Agenda of Audit, Risk and Finance Subcommittee

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

14 October 2015

Page No.

1. Apologies

Nil

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 10 September 2015 5 - 10

Document number M1459

Recommendation

THAT the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 10 September 2015, be confirmed as a true and correct record.

6. Status Report - Status Report - 14 October 2015 11 - 12

Document number R4982

Recommendation

THAT the Status Report Audit, Risk and Finance Subcommittee 14 October 2015 (R4982) and its attachment (A1324298) be received.

7. Chairperson's Report

8. Draft Asset Disposal Policy 13 - 18

Document number R4823

Recommendation

THAT the report Draft Asset Disposal Policy (R4823) and its attachment (A1412442) be received.

Recommendation to Governance Committee and Council

THAT the Draft Asset Disposal Policy (A1412442) be approved;

AND THAT the Delegations Manual is updated to reflect the delegations in the Asset Disposal Policy.

9. Draft Risk Management Framework 19 - 34

Document number R4887

Recommendation

THAT the report Draft Risk Management Framework (R4887) and its attachment (A1431591) be received.

Recommendation to Governance Committee and Council

THAT the Draft Risk Management Framework (A1431591) be approved.

10. Corporate Report to 31 August 2015 35 - 51

Document number R4939

Recommendation

THAT the report Corporate Report to 31 August 2015 (R4939) and its attachments (A1422506, A1432835, A793514, and A1436178) be received and the variations noted.

Recommendation to Governance Committee and Council

THAT $350,000 for the upgrade of the Civic House verandah be deferred until 2017/18;

AND THAT $200,000 for the upgrade of the Hunter Furniture roof be deferred until 2016/17.

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 10 September 2015, commencing at 1.03pm

Present: Mr J Murray (Chairperson), Her Worship the Mayor R Reese, Councillors I Barker, and B McGurk

In Attendance: Councillors P Matheson, G Noonan and T Skinner, Chief Executive (C Hadley), Group Manager Infrastructure (A Louverdis), Group Manager Corporate Services (N Harrison), Senior Accountant (T Hughes), Senior Strategic Adviser (N McDonald), Administration Adviser (G Brown), and Audit New Zealand (B Kearney)

Apology: Mr J Peters

1. Apologies

Resolved AUD/2015/033

THAT an apology be received and accepted from Mr Peters.

Barker/Her Worship the Mayor Carried

2. Confirmation of Order of Business

The Chairperson advised that item 8, Draft Annual Report 30 June 2015, would be considered first on the agenda.

3. Interests

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

4. Draft Annual Report 30 June 2015

Document number R4210, agenda pages 15 - 83 refer.

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

In response to a question, the Chief Executive, Clare Hadley clarified that the draft Annual Report was in two sections, written text and financials as different officers compiled these sections.

It was discussed that comments needed to be requested from Councillors in relation to the draft Annual Report. Mrs Hadley advised that she would advise all Councillors of today’s discussion and ask for feedback while clarifying the document split.

It was highlighted that there were some good stories to be told in relation to the draft Annual Report rates and debt levels.

In response to a question, Ms Harrison clarified that water was measured by consumption and not classified as rates. Audit New Zealand, Auditor, Bede Kearney added that clearer classification for water consumption would be published next year from a change in local government regulations.

It was discussed that the status of receivables for 2014 illustrated in attachment 1 included the Everyman and Marina bad debts.

In response to a question, Ms Hughes said that Port Nelson and Tasman Bays Heritage Trust Land were all showing as zero on page 48 of the agenda as this illustrated only Council results and not group results.

It was discussed that the wording on page 50 in the Port Nelson section in relation to the ‘title to this area of seabed’ should be reworded if possible.

There was a discussion regarding Related party transactions on page 52 of the agenda in that it should include external appointees, however it was advised that external appointees would be included under key management personnel.

With regards to Working with Maori in attachment 2, it was highlighted that there was no reference to engagement with councillors.

In response to a question, Mrs Hadley advised that documentation was still being prepared in relation to an agreed process with iwi to tender for cultural impact assessments work for infrastructure resource consents.

It was highlighted that there was no commentary around inner city parking and it was questioned whether this topic formed part of the Residents Survey.

In addition it was noted that motor camps, the Trafalgar Centre, and Waahi Taakaro Golf Club needed commentary under Recreation and Leisure.

