildings ($550 million) and the roading assets ($247 million) we:

· Reviewed how the City Council ensured completeness over the asset data;

· Reviewed the City Council’s explanations of variances between the latest and prior years’ valuations for reasonableness;

· Obtained a confirmation from the Independent valuers (Opus and Telfer Young);

· Confirmed our understanding of the valuation methodology and key assumptions. We assessed these for compliance with PBE IPSAS 17 and evaluated their reasonableness based on our experience and knowledge of other roading, and land and building valuations;

· Determined how the age and condition of the assets had been determined, and how this had been reflected in the determination of the remaining useful life of the assets and the valuation calculation for those assets;

· Determined how unit rates for replacement costs have been determined for roading assets. We confirmed the reasonableness of a sample of unit costs by reference to recent capital works undertaken by the City Council; and

· Reviewed how changes in the value of roading, and land and buildings are accounted for and disclosed in the financial statements.

The roading valuation report noted some areas for the City Council to continue to improve its records however these were not material to the value of the assets and the revaluation amounts were appropriately included into the financial statements.

Assets that are revalued but were not revalued this year

We were satisfied with management’s assessment that a full revaluation was not required to be undertaken for the asset classes that were not revalued this year.

We reviewed the robustness of management’s assessments as to why there is no material difference between the fair value and the carrying value of these assets, with a focus on the significant assets that were not revalued (3 waters). The City Council obtained advice from a 3rd party (AECOM) for the 3 waters assets. We sighted a report from AECOM who advised that, based on the Capital Goods Price Indices published by Statistics New Zealand, they assessed the indicative associated movement of 3 waters facilities infrastructure assets over the period since the last valuation as approximately 4.65% (being 1.6% for this year and 3.05% for the previous year).

Risk of management override of internal controls

There is an inherent risk in every organisation of fraud resulting from management override of internal controls.

Management are in a unique position to perpetrate fraud because of their ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively.

Auditing standards require us to treat this as a risk on every audit.

To address the risk of material misstatement due to fraud to an acceptable level we completed the following audit work:

· Tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements.

· Reviewed accounting estimates (e.g. weather tightness provision) for biases and evaluated whether the circumstances producing the bias, if any, represent a risk of material misstatement due to fraud.

· Maintained awareness of any significant transactions that were outside the normal course of business, or that otherwise appear to be unusual given our understanding of the City Council and its environment, and other information obtained during the audit.

From our testing we did not identify any issues that indicated management override.

Systems for mandatory performance measures

The measures set out in the Non-financial Performance Measures Rules 2013 (the Rules) were reported on for the first time in the 2016 Annual Report. The Rules came into force under s261B of the Local Government Act 2002, and mandated a total of 19 measures across water supply, wastewater, storm water drainage, flood protection, and roading and footpath activities.

We again assessed the systems in place to measure performance, and reviewed the reporting in the Annual Report, against the measures during our 2017/18 audit. We noted in this review that there had been improvements in this area when compared to the 2016/17 audit.

We found that improvements could still be made in relation to the reporting against mandatory measures for complaints and median response times.

We continue to recommend improvements in this area. We:

· followed up on the City Council’s progress in implementing the recommendations we made in last year’s management report; and

· performed testing on the reported median response times to ensure appropriate reporting in the Annual Report.

We found that some of the records included in the system were not complete. We found as we followed these through that the supporting job sheets had the required data but that this had either not been recorded in the system at all or had not been recorded accurately.

We also reviewed any required additional commentary where necessary to ensure the City Council is reporting fairly on its performance during the year.

Capital projects

The City Council continues to undertake an intensive capital programme.

Council has recognised the risk with the level of projects being undertaken and is taking positive actions to mitigate these. A project manager has been contracted to co-ordinate and oversee the capital programme. A process to regularly report on the progress of the capital projects has also been implemented.

The level of carry forwards from this year to next year has increased by $10.5 million over the prior year to $15.2 million.

We have no significant concerns over the carry-forwards as there were some major projects that were delayed such as the National Aquarium expansion project and the Aquatic Centre Expansion project. The Aquarium delay is due to final designs still being a work in progress and the need for the City Council to secure external funding for the project. The Aquatic Centre delay is due to the current legal case around the project being taken by a number of residents against the City Council about whether there was adequate/appropriate consultation in making the decision to proceed with the project.

The major projects included in the carry forward work do not affect the levels of service.

Investment property revaluation

Investment properties need to be revalued annually.

The relevant accounting standard is PBE IPSAS 16, Investment Properties.

We assessed the revaluation as being fair value and that it had been appropriately included into the financial statements.

We reviewed the valuation and assessed whether the underlying assumptions and data were consistent with the City Council’s management and knowledge of the assets.

Deferred tax liability

In its prior years’ financial statements, the City Council has not accounted for deferred tax liabilities in relation to its revalued port assets on the basis that the inner harbour assets are highly unlikely to be sold. This was noted in Council's Letter of Representation as an uncorrected misstatement of $1.278 million in 2017/18.

The basis upon which the Council is not accounting for deferred tax liability is not an acceptable argument under the relevant accounting standard, PBE IAS 12 Income Taxes. The standard requires all deferred tax liabilities to be recognised. We note that the deferred tax liability calculations are getting closer to our materiality thresholds (i.e. a possible impact on our audit opinion).

We continue to recommend that the City Council comply with Generally Accepted Accounting Practice.

As noted in section 2.2, this remains an outstanding issue in the current year with the deferred tax liability being understated by $1.152 million.

Reporting of bribery and corruption

Parliament’s Finance and Expenditure Committee has expressed an interest in understanding whether the public sector has effective corruption prevention and detection processes in place.

We assessed the controls the City Council has in place to reduce the risk of wrongdoing – particularly bribery and corruption.

We found that City Council's policies and procedures in relation to bribery and corruption have elements of good practice but on balance, for an organisation the size of the City Council, some improvements are required. We recommend that:

· the City Council carry out an assessment to identify areas that are at risk for bribery and corruption. Mitigating actions should be put in place to ensure the risk is lowered.

