Agenda of Audit, Risk and Finance Subcommittee

N-logotype-black-wide Audit, Risk and Finance Subcommittee

10 September 2015

Page No.

1. Apologies

1.1 An apology has been received from Mr John Peters.

2. Confirmation of Order of Business

3. Interests

3.1 Updates to the Interests Register

3.2 Identify any conflicts of interest in the agenda

4. Public Forum

5. Confirmation of Minutes

5.1 30 July 2015 5 - 12

Document number M1385

Recommendation

THAT the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 30 July 2015, be confirmed as a true and correct record.

6. Status Report - Audit, Risk and Finance Subcommittee - 10 September 2015 13 - 14

Document number R4799

Recommendation

THAT the Status Report Audit, Risk and Finance Subcommittee 10 September 2015 (R4799) and its attachment (A1324298) be received.

7. Chairperson's Report

8. Draft Annual Report 30 June 2015 15 - 83

Document number R4210

Recommendation

THAT the report Draft Annual Report 30 June 2015 (R4210) and its attachments (A1417003 and A1396738) be received.

9. Carry Forwards from 2014/15 84 - 88

Document number R4211

Recommendation

THAT the report Carry Forwards from 2014/15 (R4211) be received.

Recommendation to Governance Committee and Council

THAT $4,233,000 of unspent capital budget from 2014/15 be carried forward for use in 2015/16;

AND THAT $403,000 of capital spent in 2014/15 be offset against 2015/16 budgets;

AND THAT an amount of $107,000 operating budget be carried forward for use in 2015/16.

10. Draft Internal Audit Charter 89 - 95

Document number R4777

Recommendation

THAT the report Draft Internal Audit Charter (R4777) and its attachment (A1395134) be received.

Recommendation to Governance Committee and Council

THAT the Draft Internal Audit Charter (A1395134) be approved.

Minutes of a meeting of the Audit, Risk and Finance Subcommittee

Held in Ruma Mārama, Level 2A, Civic House, 110 Trafalgar Street, Nelson

On Thursday 30 July 2015, commencing at 1.00pm

Present: Mr J Peters (Chairperson), Councillors I Barker and B McGurk, and Mr J Murray

In Attendance: Chief Executive (C Hadley), Group Manager Infrastructure (A Louverdis), Group Manager Community Services (C Ward), Group Manager Corporate Services (N Harrison), Accounting Services Manager (L Anderson), and Administration Adviser (S McLean)

Apology: Her Worship the Mayor Rachel Reese

1. Apology

Resolved AUD/2015/018

THAT an apology be received and accepted from Her Worship the Mayor Rachel Reese.

Barker/McGurk Carried

2. Confirmation of Order of Business

The Chairperson advised of one late item for the public part of the meeting, and that the following resolution needed to be passed for the items to be considered:

2.1 Capital Projects 2014/15

Resolved AUD/2015/019

THAT the item regarding Capital Projects 2014/15 be considered at this meeting as a major item not on the agenda, pursuant to Section 46A(7)(a) of the Local Government Official Information and Meetings Act 1987, to enable a timely decision to be made.

Barker/McGurk Carried

3. Interests

There were no updates to the Interests Register, and no interests with items on the agenda were declared.

4. Public Forum

There was no public forum.

5. Confirmation of Minutes

5.1 18 June 2015

Document number M1286, agenda pages 6 - 12 refer.

It was noted that as the only business transacted in public excluded on 18 June 2015 was to confirm the minutes, this business has been recorded in the public minutes. In accordance with the Local Government Official Information Meetings Act, no reason for withholding this information from the public existed.

Resolved AUD/2015/020

THAT the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 18 June 2015, be confirmed as a true and correct record.

Murray/McGurk Carried

6. Status Report - Audit Risk and Finance Subcommittee - 30 July 2015

Document number R4596, agenda pages 13 - 14 refer.

In response to questions, the Chief Executive, Clare Hadley, advised that only resolutions containing actions were included in the status report.

Resolved AUD/2015/021

THAT the Status Report Audit, Risk and Finance Subcommittee 30 July 2015 (R4596) and its attachment (A1324298) be received.

McGurk/Barker Carried

7. Chairperson's Report

The Chairperson asked for further information to be provided to the Subcommittee on matters such as internal audit and risk management framework.