It was noted that the New Zealand Transport Agency R Funding in relation to Rocks Road would be worthwhile mentioning also in the commentary.

It was suggested that it should be highlighted that the shift in focus to improve footpaths was not only for mobility scooters but for the elderly and sight impaired.

In response to a question, Ms Hughes said that infrastructure revaluations were on a two yearly cycle. She said last year was a full revaluation and this year was an off year. She added the actual revaluation amounts for 2014 and 2015 in the Statement of Comprehensive Revenue and Expense represented the increase in each respective year.

Mr Kearney advised the Committee that the audit was progressing well. He highlighted that there would be changes to auditing standards next year but brought emphasis into these focus areas this year.

In response to a question, Mr Kearney said that it was good practice to adopt a business case approach.

Resolved AUD/2015/034

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

Barker/McGurk Carried

5. Public Forum

There was no public forum.

6. Confirmation of Minutes

6.1 30 July 2015

Document number M1385, agenda pages 5 - 12 refer.

Resolved AUD/2015/035

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.

Barker/McGurk Carried

7. Status Report - Audit, Risk and Finance Subcommittee - 10 September 2015

Document number R4799, agenda pages 13 - 14 refer.

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

Resolved AUD/2015/036

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

Her Worship the Mayor/McGurk Carried

8. Chairperson's Report

There was no Chairperson’s Report.

9. Carry Forwards from 2014/15

Document number R4211, agenda pages 84 - 88 refer.

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

In response to a question, Group Manager Infrastructure, Alec Louverdis, advised that subject to no major changes to the work programme he believed Nelson City Council was adequately resourced for the capital programme of $55.3 million. It was noted that the programme included large projects such as the Trafalgar Centre strengthening, Rutherford Park, the Suter and Nelson School of Music developments.

Mrs Hadley highlighted that part of the organisational restructure was to provide more support in the capital projects area however, at times resource consents, New Zealand Transport Agency approval, engagement with landowners and easements could hold projects up.

Resolved AUD/2015/037

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

Barker/McGurk Carried

Recommendation to Governance Committee and Council AUD/2015/038

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.

McGurk/Barker Carried

10. Draft Internal Audit Charter

Document number R4777, agenda pages 89 - 95 refer.

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

There was a discussion regarding the work programme. Ms Harrison advised that a Standard Operating Procedures Manual would be compiled and that the Audit, Risk and Finance Subcommittee would review this document.

It was requested that the following changes be made to the draft Internal Audit Charter:

· Add the word ‘directly’ to section 5.1 in relation to interaction with the Chair

· Change the wording ‘if required’ to ‘as required’ in section 5.3

· Add the words to the fifth bullet point in section 7.1 at the end ‘and integrated, and their contribution to council outcomes’

· Add the words ‘and testing’ to the second and subsequent bullet points in section 7.1 so it reads ‘Evaluating and testing the reliability...’

· Section 8.2, recommended changes to be reviewed by Group Manager Corporate Services and Manager Organisational Assurance

· Remove additional wording in section 10.2

There was a discussion regarding a whistle blower mechanism. The Chief Executive, Clare Hadley advised the Committee that Nelson City Council had a ‘Report it Now’ system to report any unethical behaviour. She added that this function was the responsibility of Human Resources.

It was suggested that contractors should also be made aware of the ‘Report it Now’ system.

It was noted that the Fraud Policy was included in the work programme for the Audit, Risk and Finance Subcommittee.

There was a discussion regarding expectations in relation to internal audit reporting and it was agreed that progress against the work programme would be adequate showing high level findings such as areas being worked on, findings and work going forward at each meeting, as well as more structured reporting on a six monthly basis.

Resolved AUD/2015/039

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

Barker/McGurk Carried

Recommendation to Governance Committee and Council AUD/2015/040

THAT the Draft Internal Audit Charter (A1395134) as amended as per the Audit, Risk and Finance Subcommittee minutes 10 September 2015 be approved.

Her Worship the Mayor/McGurk Carried

There being no further business the meeting ended at 2.44pm.

Confirmed as a correct record of proceedings:

Chairperson Date

Audit, Risk and Finance Subcommittee

14 October 2015

REPORT R4823

Draft Asset Disposal Policy

1. Purpose of Report

1.1 To approve the Draft Asset Disposal Policy.

2. Delegations

2.1 The Audit, Risk and Finance Subcommittee has responsibility for risk management and internal control.

3. Recommendation

THAT the report Draft Asset Disposal Policy (R4823) and its attachment (A1412442) be received.