· the City Council ensure the fraud policy is included in the induction pack for new employees.

· the fraud policy be expanded to be explicit about reporting requirements in relation to attempted bribery and corruption, and should also include who the members of the Fraud Management Group are.

· the mechanism in ensuring controls in relation to fraud is adequate be expanded so that it is specific to bribery and corruption. We would expect at least annual reporting that would consider mechanisms indicating the adequacy of controls to be presented to those charged with governance (Council or the Audit and Risk Committee), including consideration by senior management of any changes required.

23.

4 Items noted during our final audit work

24.The following are the items that we noted during our final audit work that need to be brought to your attention.

25.Matters noted in our interim audit work are set out in our report dated 22 August 2019.

4.1 Rate Assessment Notice compliance with legislation

We recommend that a formal review to be completed on the rates assessment notice to ensure all legislative requirements have been met.

We reviewed the Council's rates assessment notice and compared it against the legislative provisions included in the Local Government Rating Act. From this review we noted the following areas were not complying with the Act:

· The address of the Local Authority is not included (we did note that the Private Bag address was included)

· The factor for the targeted rate did not state it was based on a SUIP, it states Fixed $ Charge (We note on the back where it describes each targeted rate it does state that it is based on SUIP)

· The penalty regime included on the rates assessment notice did not match what was in the rates resolution.

If the legislative provisions for rates are not met the worst case scenario is that the rates are not legally enforceable. With rates being the main source of income for Council, this is an area where if the rates do not meet all legislative requirements they may not be collectable.

Management comment

Audit was conducted on the 2018/19 rates template. The 2019/20 rates template complies with s.45 of the Local Government (Rating) Act and includes the following features:

· Local Authority physical address is located on page 2 of the rates assessment.

· As per s.41(1)(i) information on the factors used to calculate the amount of the liability of a rating unit in respect of each targeted rate is contained on pages 1 and 2 of the rates assessment 2019/20. For the purpose of ratepayer clarity, this information was spread over two pages and provides a detailed breakdown of targeted rates (refer to page 2, section 2 – Targeted Rates) for further information.

· Whilst the wording and layout of the penalties information is not identical to the wording and layout of the Rates Resolution 2019/20, the application of penalties described in the rates assessment 2019/20 is consistent with the application of penalties within the Rates Resolution 2019/20.

4.2 Financial statements should be prepared directly from the trial balance

We recommend that the financial statements should be prepared directly from the trial balance (i.e. adjustments should be made to the general ledger prior to the financial statements being produced).

We were not provided with a clear reconciliation between the general ledger trial balance and the financial statements. When we carried out our own reconciliation of the trial balance to the financial statements, it was unclear how a number of general ledger codes had been mapped to the financial statements.

Manual adjustments should be made rarely outside of the trial balance and if they are made they should be clearly documented.

Management comment

As agreed with Megan, this paragraph is to be removed.

4.3 Revaluations

We recommend that the City Council ensure that all assets in a class of assets are revalued at the same time and that all valuation reports are examined for accuracy.

During our audit of the revaluation of the land and buildings and the investment properties we noted several issues.

With the revaluation of the land and buildings we noted that:

· there were assets that had not been revalued from that class of assets (these were not material to the overall result);

· some assets had been revalued and included in the financial statements that were not in this class of assets but instead belonged in the drainage class (these were corrected before the final version of the annual report);

· some assets were revalued that should not have been revalued as they were non-current assets held for sale and are not subject to revaluation (these were corrected before the final version of the annual report); and

· some of the revalued assets were not correctly mapped into the financial records.

For the revaluation of the investment properties the City Council received two different revaluation figures. While the right version was included in the annual report the City Council had not initially questioned these differences.

Overall the City Council needs to ensure that the revaluation reports from the valuers are examined to ensure that they are happy that the results of the valuation include all appropriate items and that the movements in the values of the assets are reasonable.

Management comment

We acknowledge the issues you have raised above. The revaluation report received from the valuer was later than expected, resulting in a very short time for finance to update the fixed asset register with the revalued figures and update the financial statements. As a result of the lateness of the report and the requirement for us to provide audit with a finalised draft set of accounts we were under considerable pressure to get this done and reconciled. Please see below responses to your bullet points above:

1. We acknowledge there were some assets that were not revalued that the valuer did miss, even though we had provided this information to them. However due to the time restraints as advised above and the relevant small value of these, it was decided not to have these assets revalued.

2. Assets revalued in the drainage class - as we are required to assess annually those classes of assets held at fair value, the 2018/19 year required us to revalue our Operational Assets (except Plant and Equipment), and Council’s Restricted Assets. This was outside of our normal three yearly revaluation cycle. There were a small number of above ground assets that were revalued in the drainage class that was included by the valuers (as they would have normally done as part of the three yearly cycle). We will ensure in future if we are required to do an off-cycle revaluation that those assets that are not affected are not included in the valuers report.

3. Assets held for sale were included in the re-valuation, and we do acknowledge this was an oversight by us. As soon as this error was realised, audit were advised immediately whilst the audit team was onsite.

4. Noted and agreed – the valuer’s report had some minor classification errors that were not picked up at the time, but we will ensure this is checked against our records forward.

4.4 International travel approval

We recommend all international travel is pre-approved by the Chief Executive with information on what the benefit and purpose to Council is, to ensure that all expenditure incurred is appropriate.

We found one occurrence of international travel not being approved in line with the sensitive expenditure policy.

Clause 13.2 of the Sensitive Expenditure policy states that “International travel undertaken for the purposes of training and personal development of employees (other than the Chief Executive), must be approved by the Chief Executive with the overall cost approved through the annual or long-term plan process”.

Clause 13.3 of the Sensitive Expenditure policy states that “Any person travelling internationally on Council business must provide a report to the Mayor or Chief Executive on their return detailing the benefits of the trip”.

We could not find any documentation that the travel was pre-approved by the Chief Executive or that there was a report back to the Chief Executive regarding the benefits of the trip to the City Council. This made it difficult to assess if the expenditure had a benefit to the City Council and was appropriate City Council expenditure.

