Agenda of Audit and Risk Committee - Friday, 31 March 2023

Audit and Risk Committee - 31 March 2023 - Open Agenda Item 1

Agenda Items

1. Health and Safety Report - October/November/December 2022

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	1482761
Reporting Officer/s & Unit:	Anna Nottage, Chief People Officer

1.1 Purpose of Report

The purpose of this paper is to provide the Audit & Risk Committee with an overview of Health & Safety activity for the period Quarter 4 FY22.

Officer’s Recommendation

The Audit and Risk Committee:

a. Receive the Quarter 4 (October/November/December 2022) Health and Safety report.

1.2 Background Summary

Health and Safety have continued with the reporting format that contains trend data and detailed analysis on several leading and lagging Health and Safety indicators. This report is attached.

Key points to note for the October – December 2022 quarter are:

· The recent surge in community Covid 19 cases in the quarter resulted in an increase of reported cases at NCC. The increase was managed using Ministry of Health guidelines and advice.

· Reporting for most leading indicators remains strong and continues to trend in an upward direction. Lagging indicators have decreased, except for near misses. Near miss reporting reflects good health and safety practice and should be encouraged.

· Requirements for the health monitoring and surveillance of employees were addressed throughout the October – December quarter.

· There is a planned audit and review of health and safety performance to provide assurance that the Council is meeting the obligations and duties as a Person Conducting Business or Undertakings (PCBU) under the Health and Safety at Work Act 2015.

COVID-19

Health and Safety resourcing

Following approval at the previous Audit and Risk Committee we have engaged Gareth McDonald from H&S Consultancy to provide specialist advice and support to Napier City Council’s Health and Safety Team.

Covid 19

The recent surge in cases in November and December resulted in an increase of workers remaining at home for the mandatory seven-day isolation period.

The following table outlines the number of reported cases each month in the quarter, with a breakdown of cases according to each directorate.

Covid 19 Cases
Month	Community	Infrastructure	City Strategy	Corporate	City Services	Total Cases
October	5	-	1	2	-	8
November	12	1	4	2	9	28
December	11	5	3	5	6	30

Following the Ministry of Health guidelines and advice, control measures were re-initiated and escalated to provide workers with adequate protection and to reduce the risk of infection.

Risk and Audit Committee Report

Due to recent changes in the Health and Safety Team and time and resourcing constraints due to Cyclone Gabrielle, this report best reflects the data, information, and insights available. The report attempts to mirror the reporting format submitted by the previous Health, Safety and Wellbeing Manager.

Going forward the intention is to develop a refreshed reporting structure focusing on two critical components:

· Assurance that the Council is meeting their responsibilities, and duties of the Council a PCBU under HSWA 2015.

· Review of progress against the identified Health and Safety strategic risks (SR14), operational risks (OR183) and project risks.

Audit and review of H&S

NCC will commence a review of its Safety Management System and its requirements under the Tier One Health and Safety Management System Framework. A three-yearly audit and review is an essential function to:

1) Evaluate the effectiveness of the Framework and System;

2) Ensure the continued relevance of the processes within them;

3) Provide feedback so that new strategies and plans can be developed.

This review will include specific evaluation of Hazard and Risk Management processes. As part of the review, the Health and Safety Management Framework will be revised and updated to provide for new planned activities, changes to the organisation, and to ensure the Framework is achieving its purpose.

Pre-employment, Annual, Exit Health Monitoring

October 2022-December 2022.

· 5 applicants had pre-employment fitness to work which consists of a health questionnaire, musculoskeletal assessment, visual acuity screening, hearing screening, respiratory screening questionnaire/lung function screening (if applicable)

· 91 employees had annual health monitoring due to the tasks they do within their current role- this consisted of hearing screening & respiratory screening questionnaire.

· The employees were also offered a blood sugar level screening to detect early screening for potential diabetes and establish if a GP appointment was required.

· There were several employees where we requested they make a follow up GP visit.