In response to a request from the Chairperson, the Chief Executive, Clare Hadley, advised that an internal appointment had been made to the Internal Audit position. She said there had not been any suitable applications to the Risk Management Analyst position, and alternative arrangements for that role were being looked into. Mrs Hadley added she was very pleased with the experience the new Manager Organisational Assurance brought to the organisation.

Group Manager Corporate Services, Nikki Harrison, said an internal audit charter was being prepared for the 10 September 2015 Subcommittee meeting.

Resolved AUD/2015/022

THAT the verbal Chairperson’s Report be received;

AND THAT information on the risk management framework, Subcommittee work plan, internal audit work plan, and internal audit charter be provided at the next Subcommittee meeting.

Peters/Murray Carried

8. Update on charging interest on general debtors

Document number R4579, agenda pages 15 - 22 refer.

Group Manager Corporate Services, Nikki Harrison, presented the report.

In response to a question, Ms Harrison advised that penalties charged on rates and water were lump sum charges and this was a different process to charging interest.

There was discussion on the Draft Debt Management Policy and the allowance for charging interest at the discretion of the Group Manager Corporate Services.

In response to a suggestion that spreadsheets could be a viable alternative, the Chief Executive, Clare Hadley, cautioned the Subcommittee that running a manual workaround process to charge interest would increase the risk of error. She said Council would either need to invest in additional technology or determine that a process for charging interest was not warranted.

Mrs Hadley highlighted that general debtor levels were low and outstanding debts were only a small portion of debtors.

There was discussion on penalties set by local government legislation, which were integrated into the current accounting software.

Ms Harrison confirmed Council’s terms of trade would reflect the ability to charge discretionary interest.

Resolved AUD/2015/023

THAT the report Update on charging interest on general debtors (R4579) and its attachment (A1353429) be received;

AND THAT Council do not proceed with charging interest on all overdue general debtors at this time.

Barker/McGurk Carried

Mrs Harrison tabled the debt collection process used by officers (A1396334).

Accounting Services Manager, Lynn Anderson, provided detail on the debt collection process after 60 and 90 days.

In response to a question, Ms Anderson said marina debt was managed by Nelmac to a certain extent.

Ms Harrison confirmed the debt collection process would be included in the Draft Debt Management Policy.

Recommendation to Governance Committee and Council AUD/2015/024

THAT the Draft Debt Management Policy (A1353429) be approved.

Barker/McGurk Carried

Attachments

1 A1396334 - Tabled Document - Action and Collect Debtors Overdue Accounts Process

9. Update on business case approach

Document number R4454, agenda pages 23 - 27 refer.

In response to questions, Mrs Hadley confirmed the capital expenditure projects listed in Attachment 1 to the report (A1331113) were reported to Council in various ways. She advised the Civic House Renewal Programme would be reported to the Commercial Subcommittee as and when there was any information to report within the delegations for the Subcommittee.

Resolved AUD/2015/025

THAT the report Update on business case approach (R4454) and its attachment (A1331113) be received.

Murray/Barker Carried

10. Corporate Report to 31 May 2015

Document number R4523, agenda pages 28 - 48 refer.

Group Manager Corporate Services, Nikki Harrison, presented the report and tabled an updated NCC Variance to Projection 31 May 2015 table (A1396340).

It was noted that information on Maitai Walkway financials had been requested at the 18 June 2015 Subcommittee meeting and would need to be included in the Corporate Report to the 10 September 2015 Subcommittee meeting.

Ms Harrison highlighted there would be a larger carry forward than expected this financial year. In response to a question, she confirmed the carry forward figure did not include gifted or vested land. Concern was raised that carry forwards could appear to the community that Council had rated for work which was not carried out.

In response to a question, Ms Harrison clarified that carry forwards were a separate issue to surplus funds, and were related to funding policy decisions. Ms Harrison added that the Long Term Plan 2015/25 had reduced contingency funding in order to avoid overrating. She said a portion of future carry forwards would be allocated to paying down debt.

In response to a question, the Chief Executive, Clare Hadley, advised the criteria for allocating funding for economic development projects and events was tight and was focussed on extending the shoulders of peak seasons in Nelson. She said there were few applications that matched the criteria. Group Manager Community Services, Chris Ward, confirmed this matter was being considered with the economic services review.