As with all other expenditure, it is important that documentation is kept as proof that the appropriate approval process was followed.

We note that the travel has since been retrospectively approved by the Chief Executive.

Management comment

Noted and agreed – we will continue to educate all staff as part of our finance training sessions to ensure compliance with the Sensitive Expenditure Policy, noting in particular international travel pre-approval requirement.

Please note that from September 2019 we have entered into a preferred supplier agreement for travel – being Orbit. All international travel is booked through Orbit and is set up so that the booking can only be done if authorised by the CE, therefore ensuring international travel is compliant with policy.

4.5 Approval of Mayor’s expenditure

We recommend that the documentation setting out the Mayor’s expenditure provided to the Audit and Risk committee is retained.

This recommendation supplements our recommendation in the interim management report that reporting of the Mayor and Chief Executive’s sensitive expenditure be provided more frequently to the Audit and Risk Committee during the year (as opposed to annually).

We understand that a report outlining the Mayor’s expenditure was presented to the Audit and Risk committee at its June 2019 meeting. However we have been unable to obtain a copy of that report, which we would expect to include a listing of the expenditure that the Committee reviewed.

Management comment

The report that went to the June 2019 meeting was the Sensitive Expenditure report done by our internal auditors, Crowe Horwarth, for the period July 2018 to March 2019 – we did provide audit with a copy of this.

We agree that the reporting of the Mayor’s and CE’s sensitive expenditure is to be provided more frequently than annually, and have now set up the report to be presented on a quarterly basis.

4.6 Need for a Quality assurance process over performance measure report

We recommend that the City Council complete a monthly review of all the service requests relating to wastewater and water supply, to ensure the correct attendance and completed times are recorded.

During our testing and review of the performance measures we found that there was no quality assurance over the reports generated that calculate the result of the attended to and resolution time performance measures.

We found the following issues:

· Both for wastewater and water supply the median formulas were not encompassing the total population. For wastewater this did not have a material impact as only a couple of service requests were not included but for water supply there were 1,000 service requests unintentionally excluded from the median formula;

· There was no review over the data that the report was pulling. Due to this we found attended and resolution times were not coming through in the report. We worked with the City Council to update missing data (where possible) with the results from the hard copy of the service details; and

· Instances where the completion time was recorded as being the exact same time as the service request being received, when the supporting documentation disagreed with this.

Completing a quality review each month of the service requests, will ensure that any anomalies are picked up and investigated to ensure the City Council is reporting accurately on its performance measures.

Management comment

The following actions will be undertaken to address this:

· Reports are now checked for formulas and data range to ensure resolution times are captured.

· The data checking process was based on follow up of prior month only and now has been changed to check data from the start of the year to current month. This is occurring monthly and quarterly.

· Some afterhours calls were being advised as being at the time the afterhours operator finalised the advice to us, not the time the issue was reported to them. This has been followed up with the afterhours call centre.

· The completion time can be the same time as the Service Request being received where the call has been closed out due to a caller logging the same issue multiple times. The system cannot easily identify duplicates at entry point and callers may not advise they have logged earlier, e.g. dirty water can be logged with the depot line, and also be logged 20 mins later with customer service. Process changes are progressing on improving duplicate request handling.

· The Service Request system and processes are being reviewed as part of the Acella project.

5
Public sector audit

The City Council is accountable to their local community and to the public for its use of public resources. Everyone who pays taxes or rates has a right to know that the money is being spent wisely and in the way the City Council said it would be spent.

As such, public sector audits have a broader scope than private sector audits. As part of our audit, we have considered if the City Council has fairly reflected the results of its activities in its financial statements and activity groups.

We also consider if there is any indication of issues relevant to the audit with:

· compliance with its statutory obligations that are relevant to the annual report;

· the City Council carrying out its activities effectively and efficiently;

· the City Council incurring waste as a result of any act or failure to act by a public entity;

· any sign or appearance of a lack of probity as a result of any act or omission, either by the City Council or by one or more of its Councillors, office holders, or employees; and

· any sign or appearance of a lack of financial prudence as a result of any act or omission by a public entity or by one or more of its Councillors, office holders, or employees.

There were no items noted during our audit that we need to bring to your attention.

6 Changes to the Government Rules of Sourcing

As from 1 October 2019, the new Government Procurement Rules (the Rules) came into force. The Rules are a revision of the previous third edition of the Government Rules of Sourcing and were approved by Cabinet in May. Much of the content is consistent with the third edition with some re‑numbering of Rules. The new Rules and a table of rule changes can be found in this link Table of Rule Changes. A few important changes are noted below.

Whilst these Rules are not mandatory for the City Council, the Government encourages the wider public sector, including all Regional Councils and Territorial Authorities, to apply the Rules as good practice.

Government Procurement Charter

The new rules include a Charter for the first time. The Charter sets out the Government’s expectations of how agencies should conduct their procurement activity to achieve public value. The Charter applies even when the Rules do not. The City Council will need to demonstrate how it is meeting these expectations in its procurement activity.

Broader outcomes

The new Rule 16 outlines a number of secondary benefits that it is seeking from the way in which procurement is conducted in the public sector. These secondary benefits relating to the costs and benefits to society, the environment and the economy are required to be considered (where appropriate) along with the whole of life costs of the procurement.

To maximise the effects of these priorities, the Government will be designating some contracts or sectors where the outcomes must be prioritised. These will be published at www.procurement.govt.nz.

Procurement planning

A new Rule 15 includes guidance and expectations related to procurement planning. Rule 22 has been amended so that significant procurement plans must be submitted to the Ministry of Business, Innovation, and Employment for review on request

Threshold changes

The thresholds for when the Rules apply (contained in Rules 6 and 7) have been taken out of the Rules document and will now be found at www.procurement.govt.nz. We understand this is to facilitate changes in the thresholds as necessary, without a full change to the GPS. The immediate change is to the threshold for new construction works, which reduces from $10 million in the current edition to $9 million.

We encourage procurement staff to understand the changes, and consider their implementation by considering any changes that would be required to the City Council’s procurement policies, procedures and practices.