· Hepatitis C- This is a Ministry of Health national Campaign and there are people in New Zealand that do not know they have Hepatitis C- this is a finger prick test and using a test strip the results come up within 10 minutes. All employees screened were negative to hepatitis C.

· 2 employees had exit screening they were from the Environmental Solutions Team.

Hearing Screening

Oct-Dec 2022: 73 employees had hearing screening.

· 22 employees have normal hearing.

· 25 have mild hearing loss.

· 26 have hearing loss (more than mild loss)

· 16 with hearing loss have already seen an audiologist and did not require re-referral.

· 10 were referred to the Audiologist in Oct-Dec 2022.

Respiratory Screening questionnaire:

· 99 employees completed the respiratory screening questionnaire.

· No employees were referred to their GP.

· There are workers with asthma which is controlled by administering their prescribed inhalers.

Animal Control Workers zoonotic blood test annually

· All employees have been provided a lab form in November 2022 to check for:

· Toxoplasmosis, Toxocara, Hydatids.

· 3 of the 5 employees lab results have been received requiring no actions.

· Awaiting the other 2 employee lab results.

Environmental Solutions Trace Metal blood/urine test annually

· 3 employee lab results have been received requiring no action.

Hepatitis A & B Vaccinations

· 8 employees are having hepatitis vaccinations due to the tasks they do.

· The employees could be exposed to used sharps, sewage, human body fluids (blood).

· 7 employees have no immunity to Hepatitis A & B – they are having a course of 3 vaccinations.

· 1 employee has no immunity to Hepatitis A and having a course of 2 vaccinations.

Health and Safety quarterly reporting for October/November/December:

Lagging indicators

Leading indicators

Health and Safety Training and Competency

1.3 Attachments

Nil

Audit and Risk Committee - 31 March 2023 - Open Agenda Item 7

7. Annual Plan 23/24 - key assumptions

Type of Report:	Legal and Operational
Legal Reference:	Local Government Act 2002
Document ID:	1639485
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Talia Foster, Accounting Manager Danica Rio, Corporate Planning Analyst

7.1 Purpose of Report

To outline to the committee and seek feedback on the key assumptions and risks to the delivery of the Annual Plan 2023/24.

Officer’s Recommendation

The Audit and Risk Committee:

a) Receive the report titled ‘Annual Plan 23/24 – Key Assumptions.

b) Endorse the key assumptions and note the risks to the delivery of the Annual Plan 23/24.

7.2 Background Summary

Cyclone Gabrielle greatly impacted the Napier community along with many other neighbouring communities and areas across the country. For close to four weeks the Napier City Council (NCC) was in emergency management mode, meaning business as usual understandably came second to ensuring we were supporting the community in the aftermath of the cyclone. Since the outlook for the 23/24 year has now changed, it is necessary to revise the Annual Plan to ensure it takes all current information into account.

As a result of the immediate impact of the cyclone and the response that followed, there is a new budget requirement for recovery to consider, as well as a need to revisit decisions previously made to ensure actions are still appropriate in the current environment.

7.3 Issues

While NCC has been less impacted from an asset/property perspective in comparison to other Territorial Authorities, it is important that we remain sensitive to the ongoing regional recovery efforts taking place. Planning decisions around rebuilding areas such as Esk Valley and Pakowhai, and the subsequent impact on industrial and primary sector industries are just a couple of examples that highlight some of the many current unknowns.

Council also faces a lot of direct unknowns such as the total cost of response and recovery efforts, what costs will be covered by insurance, the impact to our capital plan and the prioritisation of projects (do we need to defer/stop/re-prioritise?), the impact on supply chain and transportation costs, and the impact on the Hawkes Bay region as a whole.

As a result of the immediate impact of the cyclone and the ongoing recovery efforts that have followed, there are new budget items to consider as well as a need to revisit decisions previously made to ensure they are still what is best in the current environment. Council needs to strike the right balance between adequately funding the organisation and providing the community with a rates increase that will be acceptable and digestible given recent events.