Recommendation to Governance Committee and Council

THAT the Draft Asset Disposal Policy (A1412442) be approved;

AND THAT the Delegations Manual is updated to reflect the delegations in the Asset Disposal Policy.

4. Discussion

4.1 It is best practice to have an Asset Disposal Policy to provide clear guidance to staff on how and when to dispose of assets. Although Council has robust internal processes around approving asset disposals it does not have a formal policy.

4.2 In documenting the policy, it is noted that there is not currently a formal delegation in the Delegations Manual relating to asset disposals which needs to be addressed.

5. Options

5.1 Accept the recommendation – approve the Draft Asset Disposal Policy.

5.2 Reject the recommendation – not approve the Draft Asset Disposal Policy.

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 policy.

9. Inclusion of Māori in the decision making process

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

Nikki Harrison

Group Manager Corporate Services

Attachments

Attachment 1: A1412442 - Draft Asset Disposal Policy

N-logotype-black-wide

Draft Asset Disposal Policy

Effective Date: September 2015

Review Date: September 2018

Contact: Senior Accountant, Finance

1. Introduction

1.1. Entities that dispose of capital assets must ensure they have clearly set out processes to ensure that the disposal of unwanted resources takes place in a transparent and accountable manner.

1.2. Disposals should be carefully planned and conducted so that they maximise value for money for the Council and minimise opportunities for exploitation by individual employees, private persons or organisations.

2. Purpose

3. The purpose of this policy is to set out the principles and processes for disposal of Council assets and to provide clear guidance to staff on how and when to dispose of Council assets.

4. Definitions

4.1. Assets – include, but may not be limited to, financial assets (debtors, loans), real property, plant and equipment, computer hardware, furniture and fittings, collections, vehicles, intellectual property, data and information. Land disposals must be approved by Council. Library books are excluded as they are covered by the Libraries Content management guidelines which covers book disposal.

4.2. Disposal – includes the sale, scrapping, write off, barter, trading or any other means of ceasing beneficial ownership or custody of assets.

4.3. Write off – specially refers to the removal of the asset from the Council asset register, or Statement of Financial Position, at nil value.

5. Principles

5.1. Assets will be disposed of in the manner that ensures Council achieves the best net value for the assets.

5.2. Disposals will be conducted in an efficient, effective and transparent manner.

5.3. All asset disposals will be appropriately authorised and adequately documented.

5.4. Disposal processes will ensure that assets that are sold or scrapped are removed appropriately from the asset and financial records and insurance register.

5.5. Tight controls will be in place to ensure that Council staff and elected members are not advantaged over members of the public.

5.6. All assets to be disposed of are:

5.6.1. assessed for health and safety impacts prior to sale which are included in the sale documentation and;

5.6.2. a disclaimer is stated that any buyer shall be responsible for ensuring the health and safety risks of any future use of the asset and ensuring it meets any legal and other requirements for its intended use.

5.7. All asset disposals must be in accordance with any relevant provisions of the Local Government Act 2002 (Section 133, 138 and 140), Consumer Guarantees Act 1993 and Fair Trading Act 1988.

6. Policy content

6.1. The Council expects the disposal of assets to achieve the best net value for money possible.

6.2. Proper authorisation, in accordance with the Officers Delegation Manual/this policy will be obtained before any asset is disposed of.

6.3. All disposals of assets will be through an open, fair and transparent process.

6.4. Every asset disposal will be fully documented, clearly identifying the asset, who authorised its disposal, the sale price, whom it was disposed to and recorded in a timely and accurate manner in the fixed asset records.

6.5. Proceeds from the sale of assets must be correctly and expediently recorded in the financial accounting systems.

6.6. Independent appraisals of value will be obtained for higher value assets prior to their disposal as set out in the procedure.

7. Authorisation

7.1. The initial decision to dispose of an asset must be made by a third tier manager (Business Unit Manager) responsible for the asset. This should occur when the manager becomes aware that the asset is redundant, obsolete, replaced, damaged, stolen or surplus to requirements. Written authorisation to dispose of the asset must be obtained from a Group Manager or the Chief Executive (depending on the value) prior to commencing the process.