7 Helping you to understand your risks: procurement and contract management

Why it matters

26.Procurement and contract management carry high risk in terms of costs, public and political profiles, reputation, and performance. Delivering services well depends on doing procurement and contract management well.

Understanding your risks

27.We have used our sector expertise, and recognised best practice, to develop a standardised risk assessment tool to analyse your local authority’s procurement and contract management risks. We have included the sector context by displaying your position compared to other entities in the sector^{^[1]}.

What do we mean by procurement and contract management?

28.Procurement is the overarching term used to describe all the business processes associated with purchasing goods and services. Procurement is much more than “buying something” – it includes all the processes involved in acquiring goods and services from a third party. Effective contract management helps ensure goods and services are delivered well, to specification, and in full. Both go together to ensure public value is realised.

The Auditor-General’s work programme – Procurement

29.The Office of the Auditor-General is part way through its work programme on Procurement. Earlier this year performance auditors visited 22 local authorities in the Waikato, Bay of Plenty, Canterbury, and Wellington Regions to talk about how local authorities in those regions carry out procurement. This audit identified some challenges that local authorities need to respond to so that procurement can continue to support the delivery of infrastructure and services to local areas. This will be particularly important with the significant growth that is forecast in many areas.

30.The Office of the Auditor-General plans to publish its findings by the end of 2019. It will be important for each local authority to consider the Auditor-General’s findings in order to determine priorities for further improving or developing the approach to procurement.

How do we assess risk?

31.Our assessment tool considers risk from two angles:

· The risk in the environment. This is the inherent risk. It is influenced by complexity, instability, change, delivery of critical services, interdependencies, and reliance on third parties. Size, strategic direction, and the nature of services are also important.

· The effectiveness of management systems and processes. This is control risk and covers the main aspects of good practice that we would expect to be applied. Effective management systems and processes mitigate aspects of inherent risk and reduce the risk of something going wrong.

The risk assessment process we have undertaken is based on the design of the controls only. We have not performed testing to ensure the controls are operating effectively.

What are the assessments telling us?

Procurement is particularly important for local authorities, in which investment in developing, renewing and maintaining infrastructure is typically outsourced to private sector providers. In additional, many local authorities have entered into alliances, partnerships or other collaborative arrangements to support service delivery. With continued pressure on rates and other sources of funding, the need to achieve good value for money remains an important consideration. However, many local authorities have told us that they aim to use their spend to deliver other benefits, such as supporting the local economy.

Common areas of risk across local government

32.In the graph below we have summed the risk rating we assessed for each of ten procurement controls across all the local authorities we audit.

33.

34.Two areas stand out across local government as priorities for improvement:

· Ensuring there is an appropriate information management system so that staff can analyse procurement spend, plan and manage procurement processes, and keep good records;

· Being open to continuous improvement through reviewing procurement practices and capability.

35.The graph below shows a similar analysis for contract management controls. Overall this indicates that contract management controls are weaker than those covering the purchasing stage of the procurement cycle. We encourage all local authorities to consider whether their approach to contract management is as clearly defined, well-resourced and implemented as it needs to be.

36.

37. Three aspects of contract management might provide a focus for this consideration:

· Assessing whether there is a strategic approach to supplier relationship management;

· Making sure there are good, up to date policies, guidance and procedures in place to help staff manage contracts effectively; and

· Ensuring there is an appropriate contract management system in place.

38.

Each grey dot in the graphs below represents a local authority mapped according to our assessment of its inherent and control risk.

39. Local authorities uses a range of procurement approaches and have a significant number of contracts for a diverse range of goods and services. Levels of inherent risk vary widely depending on the size of local authorities, as well as the extent of and approach to outsourcing.

40. Napier City Council has medium levels of inherent risk for both procurement and contract management.

41. There is little the City Council can do to reduce its level of inherent risk. However, it can strengthen its systems and processes to bring down the overall level of risk. In our view the controls for procurement and contract management are at a medium level, with procurement being stronger than contract management. In our view the City Council could strengthen its contract management systems and processes, to bring the overall level of risk down to low risk.

Our view on priorities for strengthening the City Council’s control over procurement and contract management

42. We expect up to date policy, procedures and guidance to form a sound basis for controlling contract management. Policy needs to be regularly updated to make sure it continues to comply with the good practice promoted by the Government Procurement Rules.

43. In our view, the area we believe would make the most difference to strengthening the City Council’s controls would be making sure that there a structured and suitably formal approach to contract completion and transition. This might involve:

· Having formal close out process in place.

· Putting together an end of contract strategy, either in total, or for key contracts.

· Using transition plans where service delivery needs to continue.

· Having clear and well defined handover / commissioning processes for outsourced projects.

Continuing focus on risk for 2019/20

44. As part of our 2019/20 audit we will consider procurement-related risks during our audit planning, based on our knowledge of your local authority, your pattern of spend and the range of contracts you have in place.

45.

8 Useful publications

Based on our knowledge of the City Council, we have included some publications that the Council and management may find useful.