Additional levers that can be used to help strike this balance have been identified and form the basis of the proposed revision of the Annual Plan. These levers not only have the potential to reduce the proposed rates increase for the community, but also remove the need for Council to consult on the 23/24 Annual Plan. Not only would this take some pressure off the organisation, but it may also be the best way forward as it is likely the community will not have the appetite to engage with Council during an Annual Plan consultation at this time.

The key assumptions underpinning the proposed rates increase of 11.7% (9.7% + 2% for a Disaster Recovery Rate) are as follows:

Vacancy loading

At a workshop on 31 January 2023, Council agreed in principle to a vacancy loading assumption of 10% (based on current vacancy levels). This equates to $5.6m or approximately 72 positions and has been factored into the budgets.

It was confirmed that this does not mean Council is going to adopt a strategy which discourages managers from hiring. It is merely a forecasting assumption that Council believes will play out over the Annual Plan period. It was noted that the vacancy loading is a one off ‘saving’ and to avoid an abrupt rates increase in the future due to the removal or sharp decrease of the vacancy loading, it could be reduced slowly over time as a position of ‘fuller’ employment was moved towards.

Loan funding

Officers are recommending that Council reverts back to the rates increase set out in year 3 of the LTP 2021-31 which would result in a funding gap of $3.3m. It is proposed that this funding gap will be loan funded for FY23/24.

Under this scenario the, loan funding the gap in FY23/24 does provide further financial challenges, by deferral of funding costs in the following FY24/25 year. The long term plan will pose some challenging decisions and require a robust review of the financial strategy to account for this, the current inflationary environment, and the potential removal of 3 waters assets.

Scoping of cost efficiency and level of service reviews, as well as a review of the current financial and investment strategy will begin shortly to provide options and solutions for consideration during the LTP development.

Disaster Recovery Rate (DRR)

The addition of a Disaster Recovery Rate could be ‘ring fenced’ and used to fund the Cyclone Gabrielle specific recovery budget which would be used for items such as recovery costs, rates remissions, and resilience planning. The rate would be in addition to the 9.7% increase, effectively bringing the overall rates increase to 11.7% if the recommended DRR of 2% ($1.5M) was adopted. Please note, the LGRA states that implementation of such a rate does not require consultation.

7.4 Significance and Engagement

Section 23(3) of the LGRA states that ‘A local authority may set a rate that is not provided for in its long-term plan and funding impact statement only if – (a) the local authority is satisfied that the rate is required to meet an unforeseen and urgent need for revenue that cannot be reasonably met by any other means.’

7.5 Implications

Financial

The following table sets out the ‘pre cyclone’ rates position and the levers available to Council to enable a more manageable rates increase for the community post cyclone Gabrielle.

Social & Policy

N/A

Risk

Key risks to the delivery of the Annual Plan:

Risk	Risk category	Consequence	Risk level	Mitigation	Revised risk level
Council is unable to meet the legislative adoption timeframe if Council directs officers to revise budgets or if community consultation takes place	Legislative compliance	Rates are set at 25% of the previous year’s rates for Q1 impacting on Council’s cashflow	Medium	Propose a rates increase of 9.7% + 2% DRR and inform the community	Low
The cyclone and an economic downturn impacts property owners ability to pay rates	Financial	Council’s rates revenue reduces	Medium	Implement the rates remission policy for red and yellow stickered properties and fund this from the DRR	Low
Cost escalations for opex and capex are above forecast	Financial	Budget overspend impacting on Councils year end financial position	Medium	Capital and project spend is closely monitored and reported to Council	Medium
Supply chain delays impacting on capital plan and project delivery	Financial, service delivery	Compromised transportation routes & high demand for materials results in project delays. Projects are carried forward into future years.	High	Collaborate with other HB Councils to jointly procure materials	Medium
Resourcing and skills shortage impacting on capital plan and project delivery	Service delivery	Projects are unable to be completed and carried forward into future years.	Medium	Outsource where possible to enable capital projects to get underway (cost can be capitalised)	Medium
Vacancy loading is set too high	Financial	Vacant positions are filled at a faster rate than anticipated	High	CE personnel contingency is utilised to partially offset vacancies	Medium
Staff are unable to work on BAU and redeployed to the recovery	Financial, service delivery, reputation	Capital projects are delayed	Medium	Outsource recovery resourcing	Low
Disaster recovery costs are greater than forecast	Financial	Budget overspend impacting on Councils year end financial position	Medium	Recovery costs are monitored and reported to Council quarterly	Low

