Agenda of Governance Committee

N-logotype-black-wide Governance Committee

1 December 2016

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. Status Report - Governance Committee - 1 December 2016 9 - 10

Document number R6820

Recommendation

That the Committee

Receives the Status Report Governance Committee 1 December 2016 (R6820) and its attachment (A1160658).

6. Chairperson's Report

Governance

7. Sister City Report

Gail Collingwood, Sister City Coordinator, will give an update to the Committee.

8. Service Delivery Review Quarterly Update 11 - 46

Document number R6482

Recommendation

That the Committee

Receives the report Service Delivery Review Quarterly Update (R6482) and its attachments (A1653452, A1653316, A1657534, A1608744, A1653640, A1654605, A1657532, A1665363, and A1665280); and

Notes the update on progress to achieving the statutory deadline of August 2017.

9. 2016 Residents Survey 47 - 88

Document number R6720

Recommendation

That the Committee

Receives the report 2016 Residents Survey (R6720) and its attachment (A1580658); and

Notes the release of the 2016 Residents Survey results (A1580658).

10. Health and Safety: Quarterly Report 89 - 119

Document number R6491

Recommendation

That the Committee

Receives the report Health and Safety Quarterly Report (R6491) and its attachments (A1394804 and A1651702).

Recommendation to Council

That the Council

Notes the report Health and Safety Quarterly Report (R6491) and its attachments (A1394804 and A1651702).

11. Internal Audit Report to 30 September 2016 120 - 130

Document number R6660

Recommendation

That the Committee

Receives the report Internal Audit Report to 30 September 2016 (R6660) and its attachment (A1642257); and

Notes internal audit findings and recommendations in the table summarising Internal Audit activity to 30 September 2016 (A1642257).

Recommendation to Council

That the Council

Approves that the Internal Audit Plan to 30 June 2017 (A1562649) be amended to remove internal audits for the Liability Management Policy and the Investment Policy.

12. Council's Key Organisational Risks: Progress Report 131 - 148

Document number R6681

Recommendation

That the Committee

Receives the report Council's Key Organisational Risks: Progress Report (R6681) and its attachment (A1639927).

Finance

13. Corporate Report to 30 September 2016 149 - 163

Document number R6813

Recommendation

That the Committee

Receives the report Corporate Report to 30 September 2016 (R6813) and its attachments (A1655647 and A1651321).

Public Excluded Business

14. Exclusion of the Public

Recommendation

That the Committee

Confirms, in accordance with section 48(5) of the Local Government Official Information and Meetings Act 1987, that Rob Gunn, Lee Babe, and Robyn Curran remain after the public has been excluded, for Item 3 of the Public Excluded agenda (Nelmac Presentation on Strategic Direction), as they have knowledge that will assist the Council;

Notes, in accordance with section 48(6) of the Local Government Official Information and Meetings Act 1987, the knowledge that Rob Gunn, Lee Babe, and Robyn Curran posess relates to Nelmac Limited.

Recommendation

That the Committee

Excludes the public from the following parts of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason 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 are as follows:

Item	General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Particular interests protected (where applicable)
1	Nelmac Presentation on Strategic Direction	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(b)(ii) To protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)
2	Nelmac Ltd - matters for Statement of Expectation 2017/18	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)
3	Bishop Suter Trust - Statement of Expectation 2017/18	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)
4	Nelson Regional Development Agency - Statement of Expectation 2017/18	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)
5	Process For Awarding Contracts for Council Festivals and Events	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(a) To protect the privacy of natural persons, including that of a deceased person
6	Commercial Lease - Reliance Building	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(i) To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)

15. Re-admittance of the public

Recommendation

That the Committee

Re-admits the public to the meeting.

Governance Committee

1 December 2016

REPORT R6482

Service Delivery Review Quarterly Update

1. Purpose of Report

1.1 To receive a quarterly report on progress with section 17A Local Government service delivery reviews.

2. Summary

2.1 Changes to the Local Government Act 2002 (LGA) saw the introduction of new requirements under section 17A to review the cost-effectiveness of current arrangements for meeting the needs of communities within its district or region for good quality local infrastructure, local public services, and performance of regulatory functions.