Description	Where to find it
Public accountability: A matter of trust and confidence
Public accountability is a cornerstone of our system of government. Knowledge on what the public is getting for their taxes and rates, how well that is being spent, and the integrity of the overall system are the basics of public accountability. This discussion paper is the first phase in a programme of work about the future of public accountability. The next phase of our research on public accountability will build on what we have learned here and focus on how well the current public accountability system is positioned to respond to the challenges and opportunities the public sector faces. This research will inform what the Auditor-General’s Office does to improve trust and promote value in the public sector.	On OAG’s website under 2019 publications. Link: public-accountability
Post implementation reviews
The OAG has recently completed a review of Auckland Council’s post implementation review process. While many aspects of the report are specific to Auckland Council, it documents the process that Auckland Council uses, and includes a post implementation review checklist.	On the OAG’s website under publications. Link: Post‑implementation review process
Inquiry into Waikato District Health Board’s procurement of services from HealthTap
Findings of the inquiry into the decision of Waikato District Health Board in 2015, to enter into a contract with the United States-based company HealthTap Inc to provide "virtual care" services through an online service. There are important lessons about a good procurement process that can be learned and applied to other procurements in the public sector – in particular, when seeking to be innovative. Innovation in the public sector is important. It can lead to new and better services for the public and more efficient ways to deliver current services. However, when public organisations seek to innovate, it is all the more important to respect the disciplines of good procurement. Innovative service delivery and good procurement practice are not mutually exclusive.	On OAG’s website under 2019 publications. Link: inquiry-waikato-dhb
Inquiry into procurement of work by Westland District Council at Franz Josef
This report concerns a decision of the Westland District Council to carry out work at Franz Josef to protect the town's wastewater treatment plant from flooding. The work was carried out on an urgent basis and resulted in the construction of a new 700-metres-long stopbank on the bank of the Waiho River. This report identifies numerous examples of poor decision-making and poor procurement practice. They include the lack of any proper risk analysis or consideration of alternative options, the failure to seek expert advice on either the immediacy of the flood risk or whether building a stopbank was the right response, an inadequate planning and procurement process for a project of this type and scope, an apparent disregard for legislated decision-making requirements, and a failure to consult those affected by the work until the work was already under way.	On OAG’s website under 2019 publications. Link: westland-dc-procurement
Water reports
A number of reports on water have been released:	On OAG’s website:
· Crown investment in freshwater clean-up The OAG examined how the Ministry for the Environment administered four Crown freshwater clean-up funds for improving lakes, rivers, streams, and wetlands. Our primary objective was to assess whether Crown funding was being used effectively to improve freshwater quality.	Link: freshwater-clean-up
· Observations on Waikato River Authority’s freshwater restoration operations The OAG looked at the operational approach of the Waikato River Authority to restoring and protecting the Waikato and Waipā Rivers for additional insight into how different entities manage Crown funds.	Link: wra-freshwater-restoration
· Managing freshwater quality: Challenges and opportunities The OAG published a report on how effectively Waikato Regional Council, Taranaki Regional Council, Horizons Regional Council, and Environment Southland managed the effects of land use on freshwater quality in their regions. We found that the effectiveness of the four regional councils' approaches was variable. In this report, we assess the progress they have made since 2011	Link: freshwater-quality
Client updates
In March 2019, we hosted a series of client updates. The theme was “Improving trust and confidence in the public sector”. These included speakers from Audit New Zealand and external organisations.	On our website under publications and resources. Link: Client updates
Good practice
The OAG’s website has been updated to make it easier to find good practice guidance. This includes resources on: · audit committees; · conflicts of interest; · discouraging fraud; · good governance; · service performance reporting; · procurement; · sensitive expenditure; and · severance payments	On the OAG’s website under good practice. Link: Good practice
Reporting fraud
The OAG have released data from 2012‑2018 on fraud in public entities. This includes how the fraud was detected, the type of fraud and the methods and reasons for the fraud. The graphs show the high‑level sector, and this can be broken down further into sub‑sectors by opening the spreadsheets available.	On the OAG’s website under data. Link: Reporting Fraud