There was discussion on the Ridgeways Joint Venture. Ms Harrison advised she would be looking into ways to reduce holding costs on the Ridgeways land.

Resolved AUD/2015/026

THAT the report Corporate Report to 31 May 2015 (R4523) and its attachments (A1376070, A1384382, A1384389, A1375171, A1366415, A793514) be received and the variations noted.

Murray/McGurk Carried

Attachments

1 A1396340 - Tabled Document - NCC Variance to Projection 31 May 2015

11. Capital Projects 2014/15

Document number R4646, late item M1381 pages 2 - 4 refer.

Group Manager Corporate Services, Nikki Harrison, presented the report.

Resolved AUD/2015/027

THAT the report Capital Projects 2014/15 (R4646) be received.

Barker/McGurk Carried

Recommendation to Governance Committee and Council AUD/2015/028

THAT Council approves continuing work on 2014/15 capital projects within the 2014/15 approved budgets, noting a report on carry forwards will come to the Audit, Risk and Finance Subcommittee meeting on 10 September 2015.

Barker/McGurk Carried

12. Rates Remissions for 2014/15

Document number R4204, agenda pages 49 - 60 refer.

Group Manager Corporate Services, Nikki Harrison, presented the report.

In response to a question, Ms Harrison said there were occasions where a level of judgement was required for rates remissions, and peer reviews often took place.

Resolved AUD/2015/029

THAT the report Rates Remissions for 2014/15 (R4204) and its attachments (A1383906 and A1222068) be received.

Murray/McGurk Carried

13. Insurance Renewal for 2015/16

Document number R4245, agenda pages 61 - 64 refer.

Group Manager Corporate Services, Nikki Harrison, presented the report.

Resolved AUD/2015/030

THAT the report Insurance Renewal for 2015/16 (R4245) be received.

McGurk/Barker Carried

14. Bad debt report to 30 June 2015

Document number R4206, agenda pages 65 - 66 refer.

The Subcommittee congratulated officers on the low level of bad debts.

Resolved AUD/2015/031

THAT the report Bad debt report to 30 June 2015 (R4206) be received.

Murray/Barker Carried

15. 2014/15 Audit New Zealand Letters

Document number R4433, agenda pages 67 - 87 refer.

Group Manager Corporate Services, Nikki Harrison, presented the report and tabled the interim Audit New Zealand letter to management (A1371564).

There was discussion on the Subcommittee’s future involvement on audit matters. Ms Harrison confirmed the Subcommittee would receive the draft Annual Report at its meeting on 10 September 2015.

It was agreed that Ms Harrison would arrange a meeting between the auditor and the members of the Subcommittee in September or October 2015.

In response to questions, it was confirmed there was an internal interests register for the Senior Leadership Team, which was soon to be rolled out to other levels of the organisation. It was also confirmed that Council had a Procurement Policy which was clear on conflicts of interest, and there was a ‘whistle-blowing’ service available.

There was discussion on the reference to independent quality assurance reviews in the audit letter. The Chief Executive, Clare Hadley said this would be considered as and when appropriate.

Questions were raised on fraud protection measures used by Council. Ms Harrison highlighted that the Subcommittee work programme due to be presented on 10 September would provide clarity on this.

Resolved AUD/2015/032

THAT the report 2014/15 Audit New Zealand Letters (R4433) and its attachments (A1371563 and A1372353) be received.

AND THAT the Subcommittee support the engagement letter being signed by Her Worship the Mayor.

Murray/McGurk Carried

Attachments

1 A1371564 - Tabled Document - Management Letter, Interim audit of NCC - Audit New Zealand

There being no further business the meeting ended at 3.12pm.

Confirmed as a correct record of proceedings:

Chairperson Date

Audit, Risk and Finance Subcommittee

10 September 2015

REPORT R4210

Draft Annual Report 30 June 2015

1. Purpose

1.1 To receive the draft Annual Report 2014/15.

2. Delegations

2.1 The Audit, Risk and Finance Committee has the delegations for monitoring Council’s financial and service performance.