2.2 The LGA has a transitional provision that requires all services to be reviewed by 8 August 2017.

2.3 These quarterly reports are brought to the Committee in order for it to have oversight of the reviews undertaken and progress towards meeting the statutory deadline of August 2017.

3. Recommendation

That the Committee

Notes the update on progress to achieving the statutory deadline of August 2017.

4. Background

4.1 Section 17A service delivery reviews seek to determine whether cost effectiveness gains can be made by adopting an alternative funding, governance or service delivery option by considering a variety of arrangements including having services delivered by a council controlled organisation, or by another local authority or other party.

4.2 Reviews must be undertaken;

· In conjunction with the consideration of any significant change to service levels

· Within two years before the expiry of any legislation, contract or other binding agreement affecting the service

· No later than six years after any previous review

4.3 A review need not be undertaken if;

· Delivery is governed by legislation, contract or other binding agreement that cannot be reasonably altered in the next two years

· The benefits to be gained do not justify the cost of the review

5. Discussion

Social Enterprise

5.1 At the last quarterly progress update the Council resolved;

THAT officers consider opportunities to explore social enterprise principles in relation to Council’s Procurement Policy and Section 17A reviews and report back to the Governance Committee via a workshop in the first instance.

5.2 A workshop on social enterprise is currently being scheduled. For tenders that are scheduled to be undertaken before the workshop officers will ensure the process includes consideration of social outcomes.

6. Progress update

6.1 In November 2015 Council agreed to the approach staff would take to comply with legislative standards. This included a schedule of review areas, template and timeline.

6.2 The scheduled timeline for reviews is flexible, to account for variation in timing influenced by external factors such as legislative change, and internal factors such as staff availability. The need for additional reviews such as the general building maintenance contract (presented with this report) continues to be considered on a case by case basis.

6.3 Reviews either come as part of a larger piece of work through the relevant committee or are attached to these progress reports. Eight reviews have been prepared and presented to Council previously. A further ten reviews are included with this report.

6.4 Officers have sought feedback from LGNZ and other councils across New Zealand on the progress of s17A reviews. They report that there is a spectrum of responses with some councils yet to start.

6.5 Given the current rate of progress officers consider it possible that Nelson City Council will not achieve the deadline of 8 August 2017. It is not planned to redirect resources from other priority areas into s17A reviews, but to continue to progress reviews as efficiently as possible within current resources.

6.6 Progress of s17A service delivery reviews is highlighted below:

6.7 Reviews that have been undertaken since the previous report are noted in the following table:

Service	Outcome
Solid Waste-Landfill	Continue to implement the Regional Landfill Business Unit plan whereby a joint committee is established with Tasman District Council, combining both Council’s landfilling operations to deliver a regional landfilling service.
Recycling	Continue with Council governance, funding and delivery
General Building Maintenance of Nelson City Council Owned Buildings / Facilities	Continue with Council governance, funding and delivery with some changes to group activities under one contract
Roading Network	Continue with Council governance and funding with delivery through a joint tender with Tasman District Council
Forestry	Continue with Council governance, funding and delivery by an external provider
Nelson Regional Sewerage Business Unit (NRSBU)	Continue with Council governance, funding and delivery by an external provider
Transfer Station	Continue with Council governance, funding and delivery
Cemeteries	Continue with Council governance, funding and delivery
Environmental Programmes - Eco Design Service and Heritage Assistance Programme	Continue with Council governance, funding and delivery
Environmental Programmes – Regulatory and Non Regulatory	Continue with Council governance, funding and delivery

6.7 Reviews that have not already been before Council are attached.

7. Conclusion

7.1 Council has a statutory requirement to undertake service delivery reviews across all its activities.

7.2 Progress is currently behind the approved schedule and it is possible that the deadline of 8 August 2017 may not be met.