Appendix 1: Status of previous recommendations

Open recommendations

Recommendation	First raised	Status
Necessary
Reporting against Mandatory measures for complaints and median response times
That the City Council establish a process for the centralised review of the results reported in the quarterly report to ensure their accuracy and completeness.	2016/17 Letter dated 14 June 2017	NO PROGRESS We have not seen verifiable evidence of a centralised review.
That the following improvements be implemented: · Continue to review the effectiveness of the current reporting and systems to accurately capture the underlying data and ensure the data is complete. · Continue to perform regular (e.g. weekly or even daily) quality reviews of data entered in relation to complaints, service requests and response times to ensure it is complete, accurate and supportable. · Data fields should include information to clearly show why data has been amended or re-categorised with a clear audit trail of any changes made and who authorised these. · Continue to review DIA guidance to ensure that the data being captured and reported meets the mandatory reporting requirements. For our detailed recommendations on this matter, please refer to our management report dated 26 October 2016.	2015/16 Letter dated 26 October 2016
Improvements in the Expenditure System Controls
That: · one up approval to be gained for all expenditure; · expenses are coded into the appropriate financial year; · a review of a random sample of smaller purchases against supporting documentation as part of the management accountant's review would reduce the risk in this area; and · Development of a system report which will identify where the same staff member has raised, approved and receipted the goods and services. This could be run as part of each creditors pay run and then included in the creditor payment review procedures conducted by senior finance staff to gain assurance that the expenditure is appropriate and valid.	2016/17 Letter dated 8 December 2017 Prior to 2015/16	PENDING The majority of expenditure is now being processed via Approval Plus. The Procurement Advisor is able to still manually raise POs and approve invoices still. The reason for this is the inability of Approval Plus to link to the stock system. This is being actively investigated by the Payroll/Accounts Payable Coordinator who is looking for ways to integrate the ordering of stock to the general Approval Plus procedure. We will follow up the progress of this during our next interim audit.
Log on accounts with no password expiry
That the current review of user accounts, identifies and ensures that log on accounts comply with Council password rules. We recommend that further verification work is continued on the validity of 'Active Directory' accounts.	2015/16 Letter dated 26 October 2016 30 June 2019	IN PROGRESS We reviewed a current Active Directory (AD) listing and found there are no User network log on accounts that have passwords that don’t expire. However, there are many generic accounts that have no password expiry and are used for administrative tasks such as room bookings, reception, library and ‘Health Mail Boxes’. Additionally we noted that many of these generic accounts have never been used. We discussed the status of AD accounts as shown in the listing and understand that further verification work is to be performed to confirm their validity.
Water by meter rates - improvement to systems
That an independent post input review of rates per cubic meter and property classification inputted into the system be carried out, evidenced with a dated signature.	2016/17 Letter dated 8 December 2017	NO PROGRESS The Rates Coordinator has advised that that there is no post input review, however, water by meter readings are a direct upload into the system via a csv file. There is also no input review of the csv file that is uploaded.
Recognition of Deferred Tax Liability – Wharf Assets
That the City Council recognise its deferred tax liability with respect to its wharves.	Prior to 2015/16	NO PROGRESS See sections 2.2 and 3. The deferred tax liability for 2018/19 has not been accounted for. This was noted as uncorrected misstatement in the Letter of Representation and in this Management Report.
High Annual Leave Balances
That management continue to encourage those with high annual leave balances to take leave.	Prior to 2015/16	IN PROGRESS 144 staff had annual leave greater than 6 weeks (2018: 185 staff)
McLean Park Sports Ground Hire Income
That a regular audit process be implemented over gate takings/ticket sales at the McLean Park Sports ground.	Prior to 2015/16	NO PROGRESS No changes noted from last year.
Beneficial
Guidelines for Sensitive and Discretionary Expenditure Policy review
That the ‘Policy Guidelines for Sensitive and Discretionary Expenditure’ be reviewed in the next financial year to ensure that the policy remains up-to-date and meets the City Council’s needs.	Prior to 2015/16	IN PROGRESS The Sensitive Expenditure policy was reviewed on 6 November 2018. We disagree with the guidance in Part 12 of the policy covering Airline loyalty schemes, which states that unless a cost is incurred to the Council then any loyalty rewards gained via travel are the property of the individual employee. Our expectation is that, to the extent that it is practically possible within the requirements of the law, that: · loyalty rewards accruing to staff carrying out their official duties are treated as the property of the City Council; · as far as practicable, those loyalty rewards should be applied only for the benefit of the City Council. · staff should keep a record of loyalty rewards accrued on City Council business (and those rewards applied for the benefit of the City Council), and regularly supply the City Council with a report of this record – e.g. six monthly. We also recommend that the policy be enhanced for the following matters: · Tipping: The City Council should be clear that it will not meet the costs of tipping by staff while they are on City Council business in New Zealand, and will pay for tips during international travel only in places where tipping is local practice (using a principle of moderate and conservative expenditure and that tipping should not in any circumstances be extravagant). Cash advances: The policy is silent on cash advances. Our interpretation of that silence is that cash advances are not allowed under any circumstances. It would be helpful for City Council staff to have that expectation clearly set out in the policy. On the other hand, if cash advances are allowed, we would expect clear guidance on their use in line with good practice.
Procurement and Contract Management
We have made the following recommendations: · Complete a register of all procurement (non purchase order) contracts to ensure the City Council has a complete view of its contracted obligations. · Complete the roll-out of the electronic purchase order system as a means to facilitate purchase order analysis and improve the efficiency of processing purchase orders. · Provide procurement training and development for those involved in significant procurement activity – both sourcing and managing contracts – particularly around probity and contract risk. · Enhance the documentation to support considerations of conflict of interest in procurement. · Consider whether the procurement expertise available in the design office can be better utilised in assisting those business units in Council with little specialist knowledge of procurement. · Consider using a wider range of procurement approaches (including evaluation methodologies) to fit the goods/services being procured. · Provide additional guidance to staff involved with procurement about the documentation that needs to be retained to support the procurement (including contract management) activity. · Consider development of standard template procurement documentation to assist in consistency across the procuring business units. · Consider the security of key procurement and contract documentation in the case of fire or natural disaster. · Clarify whether the clause in the delegations policy that requires “all contracts entered into by the Chief Executive or any Manager that exceeds half of the delegated authority must be reported to the following ordinary meeting of Council” is being complied with (and clarify the definition of Manager for the purposes of application of the policy).	2010/11	IN PROGRESS The policy which is to cover these recommendations is still in draft. We will follow this up during our next interim audit by utilising a member of our specialist assurance audit team with expertise in the area of procurement and contract management.
Conflict of interest risk management
That policies and guidance in place be improved. *Employee Handbook* A policy covering conflicts of interest should be developed and included in the next version of Employees’ Handbook. Detailed recommendation are noted in our final management report for 2014/15. *Interest Register* The register could be improved by documenting the assessment of interests disclosed for any potential conflicts and how any identified conflicts will be managed or mitigated. Apply the interest register, to lower management level staff, consultants and contractors involved in procurement and projects. Declarations should be updated at regular intervals (e.g. six monthly). Training should also be provided on the conflict of interest policy and should apply to Councillors, senior management, management and staff involved in the procuring of goods and services.	2014/15	NO PROGRESS No update from prior years.
Valuation of property, plant and equipment Unit costs: Three waters (freshwater, wastewater, and stormwater)
That a unit rate calculation valuation approach is taken which is based on the inputs used to construct assets and the costs for each input	2016/17	OPEN 2018/19 was not a revaluation year for the 3 waters.
Valuation of property, plant and equipment Unit costs: Roading
That the Council ensure that unit rates used in the valuation of roading assets are complete and accurate.	2016/17	IN PROGRESS We noted improvements this year and we will follow up this up during our next final audit.

Issues raised in 2019 interim management letter that we will follow-up as part of our 2019/20 audit

Recommendation	Reference	Priority
Journal Approvals We recommend matching the work flow for journal approvals to the transaction listing to ensure all journals have been through the work flow process of approval.	2.2.1	Necessary
Reconciliation Reviews We recommend that: · reconciliations are printed, signed and dated as evidence of preparation and review and that reconciling items are cleared regularly; and · The general suspense account is cleared regularly.	2.2.2	Necessary
New staff impact upon procedures We recommend that the City Council has clearly documented procedures in place for key tasks (particularly those tasks that are less frequent in nature); this will assist in ensuring continuity when there are changes in the personnel carrying out those tasks.	2.2.3	Necessary
Sensitive expenditure – Mayor and Chief Executive We recommend that reporting of the Mayor and Chief Executive’s sensitive expenditure be provided more frequently to the Audit and Risk Committee during the year (as opposed to annually).	2.2.4	Necessary
Kennedy Park: Weakness in Till Takings Sign Off We recommend that a more appropriate sign-off process be put in place, where the employee signing off the Cashier Balance Sheet report can be easily verified.	2.2.5	Beneficial
Stocktake of Fixed Assets We recommend that a periodic stocktake of fixed assets be completed to ensure that all assets included in the financial records are still held by the City Council.	2.2.6	Beneficial

Implemented or closed recommendations

Recommendation	First raised	Status
Need for better record keeping of retentions
There should be better record keeping of retention balances and “old” retentions should be regularly reviewed to ensure they are being paid out when they are due.	30 June 2018	All retentions have been reviewed and only the relevant ones are included in the financial records.
Periodic review of users and access rights
That management establish a formal process to periodically review user accounts and access rights, both at the network level and including other Council systems.	2015/16 Letter dated 26 October 2016	Review of user accounts for both the network and the NCS application system has been completed.