3. Recommendation

THAT the report Draft Annual Report 30 June 2015 (R4210) and its attachments (A1417003 and A1396738) be received.

4. Background

4.1 The purpose of an Annual Report is to compare the actual activities and performance of the local authority with those intended, as set out in the applicable Annual Plan. It also aims to promote the local authority’s accountability to the community for the decisions made throughout the year. An Annual Report is required under section 98 of the Local Government Act 2002.

5. Discussion

5.1 The attached draft Annual Report 2014/15 is intended to provide Committee members with all the information officers have obtained to date and to allow the opportunity to provide feedback. The intention is not to present a completed Annual Report at this stage, but rather to provide as complete a picture as possible for consideration. This draft has not yet been audited by Audit New Zealand, and is likely to require some modification through the auditing process. Some notes to the accounts have yet to be prepared pending that work.

5.2 The financial statements in the 2014/15 annual report are prepared under the new Public Benefit Entity International Public Sector Accounting Standards (PBE IPSAS). This has required a small number of prior year re-statements and re-categorisations. There is also likely to be additional explanatory notes to the financial statements, and some disclosure requirements have changed.

5.3 The final Annual Report 2014/15 is required to be adopted by Council within four months of the financial year’s end (by the end of October) and is proposed to be brought to Council for adoption at all Council meeting on 15 October 2015.

6. Options

6.1 As the Draft Annual Report is provided for information, the options are to receive the report or not as well as provide any feedback to officers.

7. Alignment with relevant Council policy

7.1 The annual report is the method by which Council compares it’s activities against the relevant annual or long-term plan.

8. Assessment of Significance against the Council’s Significance and Engagement Policy

8.1 This is not a significant decision under the Council’s significance and engagement policy.

9. Consultation

9.1 There is no consultation required.

10. Inclusion of Māori in the decision making process

10.1 There is no consultation required.

11. Conclusion

11.1 An Annual Report is required to be completed under the Local Government Act 2002.

11.2 The purpose of this report is to provide Councillors with a draft version of the Annual Report 2014/15 to allow any feedback to officers.

Tracey Hughes

Senior Accountant

Attachments

Attachment 1: A1417003 - Annual Report 2014-15 Draft Financials and activity statements

Attachment 2: A1396738 - Draft Annual Report 2014-15 Statement of Service Performance (Circulated separately)

Audit, Risk and Finance Subcommittee

10 September 2015

REPORT R4211

Carry Forwards from 2014/15

1. Purpose of Report

1.1 To inform the Committee of the process followed, and request approval of the resulting carry forward of unspent budget.

2. Delegations

2.1 The Audit, Risk and Finance Committee has oversight of the management of financial risk and makes recommendations to the Governance Committee and to Council.

3. Recommendation

THAT the report Carry Forwards from 2014/15 (R4211) be received.

Recommendation to Governance Committee and Council

THAT $4,233,000 of unspent capital budget from 2014/15 be carried forward for use in 2015/16;

AND THAT $403,000 of capital spent in 2014/15 be offset against 2015/16 budgets;

AND THAT an amount of $107,000 operating budget be carried forward for use in 2015/16.

4. Background

4.1 The capital programme for 2014/15, as agreed in the Annual Plan 2014/15, totalled $54.9 million including staff costs of $2.1 million and excluding NRSBU (all figures quoted in this report do not include vested assets).

4.2 Carry forwards totalling $1.7 million from 2013/14 were added to this giving a new total capital programme of $56.6 million.

4.3 The last budget projections were completed by officers in early May 2015, as part of the Long Term Plan 2015-25 process. This process revised the 2014/15 capital programme down to $35.0 million.

4.4 Capital expenditure for 2014/15 totalled $30.7 million, a variance of $4.3 million against the projection.

4.5 The organisation delivered 84% of the approved physical works programme for the year. Physical works is essentially asset construction and does not include other capital items such as design and consenting.

4.6 Of the total $24.2 million variance against original budget, $11.4 million is attributable to not acquiring the Nelson School of Music and the Theatre Royal. A further $4.4 million relates to scheduling changes for the Trafalgar Centre and Saxton Creek upgrade.

4.7 Capital projects that were budgeted in 2014/15 but subsequently removed through the projections were then reconsidered for the Long Term Plan 2015-25.