7.6 Development of Preferred Option

The Audit and Risk Committee endorses the change in approach and the key assumptions, and notes the risks to the delivery of the Annual Plan 2023/24

7.7 Attachments

Nil

Audit and Risk Committee - 31 March 2023 - Open Agenda Item 8

8. Risk Management Report

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	1645164
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Dave Jordison, Risk and Assurance Lead

8.1 Purpose of Report

To provide the Audit and Risk Committee (Committee) with an update on the potential impacts on the Council’s current strategic risk profile brought about by Cyclone Gabrielle.

Officer’s Recommendation

The Audit and Risk Committee:

a) Receive the Risk Management Report dated March 2023, and

b) Endorse a fulsome review of the Council’s strategic risk profile and risk appetite, given the immediate ongoing and long term impact of Cyclone Gabrielle on the Council Strategy, risk profile and its stakeholders.

8.2 Background Summary

This paper provides:

· Information on the immediate and medium to long term risks as a result of Cyclone Gabrielle and their connection to the Council’s strategic risk profile for the Committee’s consideration and discussion.

· Specific recommendations for the Council to perform a deep dive of the strategic risks in light of Cyclone Gabrielle, with outcomes to be shared in the June Audit and Risk Committee meeting.

Setting the scene

1. Risk management - current profile

In light of the significant damage sustained by Napier due to Cyclone Gabrielle (the Cyclone), Council personnel were re-deployed to support the emergency response, and continue to focus on supporting residents and the immediate recovery of Council’s assets. Understandably, a complete identification and deep-dive assessment of the scope of risks and impacts emerging from the Cyclone has not yet been performed.

However, we have performed an initial and very high-level assessment of the changes in the risk profile and emerging risks following the Cyclone, that require further consideration and noted the following:

● Overall, the Council’s strategic risk profile is elevated with most risks sitting outside of appetite. The 10 strategic risks mapped below were identified by the Executive during a workshop in May 2022 and endorsed by the Committee in July 2022.

● The review identified 5 risks related to the immediate response. Of those, the risk to public health and safety and environmental contamination are not well connected to the Council’s existing risk profile and are particularly heightened.

● The review identified 7 medium or long term risks related to setting up and delivering a long term recovery plan and challenges to business as usual activities (BAU) which can result in increased costs and delays in delivery of both the recovery plan and BAU activities.

Details of the strategic risk profile and emerging risks are outlined on section 1.3.

The changes in the external environment and context that the Council is now operating in, means that priorities and what is ‘top of mind’ now for the Council and its stakeholders might have shifted. There is an opportunity for the Council to identify and assess long term risks and revise its risk appetite to prepare and adapt, while supporting deliberate action in high-risk areas.

Further, the extent to which current risk management practices are aligned to good practice and embedded within organisation has been identified as an area of focus for the Council, and the Cyclone has brought this into sharp focus.

Whilst the Risk and Assurance Lead continues to provide risk management support, it is acknowledged that our risk application (Sycle) and reporting is generally out of date, meaning emerging risks (operational and strategic), controls, and treatments are not captured completely and accurately.

Risk Management: Next Steps

The Council should consider:

● A facilitated workshop with the Executive Leadership Team and third tier managers to review the strategic risks

● Performing deep dive sessions for each key strategic risk with the Executive Leadership Team (including elevated risks due to the Cyclone).