46.

Appendix 2: Corrected misstatements

	Reference	Assets	Liabilities	Equity	Financial performance
	Reference	Dr (Cr)	Dr (Cr)	Dr (Cr)	Dr (Cr)
Bank Employee Entitlements	1	913,679	(913,679)
Property plant and equipment impairment Water assets	2	(430,714)			430,714
Asset revaluation reserve Property plant and Equipment	3	(28,197,465)		28,197,465
Total		(27,714,500)	(913,679)	28,197,465	430,174

Explanation of uncorrected misstatements

1 To correctly accrue the end of year payroll liability

2 To record the reservoirs no longer able to be used.

3 To correct errors made in the revaluations of property plant and equipment.

Corrected disclosure deficiencies

Detail of disclosure deficiency
The reconciliation to the cash flow needed to be adjusted to ensure that it reflected the balances in the rest of the financial statements.
The numbers of the employees included in the disclosures relating to the bands and total numbers of employees needed to be changed to match the underlying records.
Some of the benchmark calculations needed to be updated to ensure that the correct figures were used to calculate them.
Some drainage assets were incorrectly revalued in the initial valuer’s report and included in the financial statements. These needed to be reversed.
The disclosure as required for the water rates needed to be included into the financial statements.

47.

Corrected performance reporting misstatements

Detail of misstatement
Further detail needed to be added into the wastewater performance measures relating to compliance with resource consents to ensure it reflected what had happened during the year.
Dry weather overflows incorrectly did not include one overflow which had incorrectly been recorded as a wet weather overflow.
The total number of complaints per 1,000 connections was calculated on an incorrect number of connections.
The attendance and resolution times for the water supply call outs were incorrectly calculated due to the underlying information.

48.

Appendix 3: Disclosures

Area	Key messages
Our responsibilities in conducting the audit	We carried out this audit on behalf of the Controller and Auditor‑General. We are responsible for expressing an independent opinion on the financial statements and activity groups and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001. The audit of the financial statements does not relieve management or the Council of their responsibilities. Our Audit Engagement Letter contains a detailed explanation of the respective responsibilities of the auditor and the Council.
Auditing standards	We carried out our audit in accordance with the Auditor‑General’s Auditing Standards. The audit cannot and should not be relied upon to detect all instances of misstatement, fraud, irregularity or inefficiency that are immaterial to your financial statements. The Council and management are responsible for implementing and maintaining your systems of controls for detecting these matters.
Auditor independence	We are independent of the City Council in accordance with the independence requirements of the Auditor‑General’s Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners, issued by New Zealand Auditing and Assurance Standards Board. In addition to the audit we have carried out an engagement in the areas of performing a limited assurance engagement related to the City Council’s debenture trust deed, which is compatible with those independence requirements. Other than the audit and this engagement, we have no relationship with or interests in the City Council.
Fees	The audit fee for the year is $137,000, as detailed in our Audit Proposal Letter. Other fees charged in the period are $4,200, for the limited assurance engagement related to the City Council’s debenture trust deed.
Other relationships	We are not aware of any situations where a spouse or close relative of a staff member involved in the audit occupies a position with the City Council that is significant to the audit. We are not aware of any situations where a staff member of Audit New Zealand has accepted a position of employment with the City Council during or since the end of the financial year. The Audit Manager responsible for the audit has not undertaken any work related to the internal auditors (as her sister is a Crowe Horwath employee). The audit supervisor has reported directly to the Appointed Auditor on any of our work relating to internal audit.

49.

Audit and Risk Committee - 05 December 2019 - Open Agenda

Audit and Risk Committee

Open Minutes

Meeting Date:	Friday 13 September 2019
Time:	9.00am – 9.24am
Venue	Ikatere Boardroom Level 2, Capeview Building 265 Marine Parade Napier

Present	John Palairet (In the Chair), Acting Mayor Faye White, Councillor Claire Hague and Councillor Kirsten Wise
In Attendance	Chief Executive, Director Corporate Services, Chief Financial Officer, Director Infrastructure Services, Director City Services, Director Community Services [from 9.08am], Manager Communications and Marketing
Administration	Governance Team

Apologies

Acting Mayor White / Councillor Hague

That the apologies from Mayor Dalton and David Pearson be accepted.

Carried

Conflicts of interest

Nil

Public forum

Nil

Announcements by the Acting Mayor

The Acting Mayor gave a brief update to the Committee on current work underway.

Announcements by the Chairperson

Nil

Announcements by the management

The Chief Executive advised that Napier City Council has recently received accreditation as a White Ribbon organisation, recognising Council’s policies and kaupapa in relation to relationship violence. Three people have also received specific accreditation as leaders in this space – the Chief Executive, the Manager Community Strategies and the Building Maintenance Lead.

Confirmation of minutes

Councillors Wise / Hague

That the Minutes of the meeting held on 20 June 2019 were taken as a true and accurate record of the meeting.

Carried

Agenda Items

1. Health and Safety Report

Type of Report:	Operational
Legal Reference:	Health and Safety at Work Act 2015
Document ID:	823535
Reporting Officer/s & Unit:	Sue Matkin, Manager People & Capability

1.1 Purpose of Report

The purpose of this report is to provide Audit and Risk with an overview of the health and safety performance as at 31 July 2019.

At the Meeting

There was no discussion on this item.

Committee's recommendation

Councillors Hague / Wise

The Audit and Risk Committee:

a. Receive the Health and Safety report as at 31 July 2019.