4.8 The 2015/16 Annual Plan has a capital programme of $55.3 million including projects carried over from 2014/15 through the LTP process.

4.9 Once the 2014/15 year was closed for processing, officers collated data relating to the capital projects undertaken during the year, identifying variances against the last projection. Project managers were asked to identify which variances represented savings, and where they wished to carry forward budget into 2015/16 they were asked to support their request. Senior Leadership Team reviewed the resulting information with the project managers against agreed criteria.

4.10 Reasons for carry forwards being requested include: expenditure committed but suppliers unable to deliver before financial year end, delays related to vendors or other stakeholders, and construction delays.

5. Discussion

Savings

5.1 Officers identified $451,000 of savings in capital expenditure against projection. This will have a positive impact on interest, depreciation and debt levels, in excess of that already identified through the 2015/16 Annual Plan.

5.2 Savings represent renewals budgets, land purchases budgets and staff time not required along with savings against completed projects or stages of projects.

Capital carry forwards

5.3 For renewals budgets and multi-year projects, any spend over the 2014/15 projection is considered a timing variance and is offset against the 2015/16 budget, thereby reducing it in the amount of $403,000.

5.4 Officers have requested that $4.2 million be carried forward into 2015/16, revising the total capital programme to $59.5 million. Interest, depreciation, and debt relating to these amounts was already built into the 2015/16 Annual Plan.

5.5 Totals by activity are as follows:

Projects with differences against projection greater than $100,000 are as follows:

Operating expenditure carry forwards

5.6 It is not normal practise to carry forward operating expenditure. The items below represent specific projects that cross the 2014/15 and 2015/16 financial years, and were budgeted/projected on a whole of project basis. In these cases, anticipated spend did not occur in 2014/15 and it is recommended that the budget remaining be added to that already approved for 2015/16. This treatment means that the whole of project budget remains the same.

Activity	Project	2015/16 Budget Reduction $000	Carry forward to 2015/16 $000
Corporate	Councillor training		42
Corporate	Condition assessments		27
Corporate	Property assets review		38

6. Options

6.1 Work has continued on 2014/15 capital projects following the resolution at the Audit, Risk and Finance committee on 30 July 2015 and costs will have been incurred. There is therefore no viable option other than to accept the officers’ recommendation.

7. Alignment with relevant Council policy

7.1 The amounts proposed to be carried forward to 2015/16 were approved spending in the Annual Plan 2014/15.

8. Assessment of Significance against the Council’s Significance and Engagement Policy

8.1 This is not a significant decision under the Council’s significance and engagement policy.

9. Consultation

9.1 The amounts proposed to be carried forward were already consulted on through the Annual Plan 2014/15.

10. Inclusion of Māori in the decision making process

10.1 No specific consultation with Maori has been undertaken in preparation of this report.

11. Conclusion

11.1 An analysis of capital expenditure against projection for 2014/15 and subsequent review by Senior Leadership Team indicates:

11.2 There are savings from the capital budget of $0.5 million;

11.3 Renewals and multi-year projects overspent by $0.4 million should be offset against 2015/16 budgets;

11.4 $4.2 million of capital budget not spent should be carried forward into 2015/16.

11.5 $107,000 of operating expenditure not spent should be carried forward into 2015/16.

Tracey Hughes

Senior Accountant

Attachments

Nil

Audit, Risk and Finance Subcommittee

10 September 2015

REPORT R4777

Draft Internal Audit Charter

1. Purpose of Report

1.1 To approve the Draft Internal Audit Charter.

2. Delegations

2.1 The Audit, Risk and Finance Subcommittee has responsibility for internal audit.

3. Recommendation

THAT the report Draft Internal Audit Charter (R4777) and its attachment (A1395134) be received.

Recommendation to Governance Committee and Council

THAT the Draft Internal Audit Charter (A1395134) be approved.

4. Discussion

4.1 Council recently established an internal audit role within the Organisational Assurance team following feedback for Audit NZ. It is appropriate to have an Internal Audit Charter.

4.2 The Internal Audit Charter is a formal document that defines the purpose, authority and responsibility of the internal audit function. The charter establishes the position of the internal audit function within the organisation; authorises access to records, staff and physical property relevant to the performance of internal audit engagements; and defines the scope of work.