● Revisiting the Council’s risk appetite (noting that the current appetite is ‘Low’ for all risk categories, which may no longer be an accurate reflection of Council’s risk thresholds).

2. Cyclone Gabrielle impacts

Below is a high-level summary of the key impacts of the Cyclone and the actions the Council is taking to manage these:

● Awatoto Waste Water Treatment Plant (WWTP): Council has commercial insurance on this asset although an estimate to complete has not been provided by contractors. A Project Director has been appointed. Contractors are on site disconnecting the equipment and commencing reconfiguration of the miliscreens and cleaning at WWTP is progressing as expected.

● Key transport connection: Two road bridges and one rail in Napier CIty boundaries and access north via SH2 and SH5 need to be reinstated. – a governance group comprised of the Directors for Infrastructure and Corporate Services from Hastings District Council and Napier City Council has been formed. This will ensure that decision making is joint, and that temporary and longer term solutions are agreed, with implications understood by both organisations.

● Other structures: lighting, drainage, Awatoto pump station.

● Awatoto: The Awatoto response team was assembled on March 8th within the Council, reporting to the Executive Director Infrastructure Services. The following actions have been taken to date:

- Road has been cleared and dust suppression continues.

- Testing results show no chemical results of concern, but high levels of biologicals which increases the risk of environmental contamination.

- Estimated timeframe for complete clean-up of Waitangi and Awatoto Road is two weeks from 20/03.

- A working group with a small number of industry stakeholders has been set up. The group meets twice a week and has developed a risk assessment process to enable them to re-open business. Each business will be asked to complete a risk assessment and management plan which will be shared with the Council for record keeping purposes.

- Indicative timeline for relivening Unison network to industry is up to six weeks as at 16/03.

- Resident Liaison: Test results from initial tranche of 17 households are clear and within expected ranges with exception of four samples with total coliforms detected. All these households have been notified of their results.

- Funding: MBIE has undertaken to fund at least $600K and up to $1M to NCC for Awatoto response. MFE is preparing a budget bid to Cabinet to fund silt removal and storage in Awatoto.

- Solid waste: Bags continue to be delivered to residents for small waste quantities. For large quantities of waste removal, a list of properties that require extra assistance has been collated and contractors are working on site.

1.3 Emerging risks and issues post Cyclone Gabrielle and impact on Council’s strategic risk profile

A snapshot of the emerging and long term risks due to the Cyclone, and their connection to the Council’s strategic risks are set out in the table in attachment 1.

Specifically, these have been categorised as either:

● Immediate (where the risk has or will materialise within 0-3 months following the Cyclone), or

● Medium- Long term (where the risk will materialise within 3 or more months following the Cyclone)

8.3 Significance and Engagement

Council is intending to engage with mana whenua when developing the long term recovery plan.

8.4 Implications

Financial

A financial impact assessment detailing the costs to remediate damage resulting from the Cyclone is underway and will be included in the quarterly report at the next Prosperous Napier Committee meeting.

Officers are currently working through the insurance claims and investigating all funding avenues available for claiming costs that do not meet the emergency response criteria as set out under the Civil Defence legislation.

Social & Policy

N/A

8.5 Preferred option

a. Receive the Risk Management Report dated March 2023, and

b. Endorse a fulsome review of the Council’s strategic risk profile and risk appetite, given the immediate ongoing and long term impact of Cyclone Gabrielle on the Council Strategy, risk profile and its stakeholders.