7.2. Any sales above $50,000 must be authorised by Council. All land disposals must be approved by Council.

8. Methods of disposal

8.1. To establish a perceived value, find examples of like items being sold in similar circumstances by other sellers.

8.2. The valuation for the authorisation and method of disposal is based on the total perceived value of the items being disposed of on one day to a seller ie if selling 300 $30 phones, the perceived value would be $9,000 and would required CE signoff.

8.3. The below table sets out the methods of disposal to be used:

8.4.

Estimated sale value of asset	Method	Approval
Under $500	Internal tender available to all staff or Trade-in or Gift to non-profit organisation	GM Corporate Services or GM Infrastructure
$500 - $5,000	Public auction or Trade-in or Sell to dealer (3 quotes)	GM Corporate Services or GM Infrastructure
$5,000-$50,000	Public auction or Trade-in or Sell to dealer (3 quotes)	Chief Executive
Over $50,000	Public auction or Trade-in	Council

8.5. The reserve prices for auctioned items should not be less than the book value of the asset unless there is a tangible reason, such as market belief that the asset is obsolete or the condition of the asset is such that it is reduced in value. With vehicles, if selling by auction, set the reserve price by reviewing similar vehicles on the auction site.

8.6. Technology items that hold data will not be on sold. The hard drive of the device will be destroyed and then the item will be disposed of.

9. Related policies and procedures

9.1. Officers Delegations Manual

Audit, Risk and Finance Subcommittee

14 October 2015

REPORT R4887

Draft Risk Management Framework

1. Purpose of Report

1.1 To approve the Draft Risk Management Framework.

2. Delegations

2.1 The Audit, Risk and Finance Subcommittee has responsibility for risk management and internal control.

3. Recommendation

THAT the report Draft Risk Management Framework (R4887) and its attachment (A1431591) be received.

Recommendation to Governance Committee and Council

THAT the Draft Risk Management Framework (A1431591) be approved.

4. Background

4.1 The Council risk register was last reported to the Audit, Risk and Finance subcommittee at the 18 June 2015 meeting. At that meeting a high level plan for the development of a risk management framework was put forward with the intent to present the Draft Risk Management Framework to this Subcommittee by 30 September 2015.

5. Discussion

5.1 The Draft Risk Management Framework confirms the commitment of the Council to good corporate governance through risk management. It defines the broad accountabilities and structures the Council will maintain in order to manage risk. The intent of the Framework is to ensure that sound risk management practices are an integral part of all Council processes.

6. Options

6.1 Accept the recommendation – approve the Draft Risk Management Framework.

6.2 Reject the recommendation – not approve the Draft Risk Management Framework. However not having a Risk Management Framework in place would mean that ensuring sound risk management practices were in place would be difficult.

7. Alignment with relevant Council policy

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

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 No consultation has been undertaken in preparing this policy.

10. Inclusion of Māori in the decision making process

10.1 No consultation with Maori has been undertaken in preparing this policy.

Nikki Harrison

Group Manager Corporate Services

Attachments

Attachment 1: A1431591 - Draft Risk Management Framework

Audit, Risk and Finance Subcommittee

14 October 2015

REPORT R4939

Corporate Report to 31 August 2015

1. Purpose of Report

1.1 To inform the members of the Audit, Risk and Finance Subcommittee on the financial results of activities for the 2 months ending 31 August 2015 compared to the approved operating budget, and to highlight and explain any material variations.

2. Delegations

2.1 The Audit, Risk and Finance Subcommittee has oversight of the management of financial risk and makes recommendations to the Governance Committee and to Council. Do not delete Do not delete this line

3. Recommendation

THAT the report Corporate Report to 31 August 2015 (R4939) and its attachments (A1422506, A1432835, A793514, and A1436178) be received and the variations noted.

Recommendation to Governance Committee and Council

THAT $350,000 for the upgrade of the Civic House verandah be deferred until 2017/18;

AND THAT $200,000 for the upgrade of the Hunter Furniture roof be deferred until 2016/17.

4. Background

4.1 The report focuses on the 2 month performance compared with the year to date approved operating budget. Budgets for operating income and expenditure are phased evenly through the year, whereas capital expenditure budgets are phased to occur mainly in the second half of the year.