4.3 It is intended that a risk based internal audit plan will be brought to the Committee at least annually. The intention is to bring this to the 12 November committee meeting after some risk assessments have been undertake across the organisation.

5. Options

5.1 Accept the recommendation – approve the Draft Internal Audit Charter.

5.2 Reject the recommendation – not approve the Draft Internal Audit Charter.

6. Alignment with relevant Council policy

6.1 This decision is not inconsistent with any other previous Council decision.

7. Assessment of Significance against the Council’s Significance and Engagement Policy

7.1 This is not a significant decision under the Council’s Significance and Engagement Policy.

8. Consultation

8.1 No consultation has been undertaken in preparing this charter.

9. Inclusion of Māori in the decision making process

9.1 No consultation with Maori has been undertaken in preparing this charter.

Nikki Harrison

Group Manager Corporate Services

Attachments

Attachment 1: A1395134 - Draft Internal Audit Charter

N-logotype-black-wide

Draft Internal Audit Charter

Effective Date: September 2015

Review Date: September 2018

1. Contact: Manager Organisational Assurance

1. Introduction

1.1. Internal Auditing is an independent and objective assurance and advisory activity. It assists the Council in accomplishing its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of the organisation’s performance, risk management, internal control and the application of policy and process.

2. Role

2.1. The internal audit activity is established by the Audit, Risk and Finance Sub-Committee (AR&F) and the Manager Organisational Assurance. The internal audit activity’s responsibilities are defined and approved by the Council (by recommendation from the Governance Committee) as part of their oversight role.

3. Professionalism

3.1. Professional oversight of the internal audit activity will be guided by reference to The Institute of Internal Auditors’ mandatory guidance including the Definition of Internal Auditing, the Code of Ethics, and the International Standards for the Professional Practice of Internal Auditing (Standards). This mandatory guidance constitutes principles of the fundamental requirements for the professional practice of internal auditing and for evaluating the effectiveness of the internal audit activity’s performance.

3.2. The Institute of Internal Auditors’ Practice Advisories, Practice Guides, and Position Papers will also be adhered to as applicable to guide operations. In addition, the internal audit activity will adhere to the Council’s relevant policies and procedures and the internal audit activity’s standard operating procedures manual.

4. Authority

4.1. The internal audit activity, with strict accountability for confidentiality and safeguarding records and information, is authorised to have full, free, and unrestricted access to any and all of Nelson City Council’s records, physical properties, and employees pertinent to carrying out any engagement. All employees are required to assist the internal audit activity in fulfilling its roles and responsibilities. The internal audit activity will also have free and unrestricted access to the Chief Executive, the Governance Committee Chair and the AR&F Committee (through the Chair).

5. Organisation

5.1. The Internal Audit and Procurement Analyst (IA & PA) will report to the Manager Organisational Assurance. In order to ensure the internal activity has a level of organisational independence the internal auditor may from time to time interact with the Chair of the Audit, Risk and Finance Committee.

5.2. The AR&F sub-committee will:

· Approve the internal audit charter and any amendments.

· Approve the risk based internal audit plan.

· Receive communications from the IA & PA on the internal audit activity’s performance relative to its plan and other matters.

· Make appropriate inquiries of management and the IA & PA to determine whether there is inappropriate scope or resource limitations.

5.3. The IA & PA will communicate and interact directly with the ARF Committee through the Chair of AR&F if required.

6. Independence and Objectivity

6.1. The internal audit activity will remain free from interference by any element in the organisation, including matters of audit selection, scope, procedures, frequency, timing, or report content to permit maintenance of a necessary independent and objective mental attitude.

6.2. Internal auditors will have no direct operational responsibility or authority over any of the activities audited. Accordingly, they will not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair internal auditor’s judgment.

6.3. Internal auditors will exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors will make a balanced assessment of all the relevant circumstances and not be unduly influenced by their own interest or by others in forming judgments.

6.4. The IA & PA will confirm to the AF&R sub-committee, if there are concerns about the organisational independence of the internal audit activity.