8.6 Attachments

1 NCC Strategic Risk Profile March 2023 (Doc Id 1645375)

Audit and Risk Committee - 31 March 2023 - Open Agenda

Audit and Risk Committee

Open Minutes

Meeting Date:

Friday 9 December 2022

Time:

09.30am - 9.35am (Open)

09.36am - 11.08am (Public Excluded)

11.15am - 12.19pm (Open)

12.20pm - 12.46pm (Public Excluded)

Venue

Small Exhibition Hall
War Memorial Centre
Marine Parade
Napier

Present	Chair: Bruce Robertson Members: Mayor Kirsten Wise, David Pearson, Councillor Sally Crown (Deputy Chair) Councillor Greg Mawson and Councillor Hayley Browne
In Attendance	Acting Chief Executive (Richard Munneke) Deputy Chief Executive / Executive Director Corporate Services (Jessica Ellerm) Chief Financial Officer (Caroline Thomson) Accounting Manager (Talia Foster) Risk and Assurance Lead (Dave Jordison Team Leader Building Asset Management (Andrew Clibborn) Manager Asset Strategy (Kate Ivicheva) Manager Property (Bryan Faulknor) Chief People Officer (Anna Nottage) Audit New Zealand (Karen Young)
	Attendees Via Teams Audio Visual Link: Martyn Solomon, Crowe Limited (Items 5, 6 and 7) Matthew Wilson and Jessica Jurisich (Aon New Zealand) [Public Excluded Item 1 – Insurance Arrangements]
Administration	Governance Advisor (Carolyn Hunt)

Karakia

The meeting opened with a karakia.

Apologies

Nil

Conflicts of interest

Nil

Public forum

Nil

Announcements by the Mayor

Welcomed previous members and new members to the Committee for the first Audit and Risk Committee meeting following the 2022-2025 triennial elections.

Announcements by the Chairperson

Nil

Announcements by the management

Nil

Confirmation of minutes

There were no previous minutes to confirm as this was the first Audit and Risk Committee meeting for the 2022-2025 triennium.

The meeting agreed to address the Public Excluded items prior to the Open Session due to time constraints of external presenters for confidential items.

PUBLIC EXCLUDED ITEMS

B Robertson / Councillor Mawson

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

1. Insurance Arrangements

2. Legal Update

3. Draft Annual Report 2021/22

b) That Matthew Wilson and Jessica Jurisich representatives from Aon New Zealand be permitted to remain in the Public Excluded session for Item 1 – Insurance Arrangements for their expertise on this matter.

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. Insurance Arrangements	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. Legal Update	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.
3. Draft Annual Report 2021/22	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.

The meeting moved into the Public Excluded session at 9.35am and reconvened in Open Session at 11.19am to address the remainder of the agenda items

Agenda Items

1. Risk Management Report

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	1613814
Reporting Officer/s & Unit:	Dave Jordison, Risk and Assurance Lead Caroline Thomson, Chief Financial Officer

1.1 Purpose of Report

To provide the Audit and Risk Committee (Committee) with an update on risk management, outline the processes undertaken to mitigate key risks and note emerging risks.

At the meeting

The Deputy Chief Executive / Executive Director Corporate Services, Ms Ellerm advised that the risk management framework approach was still somewhat as a compliance issue exercise within Council and that it required the attention of, and sponsorship from the Leadership Team. The risk report was vast and a lot of operational risks have been listed. The Executive Leadership Team were looking at significant strategic risks in Council in regard to resourcing issues, in particular the ability to retain and recruit staff all of which impacted on the delivery of the capital programme for 2022/23.

It was noted that the development of an activity roadmap to both embed the framework and build organisational maturity would commence in the first quarter of 2023.

Emerging risks related to the supply chain, labour availability and inflation which continued to put pressure on Council budgets and delivery.

The Chief People Officer, Ms Nottage confirmed that Council was meeting its Health and Safety obligations under Section 44 of the Local Government Act 2002 however, noted vulnerability due to retention and recruitment issues. A Health and Safety report based on obligations under the Act would be provided at the next meeting.

Committee resolution

Councillor Browne / D Pearson

The Audit and Risk Committee:

a. Receive the Risk Management Report dated November 2022; and

b. Note the emerging risks

Carried

2. Sensitive Expenditure - Mayor and Chief Executive

Type of Report:	Procedural
Legal Reference:	N/A
Document ID:	1598019
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Talia Foster, Accounting Manager

2.1 Purpose of Report

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

At the meeting

The Chief Financial Officer, Ms Thomson spoke to the report and confirmed that all items identified in the report included two quarters (June and September) due to the elections and no meetings, complied with Council’s Sensitive Expenditure Policy.