Gabrielle Thorpe

Policy Adviser

Attachments

Attachment 1: A1653452 - s17A Service Delivery Review NRSBU ⇩

Attachment 2: A1653316 - s17A Service Delivery Review Recycling ⇩

Attachment 3: A1657534 - s17A Service Delivery Review Transfer Station ⇩

Attachment 4: A1608744 - s17A Service Delivery Review General Building Maintenance of Nelson City Council Owned Buildings/Facilities ⇩

Attachment 5: A1653640 - s17a Service Delivery Review Roading Network ⇩

Attachment 6: A1654605 - s17A Service Delivery Review Forestry ⇩

Attachment 7: A1657532 - s17A Service Delivery Review Cemeteries ⇩

Attachment 8: A1665363 - s17A Service Delivery Review Environmental Programmes Eco Design Service and Heritage Assistance Programme ⇩

Attachment 9: A1665280 - s17A Service Delivery Review Environmental Programmes Regulatory and Non Regulatory ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

Section 17A service delivery reviews are a statutory requirement of the LGA 2002 to determine the most cost effective arrangement for meeting the needs of communities within a district for good quality infrastructure, local public services and performance of regulatory functions.

2. Consistency with Community Outcomes and Council Policy

The service delivery review process aligns with Council’s due diligence obligations and regular reviews of contract performance that are part of business as usual. This work supports the principles of Nelson 2060 and the community outcomes that our infrastructure is efficient, cost effective and meets current and future needs and that our Council provides leadership.

3. Risk

It is possible that the scheduled reviews will not be completed by the deadline of 8 August 2017. This is considered a low risk outcome as there is no penalty if a territorial authority does not achieve the deadline.

4. Financial impact

The process of reviewing service delivery functions may bring cost savings in some areas. Staff resources required to complete the reviews are within existing budgets.

5. Degree of significance and level of engagement

This quarterly update is of low significance and no community engagement has been undertaken.

6. Inclusion of Māori in the decision making process

Maori have not been consulted in preparation of this report.

7. Delegations

The Governance Committee has the responsibility for considering the monitoring of Council’s financial and service performance. The Governance Committee has the power to make a recommendation to Council on this matter.

Governance Committee

1 December 2016

REPORT R6720

2016 Residents Survey

1. Purpose of Report

1.1 To provide information from the 2016 Residents’ Survey.

2. Recommendation

That the Committee

Receives the report 2016 Residents Survey (R6720) and its attachment (A1580658); and

Notes the release of the 2016 Residents Survey results (A1580658).

3. Background

2.1 The purpose of the Residents’ Survey is to get statistically representative resident feedback on Council performance which is used to: (a) report against Long Term Plan performance measures; and (b) identify areas for improvement.

2.2 Nelson City Council has been conducting annual surveys of residents since the late 1990s, covering a range of topics. Where possible, questions are repeated to enable comparisons over time. Council’s current approach to annual residents’ surveys is to run a long (20-minute) survey every three years, timed for the year before the Long Term Plan (LTP), for example, 2017. This allows a wider range of topics to be covered to inform LTP decision-making. In the intervening years, such as in 2016, shorter surveys (up to 10 minutes) are undertaken. These focus on collecting data to report on LTP performance measures and to inform Asset and Activity Management Plans.

2.3 The 2016 Residents’ Survey was conducted by Versus Research in May 2016 and involved a phone survey of 400 randomly selected Nelson residents. The overall results have a maximum margin of error of +/-4.8% at the 95 percent confidence interval. This means we can be 95% confident that these results are true of all Nelson residents, give or take 4.8%. Age and gender weightings have been applied to ensure specific demographic groups are not under or over represented. This also allows the reporting of any significant differences in the results for different age groups, genders, and for different parts of Nelson.

2.4 Census data from 2013 showed that 88% of Nelson households had a telephone line, and a telephone survey was recommended as the fastest and most cost-effective way of gaining feedback from a large number of residents. However, due to a declining trend in houses with telephone lines, future surveys will consider including the use of other technologies.

4. Discussion

3.1 Satisfaction with Council libraries was high, with 98% of library users satisfied with the service.

3.2 Parks and recreation activities also received high satisfaction ratings, with 86% of residents satisfied with this activity. The activity was defined in the survey as including gardens, sports grounds, sports venues, pools and reserves. A new question on the provision of recreation opportunities for people of all ages and abilities showed that 65% of residents were satisfied with this aspect.

3.3 Forty-three percent of residents had used or visited Riverside and/or Nayland Pool and 74% of pool users were satisfied with the pools.

3.4 Residents were less satisfied with Transport in 2016 than in recent years, with 44% satisfied this year compared with 55% in 2014. In 2016, there was a significant increase in the number of residents who were neither satisfied nor dissatisfied with Transport, which was defined as including roads, cycleways, footpaths and public transport. Thirteen percent were dissatisfied and their reasons included limited public transport, traffic congestion, and issues with cycleways. Overall satisfaction with Transport increased significantly in 2012 to 57%, compared with 39% in 2011, following the introduction of the NBus service and increased frequency.

3.5 Almost three-quarters (73%) of residents had used a public toilet in the previous year. Overall satisfaction is 45% but has increased significantly compared with 35% in 2011. Despite there being no significant demographic differences in the use of toilets, Stoke residents and residents aged between 16-39 years were significantly more likely to be dissatisfied, while residents aged over 40 were more likely to be satisfied.

3.6 Satisfaction with communication and consultation measures has decreased in 2016. Compared with previous years, more residents are neither satisfied nor dissatisfied.

3.6.1 Thirty-seven percent were satisfied with opportunities to provide feedback and take part in Council’s decision-making. Similarly, 37% felt informed about Council and its services.

3.6.2 The most common reasons for not feeling well informed were that information is not communicated or advertised enough or it is not easily available.

3.6.3 The most common reasons for being dissatisfied with feedback opportunities were not knowing how to easily give feedback and a perception that Council doesn’t listen.

3.7 Attendance by residents at Summer and Arts Festivals had generally decreased in 2015/16:

· 43% had attended Summer Festival events (53% in 2013/14).

· 34% had attended the Masked Parade (44% in 2013/14).

· 30% had attended Opera in the Park (30% in 2013/14).

· 22% had attended Arts Festival events (31% in 2013/14).

· 38% had not attended any of the above events (27% in 2013/14).

3.7.1 Actual attendance numbers have not been collected for the Summer Festival events but the Lantern Festival was called off in 2015 due to rain. Attendance numbers at the Arts Festival have been trending up annually. Actual attendance numbers include both residents and visitors.

5. Conclusion

4.1 Survey results for Long Term Plan performance measures have already been reported in the 2015/16 Annual Report.

4.2 Results will be communicated to the community via Our Nelson and the attached report will be available on Council’s website, along with reports from recent years’ surveys.

Brylee Wayman

Strategy and Environment Analyst

Attachments

Attachment 1: A1580658 -2016 Resident Survey Final Report ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

Residents’ Survey results provide information on current and future needs of residents, and feedback for assessing the standard of delivery of assets, services, and regulatory functions.

2. Consistency with Community Outcomes and Council Policy

Release of Residents’ Survey results supports the Community Outcome around Council providing information to help our leaders understand their communities, and giving everyone the opportunity to participate in the community’s major decisions.

3. Risk

There is no risk associated with releasing survey results to the public and it is important for transparency.

4. Financial impact

Survey costs have been allocated within budget in Long Term Plan operational budgets.

5. Degree of significance and level of engagement

This decision is of low significance and no engagement, beyond making results available, is planned.

6. Inclusion of Māori in the decision making process

Maori have not been consulted in preparation of this report.

7. Delegations

The Governance Committee has the responsibility Council’s financial and service performance. The Governance Committee has the power to make a recommendation to Council on this matter.

Governance Committee

1 December 2016

REPORT R6491

Health and Safety: Quarterly Report

1. Purpose of Report

1.1 To provide the Committee with a quarterly report of health and safety data collected over the period July-September 2016, and to update the Committee on next steps to meet Council’s obligations under its Health and Safety Management System Governance Charter.

2. Recommendation

That the Committee

Receives the report Health and Safety Quarterly Report (R6491) and its attachments (A1394804 and A1651702).

Recommendation to Council

That the Council

Notes the report Health and Safety Quarterly Report (R6491) and its attachments (A1394804 and A1651702).

3. Background

3.1 The new Health and Safety at Work (HSW) Act came into effect in April 2016. Council has been implementing a programme to ensure its health and safety management system meets the higher expectations contained within the Act. As part of this Council adopted, on 17 December 2015, a Health and Safety Management System Governance Charter (a copy is attached as background, Attachment 1). This Charter sets out that monitoring of Health and Safety performance data will be undertaken quarterly by Council as part of its obligation in the HSW Act 2015 to demonstrate due diligence.

4. Discussion

4.1 This report provides the Committee with a summary of quarterly data on the health and safety performance of Council (Attachment 2). It includes information on both leading (preventative) and lagging health and safety management system indicators, and progress in addressing our critical health and safety risks.

4.2 In brief, there were no incidents over the quarter which were required to be notified to Worksafe New Zealand.

4.3 Next steps: governance responsibilities

4.4 The governance obligations of councillors under the new HSW Act 2015 are outlined in more detail in the Health and Safety Management System Governance Charter (Attachment 1). In particular, Appendix 2 of that document sets out the activities that Council will undertake. This includes annual reviews of Council’s Health and Safety Charter and its Health and Safety Strategic Plan. It is proposed to undertake this annual review at an appropriate workshop in the first half of 2017. This will provide an opportunity to more fully induct new Councillors to their governance responsibilities under the HSW Act.

4.5 The Governance Charter also sets out that councillors will undertake regular site visits for the purposes of demonstrating due diligence on health and safety. At the time of writing, the next visit is scheduled for the Trafalgar Centre on 9 November 2016.

5. Options

Option 1: Receive and understand the report and its attachment
Advantages	· Council demonstrates positive due diligence in relation to health and safety matters in the Council workplace.
Risks and Disadvantages	· Receiving the report alone is not sufficient. Positive diligence (understanding, asking questions etc) is required. Other actions in accordance with the Health and Safety Governance Charter are also recommended (eg, site visits).
Option 2: Decline to receive the report
Advantages	· An advantage could not be identified.
Risks and Disadvantages	· Council will not be able to use this report to help demonstrate due diligence on health and safety matters.

Roger Ball

Manager Organisational Assurance and Emergency Management

Attachments

Attachment 1: Health and Safety Management System Governance Charter (A1394804) ⇩

Attachment 2: Health and Safety Quarterly Report July-September 2016 (A1651702) ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

This report forms part of Council’s work to perform its regulatory functions. Council has an obligation under the Workplace Health and Safety Act 2015 because it is classed as a Person Conducting a Business or Undertaking (PCBU), and both Councillors and senior staff have obligations as “Officers” under that Act.

2. Consistency with Community Outcomes and Council Policy

The recommendation aligns with the Community Outcome: Our communities are healthy, safe, inclusive and resilient.

3. Risk

This report aims to help Councillors meet their due diligence obligations as “Officers” under the Health and Safety at Work Act 2015. It is likely this objective will be achieved when combined with other actions outlined in Appendix 2 of Council’s Health and Safety Management System Governance Charter (A1394804). The likelihood of adverse consequences is assessed as low based on the current record of Council’s health and safety systems and our on-going monitoring of them. However the consequences for Council could still be significant if there were to be a serious harm incident to a Council worker, contractor or other person. These consequences could include harm to people, prosecution of the Council and/or its officers, financial penalties, and reputational damage.

4. Financial impact

There are no immediate budget implications arising from this report.

5. Degree of significance and level of engagement

This matter is of low significance because it is a quarterly progress report regarding the Council’s health and safety data, and no engagement is required.

6. Inclusion of Māori in the decision making process

Iwi have not been consulted in the preparation of this report.

7. Delegations

The Governance Committee is responsible for Health and Safety.

Governance Committee

1 December 2016

REPORT R6660

Internal Audit Report to 30 September 2016

1. Purpose of Report

1.1 To update the Committee on the Internal Audit activity relative to the Internal Audit Plan to 30 September 2016.

2. Recommendation

That the Committee

Receives the report Internal Audit Report to 30 September 2016 (R6660) and its attachment (A1642257); and

Notes internal audit findings and recommendations in the table summarising Internal Audit activity to 30 September 2016 (A1642257).

Recommendation to Council

That the Council

Approves that the Internal Audit Plan to 30 June 2017 (A1562649) be amended to remove internal audits for the Liability Management Policy and the Investment Policy.

3. Background

3.1 The Internal Audit Charter was approved by Council on 15 October 2015.

3.2 Under the Charter, the Audit, Risk and Finance Subcommittee requires a periodic update on the progress of internal audit activities relative to any current Internal Audit Plan approved by Council, and to be informed of any significant risk exposures and control issues identified from internal audits completed. As there is no Audit, Risk and Finance Subcommittee at present, this is being reported direct to the Governance Committee.

3.3 The Annual Internal Audit Plan relative to the year to 30 June 2017 was approved by Council on 28 July 2016.

3.4 Under section 8.5 of the Internal Audit Charter, any significant deviation from the approved Annual Internal Audit Plan is to be considered by the Senior Leadership Team, the Audit, Risk and Finance Subcommittee, and also the Governance Committee where appropriate.

4. Discussion

Items reported on the attached Internal Audit Report to 30 September 2016

4.1 Progress on internal audits is reported in the attached table. This is for information only and reflects approved audits for the Annual Audit Plan to 30 June 2017 which were due for completion during the period from 1 July 2016 to 30 September 2016, together with activity planned for the month of October 2016.

4.2 The table separates and summarises approved audit activity into three groupings: a) external audit; b) Council staff (field work only); and c) internal audit.

Removal of Internal Audits from the Internal Audit Plan to 30 June 2017 - the Liability Management Policy and the Investment Policy

4.3 Included in the Annual Audit Plan to 30 June 2017 are audits to check compliance with Council’s Liability Management and Investment Policies.

4.4 Further enquiry since the inclusion of these audits in the current Audit Plan has revealed that external auditors Audit NZ annually test and report on any significant breaches related to these Policies.

4.5 Audit NZ test investments to ensure they are held in accordance with legislation provisions and Council’s Investment Policy. Any significant changes to investments held are checked and correct authorisations sighted. Their audit report includes a conclusion whether investments are adequately controlled to ensure that they are fairly stated in the financial statements and comply with statutory authority.

4.6 Audit NZ also review Council’s Liability Management Policy and the overall management control systems over loan raising, debt management and interest rate risk management. Their review considers the systems in place, including reconciliations, and they provide independent quality assurance. They report any non-compliance in the Management Report.

4.7 Given the level of coverage by Audit NZ, the residual risk is rated as low and thus an internal audit of these policies is not considered high priority for internal audit. The recommendation therefore is to remove these two audits from the current year’s Audit Plan.

5. Options

5.1 The recommendation is to remove the Liability Management and Investment Policies audits from the Internal Audit Plan to 20 June 2017.

Option 1: Accept the recommendation
Advantages	· Priority can be given to other internal audits with a higher residual risk.
Risks and Disadvantages	· By not auditing down to the level of effectiveness and procedural efficiency, these may not be optimal.
Option 2: Reject the recommendation
Advantages	· An internal audit will provide a more in-depth review of effectiveness, controls, procedures and efficiencies.
Risks and Disadvantages	· Other higher residual risk internal audits will be delayed.

Lynn Anderson

Internal Audit Analyst

Attachments

Attachment 1: A1642257 - Internal Audit Report to 30 September 2016 ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

Council has chosen to undertake internal audits to help improve systems, their controls and efficiencies, in order to help give confidence that it will be able to meet its responsibilities cost-effectively and efficiently.

2. Consistency with Community Outcomes and Council Policy

This decision supports the community outcome that Council provides leadership, which includes the responsibility for protecting finances and assets through the minimisation of fraud, consistent with guidance provided in Council’s Fraud Prevention Policy.

3. Risk

There is a low risk created by removing these two policies from the Internal Audit Plan to 30 June 2017. There is a greater risk continuing to use the internal audit resource for these audits in place of audits with higher priorities.

4. Financial impact

The recommendation will not have any significant financial impact.

5. Degree of significance and level of engagement

This matter is of low significance because it does not affect the level of service provided by Council or the way in which services are delivered and no engagement has been undertaken.

6. Inclusion of Māori in the decision making process

There has been no consultation with Maori in the preparation of this report.

7. Delegations

The Governance Committee has responsibility for audit processes and management of financial risks.

Governance Committee

1 December 2016

REPORT R6681

Council's Key Organisational Risks: Progress Report

1. Purpose of Report

To update the Committee on progress with identifying and managing key risks to the organisation’s objectives.

2. Recommendation

That the Committee

Receives the report Council's Key Organisational Risks: Progress Report (R6681) and its attachment (A1639927).

3. Background

3.1 At its meeting on 4 August 2016 the Audit Risk and Finance Subcommittee considered and received the third progress report on the Council’s key organisational risks. This report was developed from updates of a series of broad brush business unit risk assessments conducted during the last quarter of 2015. That update included working with each business unit to develop objectives for risk management which are, as far as possible, specific, measurable and achievable within a defined timeframe.

3.2 At the time of writing, these objectives and a consistent set of techniques for assessing risks have been largely put in place. Work is continuing to improve the criteria for assessing risks and to develop the organisation’s tools for assessing and managing risks. In addition the Council continues to put in place controls to reduce risks described in the attached update. This work has included an updated risk management policy which will be brought to the relevant committee for consideration at a meeting in the near future.

3.3 A first round of training in risk management concepts (‘risk management 101’) for all managers and nominated team leaders has been completed. Staff from Tasman District Council and Marlborough District Council also participated in this training. Development of a workshop to introduce and implement the updated risk management policy described in paragraph 3.2 is now underway.

4. Progress in implementing risk treatments

4.1 Since the last report, controls to manage risks in the following key risk areas have been improved or further developed. This is occurring as part of actioning risk treatments developed in Council’s ongoing programme of addressing risk areas. (For clarity; risk treatments are actions to manage risks decided on but not yet put in place (or partially put in place) whereas controls are already in place.)

Key risk area	Progress on risk treatments since last report
2. Customer aggression threatening health and safety	· Security review findings being actioned, obtaining expert advice on security in customer-facing areas · Lone worker policy roll out underway
3. Reputational damage from negative media exposure	Rollout of conflict of interest policy underway
4. Field work or working alone exposes workers and/or members of the public to higher likelihood of injury or stress	· Safe work observations being stepped up · Transfer of existing hazards register material to council wide workplace risk register (for use in establishing controls) underway – as required by the Health and Safety at Work Act
5. Ineffective contracts and management of contractors compromising Council service performance	Standard contract templates for all Council contracts being introduced during October – November
6. IT failure impacts on service delivery	Further removal of bespoke systems now estimated at less than 10% of total council IT profile
7. Incomplete and difficult access to records compromising decision making and public services	· Review of EDRMS systems and knowledge (findings being considered) · Rationalisation and improved cataloguing of records stored off-site
8. Loss of specialist expertise compromising Council capability to deliver its work programme	Rewrite of Council risk management policy completed (assisting clear documentation of objectives and risk management actions) and scheduled for approval by the relevant committee
9. Fraud corruption or theft reduces Council capacity to deliver work programme	Revised risk criteria to be used for future audits – improving consistency with other areas of Council decision making on risks

5. Options

5.1 It is recommended that this report be received as it will further improve the Committee’s understanding of the risks faced by Council and the actions being taken to manage them.

5.2 There can be value from a discussion of the factors contributing to risks and the Committee may consider such a discussion useful.

Steve Vaughan

Risk & Procurement Analyst

Attachments

Attachment 1: A1639927 - Progress report 4: Council's Key Organisational Risks ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

This report describes risk management activity. Risk management is a tool to enable more efficient and effective provision on services as set out in section 10 (1)(b) of the LG Act.

2. Consistency with Community Outcomes and Council Policy

This report describes risk management activity. Risk management at its most fundamental is about achieving an organisation’s objectives (in this case as set out in Nelson City Council’s planning documents) with increased clarity, efficiency and effectiveness.

3. Risk

The report does not recommend a particular goal or objective to which risks may be considered. It serves to provide information about Council’s work in addressing those risks judged to be key to the organisation achieving its objectives.

4. Financial impact

This a report on work already underway as part of Council’s regular management activity. Therefore there are no additional funding implications at this stage.

5. Degree of significance and level of engagement

This is not a significant decision under the Council’s Significance and Engagement Policy. Therefore no external consultation has been undertaken in the preparation of this report although information from the Council’s developing risk management systems has been used in preparing it.

6. Inclusion of Māori in the decision making process

There has been no consultation with Maori in the preparation of this report which deals with internal Council processes.

7. Delegations

The Governance Committee has oversight of the Council’s management of risk.

Governance Committee

1 December 2016

REPORT R6813

Corporate Report to 30 September 2016

1. Purpose of Report

1.1 To inform the members of the Governance committee of the financial results of activities for the 3 months ending 30 September 2016 compared to the approved operating budget, and to highlight and explain any permanent and material variations

2. Recommendation

That the Committee

Receives the report Corporate Report to 30 September 2016 (R6813) and its attachments (A1655647 and A1651321).

3. Background

3.1 The financial reporting focuses on the 3 month performance compared with the year to date approved operating budget.

3.2 Unless otherwise indicated, all measures are against approved operating budget, which is 2016/17 Annual Plan budget plus any carry forwards, plus or minus any other additions or changes as approved by Council throughout the year.

3.3 In prior years, budgets for operating income and expenditure were phased evenly through the year and capital expenditure budgets were phased to occur mainly in the second half of the year. Inevitably, this approach produced many and sometimes significant timing variances which did not aid clarity of analysis.

3.4 For the 2016/17 financial year, officers have assessed budgets and applied a range of phasing mechanisms to better reflect the timing of anticipated actual income and expenditure. This should enable clearer analysis of variances, and better highlight any real issues. Given that there are in excess of 3,500 budget lines, officers have concentrated effort on more material items so there will remain a (much smaller) element of timing differences.

4. Discussion

1.1 For the 3 months ending 30 September 2016, the activity surplus/deficits are $1.5 million favourable to budget.

1.2 Financial information provided in attachment 1 to this report are:

· A financial measures dashboard with information on rates revenue, operating revenue and expenditure, and capital revenue and expenditure. The arrow icon in each applicable measure indicates whether the variance is increasing or decreasing and whether that trend is favourable or unfavourable (green or red).

· A grouping of more detailed graphs and commentary for operating income and expenditure. The first set of charts and the commentary is by category (as in the annual report) and highlights significant permanent differences and items of interest. Variances due to timing will not be itemised unless they become permanent. The second set of charts are by activity.

· A treasury measures dashboard with a compliance table (green = compliant), a forecast of the debt/revenue ratio for the year where available, and a graph showing debt levels over a rolling 13 month period.

· High level balance sheet. This does not include any consolidations.

· A debtor analysis graph over 12 months, clearly showing outstanding debt levels and patterns for major debt types along with a summary of general debtors > 3 months and over $10,000 and other debtors at risk.

· Two capital expenditure graphs – actual expenditure against operating budget for the financial year, and year to date expenditure against approved operating budget by activity.

· A major projects summary including milestones, status, issues and risks.

4.1 Capital expenditure is $2.1 million under budget.

5. Options

5.1 Accept the recommendation. This report is to inform the committee members, and no further actions are required.

5.2 Do not accept the recommendation.

Tracey Hughes

Senior Accountant

Attachments

Attachment 1: Financial information (A1655647) ⇩

Attachment 2: Major projects summary (A1651321) ⇩

Important considerations for decision making

1. Fit with Purpose of Local Government

The Governance committee receives an update on financial matters at each meeting to inform them of items of financial interest and potentially items of financial risk.

2. Consistency with Community Outcomes and Council Policy

The financial reports are prepared comparing current year performance against the year to date approved budget for 2016/17.

3. Risk

The recommendation carries no risk as the report is for information only.

4. Financial impact

The recommendation has no financial impact.

5. Degree of significance and level of engagement

The recommendation is of low significance as there are no decisions to be made.

6. Inclusion of Māori in the decision making process

No consultation is required.

7. Delegations

The Governance committee has oversight of Council’s financial performance and the management of financial risks.