4.2 Some definitions of terms used within this report:

· Approved operating budget – Annual plan plus carry forwards plus any other additions or changes approved by Council;

· Operating income – all income other than rates including metered water, grants, fees, rentals, and recoveries;

· Rates – includes the general rate, wastewater, stormwater and flood protection rates, and targeted rates for Solar Saver;

· Staff costs – salaries plus overheads such as training, super, professional fees and office accommodation expenses;

· Depreciation – includes all depreciation, and any losses on asset disposal/retirement;

· Interest – includes debt interest, bank fees, interest rate swap margins, treasury and rating agency fees.

5. Discussion

5.1 The report focuses on performance to date compared with the year to date approved operating budget. More detailed financials by sub-activity are in Attachment 2.

5.2 For the 2 months ending 31 August 2015, the activity surplus/deficits are $1.2 million favourable to budget.

5.3 Revenue and expenditure variances are discussed by activity. At this stage of the year individual variances tend to be immaterial and/or a mismatch in timing between the budget phasing and actual expenditure.

5.4 Staff expenses are $125,000 in total better than budget. Variances in activities illustrate where staff time has actually been spent against where it was expected to be spent at the time of setting the 2015/16 Annual Plan.

5.5

Corporate

5.6 The Corporate activity is $386,000 worse than budget.

5.6.1 Revenue – $371,000 less than budgeted. Internal interest income is $183,000 less than budgeted as 2014/15 capital expenditure was less than projected and interest rates remain favourable to those anticipated. Forestry income is $198,000 less than budgeted due to the timing of the Brook forest harvest (income expected to be reported in the third or fourth quarter).

Parks and Active Recreation

5.7 The Parks and Active Recreation activity is $502,000 better than budget due to:

5.7.1 Expenses – other - $433,000 better than budget. Water by meter has not yet been charged to activities ($67,000 - timing), grants for capital projects at Saxton’s Field have not yet been made to Tasman District Council ($147,000 - timing), and maintenance expenditure is behind budget by $210,000 including $64,000 for the Marina dredging which is due to commence in November. Some maintenance expenditure in this activity is very seasonable, and a large number of purchase orders have been raised.

5.7.2 Interest and depreciation together are $70,000 less than budget due to 2014/15 capital expenditure being less than projected.

Social

5.8 The Social activity is $116,000 better than budget due to:

5.8.1 Revenue - $149,000 less than budget due to the timing of income for festivals, Founders, and the Tahuna Beach Motor Camp.

5.8.2 Expenses – other - $226,000 better than budget. Expenditure for the earthquake strengthening and refurbishment of the Nelson School of Music is behind budget by $138,000 (timing). Maintenance expenditure is $70,000 behind budget although again there are a large number of open purchase orders awaiting invoices.

Economic

5.9 The Economic activity is $80,000 better than budget due to:

5.9.1 Expenses – other - $80,000 better than budget. Grants for Light Nelson and the Events Contestable Fund have not yet been accessed (timing), and expenditure budgeted for special economic projects and the investigation of a business incubator has not occurred to date (timing).

Transport

5.10 The Transport activity is $277,000 better than budget due to:

5.10.1 Revenue - $87,000 less than budget as the timing of income from NZTA reflects the timing of expenditure.

5.10.2 Expenses – other - $253,000 better than budget, mainly in subsidised and unsubsidised roading. The most significant underspends in that activity are:

· Base maintenance ($188,000) including particularly pre-seal repairs, road and footpath maintenance and subsequent road marking. This is seasonal activity and scheduled for October/November.

· $33,000 underspent year to date in recovery works from the 2011 emergency event relating to Days Track. This work has been carried forward from 2014/15. A report on this project will be coming to a future Works and Infrastructure committee meeting.

· Little has been spent year to date on studies and strategies (timing) relating to the Southern Arterial Corridor Management Plan (this has been delayed until the findings of the NZTA Southern Arterial Investigation – Annesbrook Drive roundabout to QEII Drive roundabout are known), Stoke Foothills Traffic Study, and Stoke CBD Study (purchase order raised).

Environmental Management

5.11 This activity includes Civil Defence and Rural Fire activities, Consents and Compliance, Environmental Programmes, and Solid Waste activities. The Environmental Management activity is $144,000 better than budget due to:

5.11.1 Revenue - $97,000 less than budget. Landfill levies are $89,000 (20%) less than year to date budget. Volumes to landfill appear to be declining in both NCC and TDC, contrary to both national trends and economic growth. Underlying factors are speculative, but may include the success of waste minimisation initiatives in the region over many years.