Committee resolution

B Robertson / Councillor Crown

The Audit and Risk Committee:

a. Receive the 30 June 2022 quarterly report of Sensitive Expenditure for the Mayor and Chief Executive and review for compliance with the Sensitive Expenditure Policy.

b. Receive the 30 September 2022 quarterly report of Sensitive Expenditure for the Mayor and Chief Executive and review for compliance with the Sensitive Expenditure Policy

Carried

3. Annual tax update year to 30 June 2022

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	1605816
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Talia Foster, Accounting Manager

3.1 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 2022.

At the meeting

The Chief Financial Officer, Ms Thomson presented the report prepared by PWC on the annual tax update on progress made up to 30 June 2022. A proactive approach on tax compliance is undertaken by Council and PWC provides assistance for various queries for a range of tax types.

The Committee were provided assurance in regard to forward programming and that officers were comfortable with timelines and had the benefit of PWC undertaking the independent evaluations.

Committee resolution

B Robertson / D Pearson

The Audit and Risk Committee:

a. Receive the report from PwC titled ‘Napier City Council Annual Tax Update year to 30 June 2022’.*

Carried

4. Internal Audit status update

Type of Report:	Information
Legal Reference:	N/A
Document ID:	1613812
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Talia Foster, Accounting Manager Raewyn Fowler, Business Analyst

4.1 Purpose of Report

The purpose of this paper is to summarise the actions taken by management of each audit undertaken over the last two years to provide assurance to the Audit & Risk Committee that these have been addressed.

At the meeting

The Chief Financial Officer, Ms Thomson advised that Martyn Solomon, Internal Audit Associate Partner with Crowe was online for any questions in relation to the following items.

Ms Thomson spoke to the report which summarised Council’s internal audit actions undertaken by management over the last two years. Noting that going forward officers would like to include the actions that resulted from the external audit. Two of the actions on the internal audit list have recently been finalised and they were the Asset Management and Sensitive Expenditure Reviews.

It was noted that the field work for asset management had been undertaken 18 months ago and there had been a number of changes in management over this time. Issues raised in the report related to resourcing, evidence of silos, level of executive support and lack of integration.

It was suggested to have two roadmaps; one for organisation maturity in asset management and the other for the Long Term Plan decision making and what process will Governors follow for decision making.

Committee resolution

Councillor Browne / B Robertson

The Audit and Risk Committee:

a. Receive the internal audit status update report.

Carried

5. Internal Audit - Proposed Programme for 2022/23

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	1613815
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Talia Foster, Accounting Manager Raewyn Fowler, Business Analyst

5.1 Purpose of Report

To provide the Committee with the internal audit programme recommendations for 2022/23 from Crowe.

Feedback is sought relative to the recommendations and any other review priorities the Committee deems relevant.

At the meeting

The Chief Financial Officer, Ms Thomson took the report as read and no additional comments made.

Committee resolution

B Robertson / Councillor Crown

The Audit and Risk Committee:

a. Receive and approve the internal audit programme for 2022/23 from Council’s Internal Auditors, Crowe (Doc Id 1617949).

Carried

6. Internal Audit: Asset Management

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	1618311
Reporting Officer/s & Unit:	Jessica Ellerm, Deputy Chief Executive / Executive Director Corporate Services Talia Foster, Accounting Manager

6.1 Purpose of Report

To table to the Committee the internal audit on Asset Management undertaken by Council’s internal auditors, Crowe.

At the meeting

The Deputy Chief Executive / Executive Director Corporate Services, Ms Ellerm acknowledged the Crowe report and noted that some of the terminology from officers included had not been intended for the final report. Currently staff were working on preparing a plan to respond to the recommendations that have been put forward. It was also noted that there had been a lot of turnover in the team and change in management of leadership in the team which may have contributed to how the report had been compiled.

In response to questions it was clarified:

· Mr Clibborn confirmed that Council do not have an Asset Management Steering Group.

· He advised that the agreed actions in the column were not agreed actions and were his comments fed back to the recommendations.

· Change of structure and turnover of staff had not allowed staff to work on it as well as could be been done.

· Without good governance and cross Council co-ordination the Asset Management journey would not progress well. Asset Management is a function of Council (not infrastructure alone) and to succeed will require an-all-of-Council approach.

· Mr Clibborn referred to an online course put out by the Institute of Public Works Engineering Australasia called “Gov 101 – Infrastructure Leadership and Governance” Asset Management for Governors. Included in this free course are questions for Governors to ask their Asset Managers and the Committee were encouraged to undertake this course. A link for this course will be forwarded to the Committee.

· Develop a roadmap and strategic approach going forward with transparency on how to grow in this area moving from silo behaviour and have all Council on board in a sustainable way.

Officers would provide an update report on the roadmap at the next meeting.

The Manager Asset Strategy, Ms Ivicheva advised that the current asset management systems have areas for improvement. Processes needed to be united and processes changed to work in a continuous way rather than a process connected to a Director.

As outlined, if someone is leaving or going to a different department the process should continue. First steps of the plan is to determine where there are gaps and how more people can be brought on board. She also encouraged Committee members to allocate one hour to undertake the Governance 101 course.

Committee resolution

Councillor Browne / D Pearson

The Audit and Risk Committee:

a. Receive the report from Crowe titled ‘Internal Audit – Asset Management” (Doc Id1618432).

Carried

7. Internal Audit: Sensitive Expenditure Review

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	1618365
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer Talia Foster, Accounting Manager

7.1 Purpose of Report

To table to the Committee the internal audit on Sensitive Expenditure undertaken by Council’s internal auditors, Crowe.

At the meeting

The Chief Financial Officer, Ms Thomson

Committee resolution

B Robertson / Mayor Wise

The Audit and Risk Committee:

a. Receive the report from Crowe titled ‘Internal Audit – Sensitive Expenditure Review’ (Doc Id 1618539).

Carried

B Robertson / Councillor Mawson

That the meeting return to Public Excluded session to enable the Acting Chief Executive to discuss issues of a sensitive nature with the reason being 7(2)(a) the privacy of a person under Section 48(1) of the Local Government Official Information and Meetings Act 1987.

Carried

The meeting adjourned at 12.19pm and reconvened in

Public Excluded session at 12.20pm.

The meeting closed with a karakia at 12.46pm

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

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

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

Committee Members	Chair: Bruce Robertson Members: Mayor Kirsten Wise, David Pearson, Councillor Sally Crown (Deputy Chair), Councillor Greg Mawson and Councillor Hayley Browne Ngā Mānukanuka o te Iwi representative (yet to be appointed)
Officer Responsible	Deputy Chief Executive / Executive Director Corporate Services
Administration	Governance Team
	Next Audit and Risk Committee Meeting Friday 23 June 2023

Chairperson	External independent appointee Appointed by Council
Deputy Chairperson	Appointed by Committee
Membership	The Mayor Deputy Chair of Sustainable Napier Committee Chair of Prosperous Napier Committee External independent appointee – Local Govt expert External independent appointee – Finance expert Ngā Mānukanuka o te Iwi (Māori Committee) Representative Note: The Chief Executive and External Auditor are required to attend all meetings but are not members and have no voting rights.
Quorum	3 One of which is an external appointee
Meeting frequency	At least quarterly and further as required
Officer Responsible	Deputy Chief Executive / Executive Director Corporate Services

Meeting Date:	Friday 31 March 2023
Time:	9.30am
Venue:	Small Exhibition Hall War Memorial Centre Marine Parade Napier

Type of Report:	Enter Significance of Report
Legal Reference:	Enter Legal Reference
Document ID:	1642327
Reporting Officer/s & Unit:	Talia Foster, Accounting Manager