7. Responsibility

7.1. The scope of internal auditing encompasses, but is not limited to, the examination and evaluation of the adequacy and effectiveness of the organisation’s performance, risk management, and internal controls as well as the quality of performance in carrying out assigned responsibilities to achieve the organisation’s stated goals and objectives. This includes:

· Evaluating risk exposure relating to achievement of the organisation’s strategic objectives.

· Evaluating the reliability and integrity of information and the means used to identify, measure, classify, and report such information.

· Evaluating the systems established to ensure compliance with those policies, plans, procedures, laws, and regulations which could have a significant impact on the organisation.

· Evaluating the means of safeguarding assets and, as appropriate, verifying the existence of such assets.

· Evaluating the effectiveness and efficiency with which resources are employed.

· Evaluating operations or programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned.

· Monitoring and evaluating the effectiveness of the organisation’s risk management processes.

· Performing investigation and advisory services related to risk management and control as appropriate for the organisation

· Liaising with external auditors in the performance of their duties.

· Performing investigation and advisory services related to risk management and control as appropriate for the organisation.

· Reporting periodically on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan.

· Reporting significant risk exposures and control issues, including fraud risks, and other matters needed or requested by the AR&F sub-committee.

· Evaluating specific operations at the request of the AR&F sub-committee or management, as appropriate.

8. Internal Audit Plan

8.1. At least annually, the IA & PA, Manager of Organisational Assurance and GM Corporate Services will submit to the Senior Leadership Team (SLT) and the AR&F sub-committee an internal audit plan for review and recommendation to the Governance Committee for approval. The internal audit plan will consist of a work schedule as well as budget and resource requirements for the next fiscal year. The IA & PA will communicate the impact of resource limitations and significant interim changes to SLT and the AR&F sub-committee.

8.2. The internal audit plan will be developed based on a prioritisation of a list of all potential audit topics^{^[1]} using a risk-based methodology, including input of SLT and the AR&F sub-committee. The IA & PA will review and adjust the plan, as necessary, in response to changes in the organisation’s business, risks, operations, programs, systems and controls. Any significant deviation from the approved internal audit plan will be considered by AR&F after seeking guidance (if appropriate) from the Chief Executive and if necessary the Governance Committee.

9. Reporting and Monitoring

9.1. A written report will be prepared and issued by the IP & PA following the conclusion of each internal audit engagement and will be distributed as appropriate. Internal audit results will, where appropriate, be communicated to SLT, AR&F sub-committee and the Governance Committee

9.2. The internal audit report should include management’s response and corrective action taken or to be taken in regard to the specific findings and recommendations. Management’s response, whether included within the original audit report or provided thereafter by management of the audited area should include a timetable for anticipated completion of action to be taken and an explanation for any corrective action that will not be implemented.

9.3. The internal audit activity will be responsible for appropriate follow-up on engagement findings and recommendations, although it is management’s responsibility to address. All significant findings will remain in an open issues file until cleared.

9.4. The IA & PA will periodically report to SLT and the AR&F sub-committee on the internal audit activity’s purpose, authority, and responsibility, as well as performance relative to its plan. Reporting will also include significant risk exposures and control issues, including fraud risks, and other matters needed or requested by the Governance Committee, the AR&F sub-committee or SLT.

10. Quality Assurance and Improvement Program

10.1. The internal audit activity will maintain a quality assurance and improvement program that covers all aspects of the internal audit activity. The program will include an evaluation of the internal audit activity’s conformance with the Definition of Internal Auditing and the Standards and an evaluation of whether internal auditors apply the Code of Ethics. The program also assesses the efficiency and effectiveness of the internal audit activity and identifies opportunities for improvement.

10.2. The IA & PA will communicate to SLT and the ARF Committee on the internal audit activity’s quality assurance and improvement program, including results of ongoing internal assessments and external assessments conducted at least every five years. Is this professional practice? Yes – can take out if you want.

11. Update of the Internal Audit Charter

11.1. The IA & PA will ensure this Internal Audit Charter is periodically reviewed and revised for relevance. Any changes to the Internal Audit Charter will require consideration by the AR&F sub-committee and the approval of the Council (by recommendation from the Governance Committee) after taking account of the recommendation of the Chief Executive.

Approved by resolution of Council at the meeting held on TBA

[1] Called the internal audit “universe”.