5.11.2 Expenses – staff - $62,000 better than budget, mainly in Resource Consents and Environmental Programmes who are carrying vacancies.

5.11.3 Expenses – other - $181,000 better than budget. Expenditure relating to the Nelson Plan and the Air Plan is currently $87,000 behind budget although significant expenditure is committed through purchase orders. Environmental advocacy and advice (mainly Nelson Nature) is $89,000 behind budget. A monitoring programme has now been agreed and expenditure has been committed.

Wastewater

5.12 The Wastewater activity is $24,000 better than budget due to:

5.12.1 Expenses – other - $63,000 less than budget. Maintenance expenditure is $41,000 behind budget, and expenditure has yet to be incurred on the studies relating to natural hazards risk assessment and network capacity confirmation for growth areas (timing).

Stormwater

5.13 The Stormwater activity is $61,000 better than budget due to:

5.13.1 Expenses – other - $50,000 better than budget. There has been no expenditure year to date against budgets for studies and strategies including natural hazards risk assessment, network capacity confirmation for growth areas, and code of practise for open streams (timing).

Water

5.14 The Water activity is $269,000 better than budget due to:

5.14.1 Expenses – other - $209,000 better than budget relates to $161,000 maintenance expenditure (including $60,000 reactive) unspent although purchase orders are in place for much of that amount. There has been no expenditure year to date (timing) against budgets for studies and strategies including natural hazards risk assessment, network capacity confirmation for growth areas, water loss reduction strategy, and water safety plan.

Flood Protection

5.15 The Flood Protection activity is $70,000 better than budget.

5.15.1 Expenses – all expenditure classes are less than budget by individually immaterial amounts (timing).

Capital Expenditure

5.16 Capital expenditure to 31 August 2015 was $4.9 million, $813,000 (14%) below budget. Details are included in Attachments 2 to 5.

Balance Sheet

5.17 Payment of the first quarter rates in August generated a cash surplus which was held on call deposit until creditors were paid in September.

5.17.1 The first quarter rates were invoiced in July and paid in August, generating the large movements in debtors in those months.

5.17.2 Payables include income in advance. $3.5 million was received in August from ratepayers who prefer to pay their annual rates in advance rather than quarter by quarter. This income will be released over the course of the year.

5.17.3 Call borrowings reduced in August in line with the payment of rates.

5.17.4 Rates income for the quarter is recognised in its entirety when it is invoiced, in this case in July. This is reflected as a large increase in accumulated funds in that month. Over the following 2 months, evidenced in August, accumulated funds decrease as expenditure is incurred. Essentially accumulated funds reflects the timing differences between rates income and organisational expenditure.

Interest Rate Position

5.17.5 The fixed maturity profile in the 1-3 years bucket is outside of the limits set by policy. This relates to interest rate swaps and the distribution of their start dates and termination dates. The policy makes some allowance for temporary timing issues so long as it comes back inside the limits within 90 days. In this case it is back inside the limits within 30 days.

6. Projects Update

6.1 Please see Attachments 4 and 5 for progress reports on Council’s major projects.

6.2 On 10 September the Works and Infrastructure Committee received the outline business case for the project to increase the number of toilets at Millers Acre, and resolved to defer the project budget of $32,000 for design to 2016-17, and the construction budget of $359,135 to 2017-18. Work this year will be to monitor utilisation of the facility, and assess the requirement for the project in light of the monitoring results.

6.3 Following an asset condition assessment, the planned project to upgrade the Civic House Verandah and budget of $350,000 has been deferred to 2017-18.

6.4 Following an asset condition assessment, the planned project to upgrade the Hunter Furniture Roof and budget of $200,000 has been deferred to 2016-17.

7. Alignment with relevant Council policy

7.1 The finance report is prepared comparing current year performance against the year to date approved operating budget for 2015/16.

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

8.1 There are no significant decisions.

9. Consultation

9.1 No consultation is required.

10. Inclusion of Māori in the decision making process

10.1 No consultation is required.

Tracey Hughes

Senior Accountant

Attachments

Attachment 1: NCC Detail Performance (A1432835)