Carried

2. Risk Management Report August 2019

Type of Report:	Information
Legal Reference:	N/A
Document ID:	829299
Reporting Officer/s & Unit:	Ross Franklin, Consultant

2.1 Purpose of Report

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

At the Meeting

It was noted that a risk management focussed role is currently being advertised. This role will have responsibility for risk management and will also contribute to work underway for business continuity planning.

As the reporting function of the project module in Sycle is implemented information will be provided both to project managers and also this Committee for an independent and politically focussed perspective.

In response to questions from the committee it was noted that there has been no softening in the construction market nationally.

The Bluff Hill fencing project is now being aligned with road widening on Lighthouse Road so as not to create longer impacts on residents than absolutely necessary.

Committee's recommendation

Councillors Hague / Wise

The Audit and Risk Committee:

a. Note the Risk Management Work being undertaken by Napier City Council Staff and Management

b. Note the current Major risks

c. Receive the Risk Report Dated 26 August 2019

Carried

3. External Audit: Audit NZ Interim Management Report

Type of Report:	Legal
Legal Reference:	Local Government Act 2002
Document ID:	823537
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

3.1 Purpose of Report

To consider the Audit NZ Interim Management Report for the year ending 30 June 2019.

At the Meeting

The Auditors are currently completing the year end audit; they have made positive comment about the transparent ethical environment. Small matters identified are already being actioned. A compulsory and comprehensive induction programme which takes into account feedback from current elected members is being prepared for the incoming council; this will include information on interests including a new application to facilitate declarations.

Some discussion took place on the management of higher leave levels, noting that while pay out of some leave was an option it was preferred for wellbeing reasons that the leave was actually taken. The overall levels of outstanding leave have reduced over the last couple of years through working with staff in this way.

Committee's recommendation

Councillors Hague / Wise

The Audit and Risk Committee:

a. Receive the Audit NZ Interim Management Report for the year ending 30 June 2019.

Carried

4. Legislative Compliance: Annual Tax Update to 30 June 2019

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	823538
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

4.1 Purpose of Report

To provide the Audit and Risk Committee with the annual tax update on progress made during the period up to 30 June 2019.

At the Meeting

The Chief Executive noted that a proposal for FBT to be scaled based on organisation size has been raised to our local MP.

It was noted that the tax position for elected members is not well understood, even by personal accountants, such as GST implications, what can be claimed for etc. and it would be useful to have this information provided to incoming councillors as part of the induction programme.

Committee's recommendation

Acting Mayor White / Councillor Hague

The Audit and Risk Committee:

a. Receive the report from PwC titled ‘Napier City Council Annual Tax Update year to 30 June 2019’.

Carried

5. External Accountability: Investment and Debt Report

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	827499
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

5.1 Purpose of Report

To consider the snapshot report on Napier City Council’s Investment and Debt as at 31 July 2019.

At the Meeting

A brief discussion took place in relation to any impacts of changing interest rates on investments.

Committee's recommendation

Councillor Hague / Acting Mayor White

The Audit and Risk Committee:

a. Receive the snapshot report on Napier City Council’s Investment and Debt as at 31 July 2019.

Carried

PUBLIC EXCLUDED ITEMS

Councillor Hague / Acting Mayor White

That the public, excepting Stephen Lucy of Audit NZ be excluded from the following parts of the proceedings of this meeting, namely:

1. External Accountability: Draft Annual Report 2018/19

2. Legislative Compliance: Legal Update as at 30 June 2019

3. Review of Audit and Risk Committee

4. Cloud Vendor Security Review by DIA

5. IT Firewall Penetration Test

6. Relocation of Offsite Archives

Carried

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. External Accountability: Draft Annual Report 2018/19	7(2)(g) Maintain legal professional privilege 7(2)(i) Enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	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.
2. Legislative Compliance: Legal Update as at 30 June 2019	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.
3. Review of Audit and Risk Committee	7(2)(c)(i) Protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied	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. Cloud Vendor Security Review by DIA	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	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. IT Firewall Penetration Test	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	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.
6. Relocation of Offsite Archives	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	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 9.24am

Approved and adopted as a true and accurate record of the meeting.

Chairperson .............................................................................................................................

Date of approval ......................................................................................................................

[1] This analysis is limited to entities audited by Audit New Zealand only.

Meeting Date:	Thursday 5 December 2019
Time:	1pm
Venue:	Council Chamber Hawke's Bay Regional Council 159 Dalton Street Napier

Committee Members	John Palairet (In the Chair), Mayor Kirsten Wise, David Pearson, Councillor Nigel Simpson and Councillor Graeme Taylor
Officer Responsible	Director Corporate Services
Administration	Governance Team
	Next Audit and Risk Committee Meeting To be confirmed

Proposed Audit and Risk Committee meetings timetable 2020
2019	Content	2020	Content
28 March 2019	Draft Annual Plan, risk management, insurance arrangements, BCP update, H&S, investment and debt report, external audit arrangements, freeholding framework	20 March 2020	Insurance arrangements, Draft Annual Plan 20/21, external audit arrangements
20 June 2019	Risk management, H&S, investment and debt report, internal audit programme, legislative compliance, legal update, Annual Plan	12 June 2020	General
13 September 2019	Risk management, H&S, investment and debt report, audit management report, Draft Annual Report, legal update, review of A&R committee, Cloud vendor security, IT firewall penetration test, relocation of offsite archives	18 September 2020	Draft Annual Report 19/20
5 December 2019	Risk management, H&S, investment and debt report, fraud gap analysis, audit management report, A&R committee meeting calendar, sensitive expenditure	11 December 2020	General

Type of Report:	Procedural
Legal Reference:	N/A
Document ID:	873943
Reporting Officer/s & Unit:	Adele Henderson, Director Corporate Services

Type of Report:	Legal and Operational
Legal Reference:	Local Government Act 2002
Document ID:	869923
Reporting Officer/s & Unit:	Adele Henderson, Director Corporate Services

Type of Report:	Operational and Procedural
Legal Reference:	N/A
Document ID:	871750
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer