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AGENDA

Ordinary meeting of the

 

Audit, Risk and Finance Subcommittee

 

Friday 8 September 2017

Commencing at 10.00am

Council Chamber

Civic House

110 Trafalgar Street, Nelson

 

 

Membership: Mr John Peters (Chairperson), Her Worship the Mayor Rachel Reese, Councillor Ian Barker, Councillor Bill Dahlberg and Mr John Murray


Guidelines for councillors attending the meeting, who are not members of the Committee, as set out in Standing Order 12.1:

·      All councillors, whether or not they are members of the Committee, may attend Committee meetings

·      At the discretion of the Chair, councillors who are not Committee members may speak, or ask questions about a matter.

·      Only Committee members may vote on any matter before the Committee

It is good practice for both Committee members and non-Committee members to declare any interests in items on the agenda.  They should withdraw from the room for discussion and voting on any of these items.

 


N-logotype-black-wideAudit, Risk and Finance Subcommittee

8 September 2017

 

 

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      27 June 2017                                                                              9 - 18

Document number M2711

Recommendation

That the Subcommittee

Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 27 June 2017, as a true and correct record.

6.       Status Report - Audit Risk and Finance Subcommittee - 8 September 2017                                                        19 - 21

Document number R8299

Recommendation

That the Subcommittee

Receives the Status Report Audit, Risk and Finance Subcommittee 8 September 2017 (R8299) and its attachment (A1753947).

  

7.       Chairperson's Report   

8.       Internal Audit Quarterly Report to 30 June 2017        22 - 37

Document number R7588

Recommendation

That the Subcommittee

Receives the report Internal Audit Quarterly Report to 30 June 2017 (R7588) and its attachment (A1813237); and

Notes that a Subcommittee workshop on the Internal Audit Plan has been scheduled for 14 September 2017.

 

9.       Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues 30 June 2017      38 - 41

Document number R8239

Recommendation

That the Subcommittee

Receives the report Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues 30 June 2017 (R8239) and its attachment (A1813245).

 

10.     Service Delivery Review Quarterly Progress Update - September 2017                                                        42 - 66

Document number R7771

Recommendation

That the Subcommittee

Receives the report Service Delivery Review Quarterly Progress Update - September 2017 (R7771) and its attachments (A1748571, A1772835, A1809382, A1806918 and A1810637).

 

11.     Council Key Risks Quarterly Report 2 Calendar 2017 67 - 84

Document number R8236

Recommendation

That the Subcommittee

Receives the report Council Key Risks Quarterly Report 2 Calendar 2017  and its attachment (A1811819).

 

12.     Health Safety and Wellbeing; Quarterly Report          85 - 97

Document number R8220

Recommendation

That the Subcommittee

Receives the report Health Safety and Wellbeing; Quarterly Report (R8220) and its attachment (A1775723).

 

Recommendation to Council

That the Council

Notes the report Health Safety and Wellbeing; Quarterly Report (R8220) and its attachment (A1775723); and

Acknowledges the assessment of critical health and safety risks contained in the attachment (A1775723).

 

13.     Carry Forwards 2016/17                                         98 - 106

Document number R7004

Recommendation

That the Subcommittee

Receives the report Carry Forwards 2016/17 (R7004) and its attachments (A1801073 and A1801504).

 


 

Recommendation to Council

That the Council

Approves the carry forward of $6,298,000 unspent capital budget for use in 2017/18; and

Approves the offsetting of $268,021 of capital spent in 2016/17 against 2017/18 budgets; and

Approves the carry forward of $1,812,113 of unspent operating budget for use in 2017/18; and

Notes savings in 2016/17 capital expenditure of $2,187,000.

 

14.     Results of 2017 Residents Survey                          107 - 200

Document number R7968

Recommendation

That the Subcommittee

Receives the report Results of 2017 Residents Survey (R7968) and its attachment (A1789495); and

Notes the 2017 Residents Survey results (A1789495) will be released to the public.

 

15.     Draft Annual Report 2016/17                                 201 - 204

Document number R7805

Recommendation

That the Subcommittee

Receives the report Draft Annual Report 2016/17 (R7805) and its attachment (A1703959); and

Relinquishes its delegation in regard to recommending the adoption of the Draft Annual Report 2016/17, provided that there are no material changes to the draft resulting from the audit.

 


 

Recommendation to Council

That the Council

Notes the draft Annual Report 2016/17 has been prepared and will be audited before being presented to Council for adoption; and

Notes that if there are material changes to the draft resulting from the audit, these will be brought back to the Audit Risk and Finance Subcommittee on 28 September 2017; and

Notes that, if there are no material changes to the draft resulting from the audit, due to timing constraints, the final Annual Report 2016/17 will be presented directly to Council for adoption, rather than via the Audit, Risk and Finance Subcommittee.

       

Public Excluded Business

16.     Exclusion of the Public

Recommendation

That the Subcommittee

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

Audit, Risk and Finance Subcommittee Meeting - Public Excluded Minutes -  27 June 2017

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.

·    Section 7(2)(i)

     To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

2

Service Delivery Review Quarterly Progress Update

 

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)

 

17.     Re-admittance of the public

Recommendation

That the Subcommittee

Re-admits the public to the meeting.

 

 

 

  


 

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

Held in the Council Chamber, Civic House, 110 Trafalgar Street, Nelson

On Tuesday 27 June 2017, commencing at 9.04am

 

Present:              Mr J Peters (Chairperson), Her Worship the Mayor R Reese, Councillor B Dahlberg, and Mr J Murray

In Attendance:   Councillors P Matheson and S Walker, Acting Chief Executive (David Hammond), Group Manager Infrastructure (A Louverdis), Group Manager Community Services (C Ward), Group Manager Corporate Services (N Harrison), Internal Audit Analyst (L Anderson), Manager Organisational Assurance and Emergency Management (R Ball), Manager Consents and Compliance (M Bishop), Health and Safety Adviser (M Hughes), Senior Accountant (T Hughes), Risk and Procurement Analyst (S Vaughan), Manager People and Capability (S Vincent), and Administration Adviser (L Canton)

Apology:             Councillor I Barker

 

 

1.       Apologies

Resolved AUD/2017/013

That the Subcommittee

Receives and accepts an apology from Councillor Barker.

Dahlberg/Murray                                                                        Carried

2.       Confirmation of Order of Business

There was no change to the order of business.

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 May 2017

Document number M2590, agenda pages 10 - 15 refer.

Resolved AUD/2017/014

That the Subcommittee

Confirms the minutes of the meeting of the Committee, held on 18 May 2017, as a true and correct record.

Dahlberg/Her Worship the Mayor                                                Carried

 

6.       Status Report - Audit, Risk and Finance Subcommittee - 27 June 2017

Document number R7943, agenda pages 16 - 18 refer.

Resolved AUD/2017/015

That the Subcommittee

Receives the Status Report Audit, Risk and Finance Subcommittee 27 June 2017 (R7943) and its attachment (A1753947).

Murray/Dahlberg                                                                        Carried

7.       Chairperson's Report   

The Chairperson acknowledged the new Acting Chief Executive, David Hammond.

8.       Corporate Report to 30 April 2017

Document number R6999, agenda pages 19 - 31 refer.

Group Manager Corporate Services, Nikki Harrison presented the report and answered questions. 

It was noted that the subcommittee would like to see profit and loss accounts for operating accounts to ascertain that all income was being recorded.

 

Resolved AUD/2017/016

That the Subcommittee

Receives the report Corporate Report to 30 April 2017 (R6999) and its attachments (A1766296 and A1771251).

Her Worship the Mayor/Dahlberg                                                Carried

Resolved AUD/2017/017

That the Subcommittee

Requests that profit and loss accounts for the forestry, marina, and camping grounds consolidated accounts be brought to a future meeting.

Murray/Dahlberg                                                                        Carried

9.       Balance Sheet reconciliation review

Document number R7002, agenda pages 32 - 39 refer.

Senior Accountant, Tracey Hughes, presented the report.  Ms Hughes and Group Manager Community Services, Chris Ward, answered questions.

Resolved AUD/2017/018

That the Subcommittee

Receives the report Balance Sheet reconciliation review (R7002) and its attachment (A1774923).

Murray/Dahlberg                                                                        Carried

10.     Liability Management Policy review

Document number R7529, agenda pages 40 - 58 refer.

Group Manager Corporate Services, Nikki Harrison, presented the report and answered questions. 

Resolved AUD/2017/019

That the Subcommittee

Receives the report Liability Management Policy review (R7529) and its attachment (A1765543).

Her Worship the Mayor/Dahlberg                                                Carried

 

Recommendation to Council AUD/2017/020

That the Council

Adopts the amended Liability Management Policy (A1765543).

Her Worship the Mayor/Dahlberg                                                Carried

 

11.     Carry Forwards (Interim) 2016/17

Document number R7555, agenda pages 59 - 68 refer.

Senior Accountant, Tracey Hughes, presented the report.  Ms Hughes and Acting Chief Executive, David Hammond, answered questions. 

Resolved AUD/2017/021

That the Subcommittee

Receives the report Carry Forwards (Interim) 2016/17 (R7555) and its attachments (A1770607).

Dahlberg/Murray                                                                        Carried

 

Recommendation to Council AUD/2017/022

That the Council

Approves continuing work on 2016/17 projects within the 2016/17 approved budgets, noting a final report on carry forwards will come to the Audit, Risk and Finance subcommittee on 8 September 2017.

Dahlberg/Murray                                                                        Carried

12.     Council Risk Management Policy and Risk Criteria

Document number R7572, agenda pages 69 - 82 refer.

Risk and Procurement Analyst, Steve Vaughan, presented the report and answered questions about the governance role in risk management.

 

 

Resolved AUD/2017/023

That the Subcommittee

Receives the report Council Risk Management Policy and Risk Criteria (R7572) and its attachments: Risk Management Policy (A1553263) and Council Risk Criteria (A1545157).

Her Worship the Mayor/Murray                                                   Carried

Mr Murray, seconded by Councillor Dahlberg, moved the recommendation to Council in the officer report.

It was noted that the policy should also address the governance body’s role in the areas of risk management.

It was further noted that the term ‘value’ in clause 5.6 of the policy was not limited to monetary value.

Attendance:  The meeting adjourned from 10.58am until 11.14am.

It was suggested that the Chairperson work with Mr Vaughan to amend the policy to clarify the role of governance in the policy’s areas of responsibility.

Mr Peters, seconded by Her Worship the Mayor moved an amendment: 

That the Council

Approves the Risk Management Policy (A1553263) as amended by the Chairperson of the Audit, Risk and Finance Subcommittee and the Risk & Procurement Analyst to include clarification of escalation of continued tolerance (table 3 of the Policy) and the role of governance in the areas of responsibility (clause 6 of the Policy), and adopts the Council Risk Criteria (A1545157).

The amendment was put and carried and became the substantive motion.

 

Recommendation to Council AUD/2017/024

That the Council

Approves the Risk Management Policy (A1553263) as amended by the Chairperson of the Audit, Risk and Finance Subcommittee and the Risk & Procurement Analyst to include clarification of escalation of continued tolerance (table 3 of the Policy) and the role of governance in the areas of responsibility (clause 6 of the Policy), and adopts the Council Risk Criteria (A1545157).

Murray/Dahlberg                                                                        Carried

13.     Internal Audit - Annual Audit Plan to 30 June 2018

Document number R7587, agenda pages 83 - 91 refer.

Internal Audit Analyst, Lynne Anderson, presented the report.  Ms Anderson and Group Manager Corporate Services, Nikki Harrison answered questions.

Resolved AUD/2017/025

That the Subcommittee

Receives the report Internal Audit - Annual Audit Plan to 30 June 2018 (R7587) and its attachment (A1748975);

Dahlberg/Murray                                                                        Carried

 

Recommendation to Council AUD/2017/026

That the Council

Approves the Internal Audit – Annual Audit Plan to 30 June 2018 (A1748975).

Dahlberg/Murray                                                                        Carried

 

14.     Health and Safety Governance Charter review

Document number R7622, agenda pages 92 - 99 refer.

Manager Organisational Assurance and Emergency Manager, Roger Ball, and Health and Safety Adviser, Malcolm Hughes, presented the report.

Resolved AUD/2017/027

That the Subcommittee

Receives the report Health and Safety Governance Charter review  (R7622) and its attachment (A1767136);

Murray/Her Worship the Mayor                                                   Carried

 

 

Recommendation to Council AUD/2017/028

That the Council

Approves the revised Health and Safety Governance Charter (A1767136).

Murray/Her Worship the Mayor                                                   Carried

 

15.     Protected disclosure policy

Document number R7631, agenda pages 100 - 111 refer.

Group Manager Corporate Services, Nikki Harrison presented the report.  Ms Harrison, Acting Chief Executive, David Hammond, and Manager People and Capability, Stephanie Vincent, answered questions.

It was noted that the issue of protected disclosures also applied to governance, and a suggestion that officers investigate how the policy could be expanded to include elected members.

Resolved AUD/2017/029

That the Subcommittee

Leaves the report to lie on the table awaiting further advice from the Chief Executive on amending the policy to cover elected members.

Her Worship the Mayor/Dahlberg                                                Carried

16.     Trafalgar Park Seating and Sale of the Punawai

Document number R7383, agenda pages 112 - 138 refer.

Group Manager Community Services, Chris Ward, and Manager Consents and Compliance, Mandy Bishop presented the report and answered questions.

 

Resolved AUD/2017/030

That the Subcommittee

Receives the report Trafalgar Park Seating and Sale of the Punawai (R7383) and its attachments (A345448, A1311242, R6448 and A1412442); and

Notes that the purchase of the Trafalgar Park Seats complied with Council’s Procurement Policy 2015 (A345448); and

Notes that the Council approved the private sale of the Punawai for reasons of timeliness and efficiency, and recognised at the time of the sale that this approach departed from Council’s Asset Disposal Policy 2015 (A1412442).

Dahlberg/Murray                                                                        Carried

 

17.     Interim audit letter for the year ending 30 June 2017

Document number R7627, agenda pages 139 - 147 refer.

Director, Audit NZ, Bede Kearney presented the report.

Resolved AUD/2017/031

That the Subcommittee

Receives the report Interim audit letter for the year ending 30 June 2017 (R7627) and its attachment (A1775216); and

Notes the suggested responses to the recommendations.

Dahlberg/Murray                                                                        Carried

       

18.     Exclusion of the Public

It was noted that Bede Kearney, of Audit NZ would be in attendance for Item 3 of the Public Excluded agenda to answer questions and, accordingly, the following resolution was passed:

 

Resolved AUD/2017/032

That the Subcommittee

Confirms, in accordance with section 48(5) of the Local Government Official Information and Meetings Act 1987, Bede Kearney of Audit NZ remains after the public has been excluded, for Item 3 of the Public Excluded agenda (Bad debts for the year ending 30 Jun 2017), as he has 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 Bede Kearney possesses relates to Council’s level of bad debt.

Murray/Peters                                                                             Carried

 

Resolved AUD/2017/033

That the Subcommittee

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:

Her Worship the Mayor/Dahlberg                                                Carried

 

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

Bad debts for the year ending 30 June 2017

 

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

·   Section 7(2)(i)

     To enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)

The meeting went into public excluded session at 12.32pm and resumed in public session at 12.39pm. 


 

19.     Re-admittance of the Public

 

Resolved AUD/2017/034

That the Subcommittee

Re-admits the public to the meeting.

Dahlberg/Murray                                                                        Carried

 

 

There being no further business the meeting ended at 12.39pm.

 

Confirmed as a correct record of proceedings:

 

 

 

                                                       Chairperson                                     Date

          

 


 

Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R8299

Status Report - Audit Risk and Finance Subcommittee - 8 September 2017

     

 

1.       Purpose of Report

1.1      To provide an update on the status of actions requested and pending.

 

 

2.       Recommendation

That the Subcommittee

Receives the Status Report Audit, Risk and Finance Subcommittee 8 September 2017 (R8299) and its attachment (A1753947).

 

 

 

Attachments

Attachment 1:  A1753947 - Status Report - Audit Risk and Finance Subcommittee - 8 September 2017

 

  



 

   


 

Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R7588

Internal Audit Quarterly Report to 30 June 2017

     

 

1.       Purpose of Report

1.1      To update the Subcommittee on the Internal Audit activity relative to audits included in the Internal Audit Plan to 30 June 2017.

 

 

2.       Recommendation

That the Subcommittee

Receives the report Internal Audit Quarterly Report to 30 June 2017 (R7588) and its attachment (A1813237); and

Notes that a Subcommittee workshop on the Internal Audit Plan has been scheduled for 14 September 2017.

 

 

 

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.

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

4.       Discussion

4.1      Progress on internal audits is reported in the attached table for information only. The table and reflects approved audits for the Annual Audit Plan to 30 June 2017 which were due for completion during the period from 1 April 2017 to 30 June 2017. Where an audit may have been reported as incomplete in prior periods, updated information is included in this table.

4.2      The table separates and summarises approved audit activity into three groupings: a) external audits; b) internal audits - staff and internal audits and c) internal audits.

Summary of Internal Audit Activity for the Year Ended 30 June 2017

4.3      The attached table shows that of the total audits originally planned the following activity occurred:

 

Completed

24

In Progress

3

Deferred to 2017/18 (ARF approved)

2

Not Started at 30/6/17

3

TOTAL as in original Annual Audit Plan 2016/17

32

4.3.1   A number of factors impacted on final audit completion numbers for the 2016/17 year. Essentially these related to the sheer volume of audits and the consequential organisational resources necessary to follow through with corrective actions for issues found during audits. In particular, unexpected resourcing shortfalls in Finance, and the disproportionately high number of audit findings that led back to that team meant that there was no capacity to actively respond to additional audits during the latter part of the financial year.

5.       Revised Annual Audit Plan to 30 June 2018 to Address Organisational Risk

5.1      The high volume of audits proposed in the original Internal Audit Plan to 30 June 2018 is aligned to Council’s initial direction when the internal audit programme was first established, which was to provide some level of assurance across Council that fundamental controls were in place to protect Council from fraudulent activity.

5.2      Based on a current evaluation, the volume of audits planned for the year to 30 June 2018 in the proposed Annual Internal Audit Plan presented to the Audit, Risk and Finance Subcommittee on 27 June 2017, is not achievable (see also 4.3.1). On the other hand, many of the fundamental controls that Council was initially concerned with have been investigated in previous Plans. This potentially weakens the effectiveness of the high volume internal audit output approach.

5.3      An unintended consequence of high volume internal audit output is that, given resource capacity, only the surface of an audit topic can be investigated. Further, this approach is unlikely to reveal issues that Council may not otherwise find - which could result in much higher risk in one or more of the areas that are of concern to Council (as established and clearly defined in the Council’s risk criteria). Council may consider that more in-depth audits focussed in these areas provides the best value from internal audit.

5.4      In response to the above, the Acting Chief Executive requested that the Annual Audit Plan to 30 June 2018 be reviewed. At the 10 August 2017 meeting Council referred the Annual Audit Plan to 30 June 2018 back to the Audit, Risk and Finance Subcommittee for further review.

5.5      Following consultations with the Acting Chief Executive and Acting Chair of the Audit, Risk and Finance Subcommittee, officers are of the view that a Subcommittee workshop would be beneficial.  Officers will provide advice and options on a revised Annual Audit Plan to assist the Subcommittee in its decision making.  The workshop is proposed for 14 September 2017. 

6.       Options

6.1      The recommendation to receive the Quarterly Audit Report to 30 June 2017 and its attachments outlining progress of internal audits included in the Annual Audit Plan to 30 June 2017 demonstrates Council’s commitment to improving controls and practices that ensure the prudent, effective and efficient management of Council resources. No advantage could be identified from not receiving this report and its attachment.

6.2      The recommendation to hold a Subcommittee workshop is to help inform officers’ recommendations for the final design of the Annual Audit Plan to 30 June 2018. The advantages are outlined in 5.1 - 5.3 above. The disadvantage from holding a workshop is that there is a delay in the officer recommendations and final authorisation by Council for the Annual Audit Plan to 30 June 2018 and therefore a delay in commencing the revised Annual Audit Plan.  (In the meantime, work is continuing on completing outstanding actions in the previous Annual Audit Plan and on systems improvement).  

6.3      If the workshop is not held the advantage would be that officers could proceed immediately with their recommendation to the Audit, Risk and Finance Subcommittee for the revised Plan. The disadvantage of this option is that there is less opportunity for Councillors to understand the underlying concerns relating to the original Annual Audit Plan to 30 June 2018 and the options for addressing these, and that officers do not fully understand Councillors’ views when forming their recommendations for the revised Plan.

 

 

Lynn Anderson

Internal Audit Analyst

Attachments

Attachment 1:  A1813237 - Internal Audit - Quarterly Report to 30 June 2017

 

 

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 report 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

When considering planned audits collectively, there is a high likelihood that Council could suffer a moderate level of negative public reaction resulting from its failure to assess and implement strong controls. According to Council’s Risk Criteria this corresponds to a high risk. 

 

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 Audit, Risk and Finance Subcommittee has responsibility for audit processes and management of financial risks. The Audit, Risk and Finance Subcommittee has the power to make a recommendation to Council on this matter.

 

 



 


 


 


 


 


 


 


 


 


 


 

Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R8239

Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues 30 June 2017

     

 

1.       Purpose of Report

1.1      To update the Subcommittee on new or outstanding risk exposures following Internal Audits included in the Internal Audit Plan to 30 June 2017.

 

 

2.       Recommendation

That the Subcommittee

Receives the report Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues 30 June 2017 (R8239) and its attachment (A1813245).

 

 

 

3.       Background

3.1      Under section 9.1 of the Internal Audit Charter, the Audit, Risk & Finance Subcommittee and the Governance Committees are to be informed of internal audit results where appropriate.

3.2      Under section 9.4, the Audit, Risk and Finance Subcommittee requires a periodic update of any significant risk exposures and control issues identified from internal audits completed.

4.       Discussion

4.1      Issues identified in the attachment, Summary of New and Outstanding Significant Risk Exposures and Control Issues Identified from Internal Audits, relate to internal audits performed to 30 June 2017.

5.       Options

5.1      The recommendation is to receive the report and its attachments outlining new or outstanding risk exposures from internal audits performed to 30 June 2017 so that Council can demonstrate its commitment to managing risks that may impact on the prudent, effective and efficient management of Council and its resources. No advantage could be identified from rejecting this report and its attachment.

 

Lynn Anderson

Internal Audit Analyst

Attachments

Attachment 1:  A1813245 - Summary of New or Outstanding Significant Risk Exposures and Control Issues - 30 June 2017

 

 

Important considerations for decision making

1.   Fit with Purpose of Local Government

Council has chosen to undertake internal audits to help meet its purpose to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.

2.   Consistency with Community Outcomes and Council Policy

This report supports the community outcome that Council provides leadership, which includes the responsibility for protecting finances and assets through the prudent management of risk, consistent with guidance provided in Council’s Risk Management Policy.

3.   Risk

There is more risk that Council may not meet its responsibilities cost-effectively and efficiently if this recommendation is not accepted.

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 Audit, Risk and Finance Subcommittee has responsibility for audit processes and management of financial and other risks. The Audit, Risk and Finance Subcommittee has the power to make a recommendation to Council on this matter.

 

 



 

Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R7771

Service Delivery Review Quarterly Progress Update - September 2017

     

 

1.       Purpose of Report

1.1      To receive a quarterly report on progress under 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 a 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 however the Committee, at its last meeting on the 18th May 2017, granted an extension for the completion of reviews until the end of the 2017 year. This decision recognised that it was more efficient to continue to progress reviews within existing resources than to redirect officers from other higher priority areas of work. 

2.3         These quarterly reports are brought to the Committee in order for it to have oversight of the progress with reviews undertaken.

 

3.       Recommendation

That the Subcommittee

Receives the report Service Delivery Review Quarterly Progress Update - September 2017 (R7771) and its attachments (A1748571, A1772835, A1809382, A1806918 and A1810637).

 

 

 

4.       Purpose of reviews

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

          Progress update

5.1      In November 2015 Council agreed to the approach staff would take to addressing the new requirement for s17A reviews. This included a schedule of review areas, template and timeline.

5.2      The scheduled timeline for reviews is flexible, and the need for additional reviews, or amalgamation of existing review areas continues to be considered on a case by case basis.

5.3      Reviews either come as part of a larger piece of work through the relevant committee or are attached to these progress reports. Currently there are 48 review areas on the schedule and 28 of these have been reported to Council previously in a progress report. Since then a further seven reviews have been undertaken. These reviews are noted in the table below:

 

Service

Outcome

Nelson Arts Festival

Establish a CCO for the governance and delivery of the activity with continued funding from Council

 

Administration of Grants

Continue with Council governance, funding and delivery with assistance from an external decision making panel

Motor Camps

Report to Commercial Subcommittee 12 June 2017 Public Excluded

Parks and Reserves

Continue with Council governance, funding and delivery by a CCO

Resources Consents

Continue with Council governance, funding and delivery

Planning and City Development

Continue with Council governance, funding and delivery

Public Transport

Continue with Council governance and funding with delivery by an external provider

 

5.4      One further review has been completed and will be coming to this meeting in a subsequent public excluded report (R8233). Counting the one further review which is attached to the public excluded report, current progress of s17A service delivery reviews is highlighted below:

5.5      Reviews that have not already been before Council are attached. (Please note that reviews that have already been before Council have not been attached, for example, Nelson Arts Festival and Motor Camps).

5.6      There are currently twelve outstanding reviews yet to be completed by the deadline of December 2017. A programme for their completion can be found below.

 

 

Review Schedule

Scheduled for completion

Heritage Properties

September 2017

Commercial Property Portfolio

September 2017

Community Health and Safety

September 2017

Listed Trees

September 2017

Corporate Services

October 2017

Nelmac

October 2017

Founders Park

October 2017

Marina

October 2017

Saxton Field and Pavilion (funding and delivery only)

October 2017

Golf Course

October 2017

Solid Waste / Refuse Disposal

October 2017

Festivals and Events (excluding Nelson Arts Festival)

October 2017

 

6.       Conclusion

6.1      It is recommended the Committee receives this report, noting progress towards completion of the first round of s17A reviews.

Gabrielle Thorpe

Policy Adviser

Attachments

Attachment 1:  A1772835 - s17A Service Delivery Review - Parks and Reserves

Attachment 2:  A1748571 - s17A Service Delivery Review - Administration of Grants

Attachment 3:  A1810637 - s17A Service Delivery Review - Public Transport

Attachment 4:  A1806918 - s17A Service Delivery Review - Resource Consents

Attachment 5:  A1809382 - s17A Service Delivery Review - Planning and City Development   

 

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.

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 also supports the following Community Outcomes:

-   That our infrastructure is efficient, cost effective and meets current and future needs

-   Our Council provides leadership and fosters partnerships, a regional perspective and community engagement

3.   Risk

There is a statutory deadline of 8 August 2017 to complete round one of service delivery reviews across the organisation however this is considered low risk as there is no penalty if a territorial authority does not achieve the deadline. The Committee has granted an extension to the end of the 2017 year to enable reviews to be completed internally by officers.

4.   Financial impact

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

Māori have not been consulted in preparation of this report.

7.   Delegations

The Audit, Risk and Finance Committee has the responsibility for the Council’s financial and service performance. The Audit, Risk and Finance Committee has the power to make a recommendation to Council on this matter.

 


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Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R8236

Council Key Risks Quarterly Report 2 Calendar 2017

     

 

1.       Purpose of Report

To update the Subcommittee on progress with identifying and managing key risks to the organisation’s objectives. The report is intended to assist the governance role of the Subcommittee in overseeing the organisation’s risk management.

 

 

2.       Recommendation

That the Subcommittee

Receives the report Council Key Risks Quarterly Report 2 Calendar 2017  and its attachment (A1811819).

 

 

 

3.       Background

3.1      At its meeting on 9 March 2017, the Governance Committee received and considered the previous quarterly report on key organisational risks to Council’s objectives. This reporting forms part of the development of Council’s overall risk management capability. As noted in the previous report, this capability is being developed using the organisation’s existing business model – that is by basing risk management processes within each business unit. This includes; business unit objectives which are, as far as possible, specific, measurable and achievable within a defined timeframe, and use organisationally consistent techniques and criteria.

3.2      A first round of workshops for business unit managers and the Senior Leadership Team to develop knowledge of basic risk management processes and principles has now been completed. In addition, a workshop focussing on risk management for governance (including the specific risk area of councillors’ health and safety obligations) was run on Tuesday 11 April 2017. 

3.3      Further workshops will be held as required to maintain and enhance the organisation’s risk management knowledge and skills (including for new staff appointed to management roles).

4.       Progress in managing key risks

4.1      Since the last report, controls to manage risks in the following key risk areas have been improved or further developed. This is 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.) Several previous treatment items are now fully in place and so appear in the attached document as controls.

4.2      In several cases, all the treatments programmed have now been put in place. In some of these cases, further treatments are not planned at this stage. This is because risk levels are already estimated as medium or lower. Such risks are, using the criteria adopted by the Council, regarded as normally tolerable although (and generally at individual business unit level) opportunities for further reductions will continue to be sought.

4.3      In some cases such actions may not lead to a reportable change in the level of risk. (For example, in respect of risk to Council reputation from public perceptions, expanding liaison with related organisations about how and when public statements are made is a valid risk management action but on its own will not affect estimated risk sufficiently to step from medium to low risk.)

4.4      The Subcommittee can be assured that these risk levels will continue to be monitored.

          Summary of control changes since last report

4.5      The table below summarises areas where controls on key risks have been progressed.

 

Key risk area

Progress on risk treatments since last report

1   Maintaining lifeline services …

·     Exercise to test and improves business continuity capability planned for next quarter

·     Bid for funds to implement findings of regional lifelines review in LTP process

5   Ineffective contract management…

·     Proposals for a contracts monitoring database (added to the MagiQ financial system) expected to be finalised in September (decision to proceed will then be required)

 7     Incomplete and difficult to access records…

·     Reconfiguration of Electronic Document Records Management System in progress.

·     Improved management protocols for hard copy records being implemented. 

 

Other areas of significant risk

4.6      A review of all business unit risk registers was undertaken at the end of the financial year just completed. This review has shown a number of risk areas ranked high for a business unit (although not necessarily for the organisation as a whole). In some cases these are not amenable to further action by Council itself (e.g. the risk that central government decision making will ‘change the rules’ under which the current reformulation of the Nelson Plan operates, leading to the possibility of missing deadlines in this process).

4.7      However one risk relating to the capital works programme may warrant consideration as a new key risk. In summary this risk arises from the current mechanisms for reconsidering expenditure in cases where are fixed sums are allocated to projects by Council decision (often substantially ahead of time). When these projects come to execution, changes in the market can alter the real cost of these projects. The experience from the capital works programme suggests that the time required to revisit a specific Council decision (which may be in the order of 90 days) can lead to significant time delays for the total work programme.

4.8      Some options for responding to this risk are currently being developed, working with Infrastructure Group management.

5.       Options

5.1      It is recommended that this report be received as it will further improve the Subcommittee’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 Subcommittee may consider such a discussion useful.

 

 

 

Steve Vaughan

Risk & Procurement Analyst

Attachments

Attachment 1:  A1811819 Key Organisational Risk Report Quarter 2 Calendar 2017 

 

 

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

5.   Degree of significance and level of engagement

This is of low significance 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 Audit, Risk and Finance Subcommittee has responsibility for overseeing the Council’s risk management systems.

 

 


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Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R8220

Health Safety and Wellbeing; Quarterly Report

     

 

1.       Purpose of Report

1.1      To provide the Subcommittee with a quarterly report of health, safety and wellbeing data collected over the April to June quarter of 2017, and an update on the health, safety and wellbeing work programme.    

 

 

2.       Recommendation

That the Subcommittee

Receives the report Health Safety and Wellbeing; Quarterly Report (R8220) and its attachment (A1775723).

Recommendation to Council

That the Council

Notes the report Health Safety and Wellbeing; Quarterly Report (R8220) and its attachment (A1775723); and

Acknowledges the assessment of critical health and safety risks contained in the attachment (A1775723).

 

 

3.       Background

3.1      Councillors, as ‘Officers’ under the Health and Safety at Work Act 2015 (HSWA), are expected to undertake due diligence on health and safety matters.  Council’s Health and Safety Governance Charter states that quarterly performance data reports will be presented to Council.

4.       Discussion

4.1      Attached is a report outlining data on health, safety and wellbeing drawn from Council’s health and safety system. ‘Wellbeing’ is a recent inclusion in the title. Work is underway to include more data relating to staff wellbeing in these reports. Feedback is always welcome on the format and content of these reports.

4.2      The issue of physical security continues to be rated as a High risk in the attached assessment. Work on physical changes to Civic House related to security improvements has been prioritised. Officers continue to carefully monitor reported security incidents at libraries. These have occurred at a significantly lower rate than in December 2016.

4.3      Overdue actions recorded in the InControl database are identified in the attachment as of ‘considerable concern’. The recent focus on completing these, has seen a reduction of almost 40% in overdue actions in the reporting period.

          General work programme

4.4      Governance activities:  Councillors have participated in site visits to the School of Music, the Tantragee water treatment plant and the Saxton Creek upgrade worksite. These visits help councillors to meet their due diligence obligations, and form part of the governance due diligence plan, outlined in the Health and Safety Governance Charter.

4.5      The Health and Safety Governance Charter was reviewed by the Audit Risk and Finance (ARF) Subcommittee on 27 June 2017 and was approved by Council on 10 August 2017.

4.5.1   Other activities: An internal audit of contractor health and safety management has been completed.  This looked at health and safety aspects of contractor management processes across a selection of Council contractors, and a number of larger projects.  This work will be discussed further as part of the Internal Auditor’s reporting to the ARF Subcommittee. 

4.5.2   The ‘Wellbeing at Work’ programme, facilitated by the Health Action Trust, has been rolled out across Council.  The programme focuses on promoting mental health in the workplace, and provides tools to develop organisations that are safe, productive and compliant in regard to mental health issues. 

4.5.3   Reviews of Council’s Health and Safety Policy and the Health and Safety Strategic Plan are underway.  The revised Strategic Plan will be presented to the ARF at the 28 September 2017 meeting.

5.       Options

 

Option 1: Receive the report and its attachment

Advantages

·   Council demonstrates positive due diligence in relation to health and safety matters in the Council workplace. This assists in meeting councillors’ obligations as ‘Officers’ under the HSW Act 2015.

Risks and Disadvantages

·   Receiving the report alone is not sufficient. Positive diligence (understanding, asking questions etc) is required.   

Option 2: Decline to receive the report and its attachment

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. 

 

 

 

 

Malcolm Hughes

Health and Safety Adviser

Attachments

Attachment 1:  A1775723 Health, Safety and Wellbeing Performance Data June 2017

 

 

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 Health and Safety at Work Act 2015 because it is classed as a Person Conducting a Business or Undertaking (PCBU), and both councillors and Council’s senior management have obligations as “Officers” under that Act. 

2.   Consistency with Community Outcomes and Council Policy

The recommendations align 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 ‘Governance due diligence plan’ found at section 6 of the Health and Safety Governance Charter (A1767136). The likelihood of adverse consequences is assessed as low based on the current record of Council’s health and safety systems and 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/or 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

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

7.   Delegations

The Audit, Risk and Finance Sub-Committee has delegated oversight of Health and Safety.

 


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Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R7004

Carry Forwards 2016/17

     

 

1.       Purpose of Report

1.1      To approve carry forward of unspent budget to the new financial year.

2.       Summary

2.1      On 27 June 2017, a report on the expected capital and operating carry forwards for the 2016/17 financial year were presented to the Audit, Risk and Finance sub-committee.

2.2      The purpose of that report was to allow officers to continue work on delivering the 2016/17 projects into the new financial year.

2.3      Processing is now complete for the 2016/17 financial year and officers have reviewed their projects, identifying savings and updating carry forwards.

3.       Recommendation

That the Subcommittee

Receives the report Carry Forwards 2016/17 (R7004) and its attachments (A1801073 and A1801504).

It is recommended that Council

That the Council

Approves the carry forward of $6,298,000 unspent capital budget for use in 2017/18; and

Approves the offsetting of $268,021 of capital spent in 2016/17 against 2017/18 budgets; and

Approves the carry forward of $1,812,113 of unspent operating budget for use in 2017/18; and

Notes savings in 2016/17 capital expenditure of $2,187,000.

 

 

 

4.       Background

4.1      The capital programme for 2016/17, as agreed in the Annual Plan 2016/17, totalled $44 million, including staff costs of $2.3 million and excluding Nelson Regional Sewerage Business Unit (NRSBU).  All figures quoted in this report do not include vested assets.

4.2      The addition of 2015/16 carry forwards, and other resolutions of Council increased the total capital budget to $45.6 million.

4.3      Total capital expenditure for the 2016/17 year was $37.4 million, $8.2 million less than budget. Of this, $2.2 million has been identified as savings.

4.4      The capital projects carry forward report presented to the Audit, Risk and Finance sub-committee on 27 June 2017 indicated that approximately $3.6 million would be requested as carry forwards into 2017/18.

4.5      Reasons for capital carry forwards being requested include:

·    alterations to the phasing of multi-year projects

·    reliance on external funds

·    delays created by weather/season requirements, negotiations with external parties

4.6      Carry forwards for operating budgets are presented for the approval of the sub-committee and are requested to complete programmed work.

4.7      The report presented to the Audit, Risk and Finance sub-committee on 27 June 2017 indicated that around $1 million of operating expenditure would be requested as carry forwards, including grants for capital works.

4.8      Once the 2016/17 year was closed for processing, officers collated data relating to the projects undertaken during the year, identifying variances against the final approved budget. Project managers were asked to identify which variances represented savings, and where they wished to carry forward budget into 2017/18 they were asked to support their request. Senior Leadership Team reviewed the resulting information to ensure that the requested carry forward is justified.

5.       Discussion

          Capital savings

5.1      Officers identified $2.2 million of savings in capital expenditure against the approved budget. This will have a positive impact on interest, depreciation and debt levels, in excess of that already identified in the 2017/18 annual plan.

5.2      Savings have been identified as follows:

5.2.1   On completion of projects or stages of projects, for example

·   $125k renewal of Roding and Maitai resource consents

·   $250k for Stormwater project 2958 Railway Reserve – Saxton Road West – Dryden St

5.2.2   Renewals budgets not completely used $224k

5.2.3   Staff time assigned to capital projects under budget $515k

5.2.4   Projects deferred to the 2018-28 Long Term Plan

          Capital carry forwards

5.3      For renewals budgets and multi-year projects, any spend over the 2016/17 projection is considered a timing variance and is offset against the 2017/18 budget, thereby reducing it in the amount of $269,000.

5.4      Officers have requested that $6.3 million be carried forward and $269,000 deducted from 2017/18, revising the total capital programme for 2017/18 to $61.7 million (excluding vested assets and NRSBU). Interest, depreciation, and debt relating to these amounts was already built into the 2017/18 Annual Plan.

5.5      Significant items that were not in the interim carry forward report include the Greenmeadows facility and Subsidised roading budgets.

5.6      Totals by activity are as follows:

 

 

5.7      Attachment 1 itemises capital projects with carry overs requested greater than $100,000.

Operating expenditure carry forwards

5.8      Officers were asked to identify operating projects and programmes that will be completed in the new financial year and which require a carry- over of funds in order to do so. A total of $1.8 million has been requested, $802,000 more than indicated in the preliminary report in June.

5.9      Major items not included in the preliminary report were building claims, the grant for the Saxton Field cycle track and the water loss reduction feasibility study and strategy (see 4.10).

5.10    Totals by activity are as follows:

 

 

5.11    Operating programmes/projects with carry overs requested greater than $50,000 are itemised in Attachment 2.

6.       Options

6.1      Council officers recommend Option 1, approve the recommendations. Not approving the recommendations would be problematic as the future scope of some of these projects has been agreed in Committee and Council resolutions prior to this meeting. Work has continued on these projects based on those decisions and the Interim Carry over report.

 

Option 1: Approve the recommendations

Advantages

·   Work has continued on 2016/17 capital projects and programmed operating projects following the resolutions at the Audit, Risk and Finance meeting on 27 June 2017 and costs have been incurred.

·   The carry forward spending is within previously approved budgets.

Risks and Disadvantages

·   None

Option 2: Approve carry forwards with exceptions

Advantages

·    Council could if they wished remove some items from the list of budgets to be carried forward.

·    Savings in future debt, depreciation, interest and maintenance costs would occur.

Risks and Disadvantages

·    The projects concerned would then not have sufficient budget to be completed.

·    Council do not have complete information through this report to fully inform such a decision.

 

7.       Conclusion

7.1      An analysis of capital and programmed operating expenditure against approved budget for 2016/17 and subsequent review by the Senior Leadership Team indicates:

·     There are savings from the capital budget of $2.2 million;

·     Renewals and multi-year projects overspent by $0.3 million should be offset against 2017/18 budgets;

·     $6.3 million of capital budget not spent should be carried forward into 2017/18;

7.2      $1.8 million of programmed operating expenditure not spent should be carried forward into 2017/18.

 


 

Tracey Hughes

Senior Accountant

Attachments

Attachment 1:  Capital carry forwards over $100,000 (A1801073)

Attachment 2:  Operating expenditure carry forwards over $50,000 (A1801504)

 

 

Important considerations for decision making

1.   Fit with Purpose of Local Government

Approval of the recommendation will allow progress/completion of approved projects, supporting the efficiency of delivery of public infrastructure and services.

2.   Consistency with Community Outcomes and Council Policy

Approval of this recommendation will allow projects as approved in the Annual Plan 2016/17 and subsequent Council resolutions to be delivered.

3.   Risk

Failure to approve the recommendation will introduce risk (financial, contractor and community relationships, health and safety) which does not currently exist.

4.   Financial impact

There is little financial impact from approving the recommendation as budgets are already approved and funded.

5.   Degree of significance and level of engagement

This matter is of low significance as budgets are already approved and the recommendation confirms business as usual.

6.   Inclusion of Māori in the decision making process

No consultation has been undertaken.

7.   Delegations

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

 

 


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Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R7968

Results of 2017 Residents Survey

     

 

1.    Purpose of Report

1.1      To provide information from the 2017 Residents’ Survey to inform the Long Term Plan and monitor outcomes.

2.       Summary

2.1      Most of the results of the 2017 Residents’ Survey are similar to previous years. The 2017 Survey included an online sample which has increased the representation of 16-39 year olds in the survey.

2.2      The activities with the highest levels of satisfaction included libraries, parks and recreation, swimming pools (users only), community facilities, and water supply.

2.3      Satisfaction levels with the Suter Art Gallery are significantly higher than previous years and reflect the major redevelopment of the gallery which was completed in the last year.

2.4      There has been an increase in dissatisfaction with transport activities in general. Satisfaction levels with specific components of the transport activities are also lower, particularly with public transport.

 

 

3.    Recommendation

That the Subcommittee

Receives the report Results of 2017 Residents Survey (R7968) and its attachment (A1789495); and

Notes the 2017 Residents Survey results (A1789495) will be communicated to the public.

 

 

 

4.    Background

4.1      The purpose of the Residents’ Survey is to get statistically representative resident feedback on Council performance which is used to inform and monitor the Long Term Plan (LTP).

4.2      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 LTP, such as in 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.

4.3      Other sources of information, such as user surveys, complaints, and submissions, are also considered to provide more detail on services and performance.

4.4      The 2017 Residents’ Survey was conducted by Versus Research in May 2017. This year, a mixed-method approach was used for data collection, which involved a phone survey of 400 residents and an online survey of 120 residents. Respondents to the online survey were recruited using Facebook. The online method was included to target those who are unable to be reached by landline, particularly younger residents. Results from both methods were compared to ensure any differences were a result of sample rather than method.

4.5      The overall results have a maximum margin of error of +/-4.3% 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 4.3%. 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. Satisfaction ratings were based on a 5-point scale with 1 representing Very Dissatisfied and 5 representing Very Satisfied.

4.6      Respondents who gave dissatisfied ratings were asked for their reasons, and those reasons are summarised in charts throughout the attached report. Weighted percentages are used if more than 50 people were dissatisfied. If less than 50 people were dissatisfied, the charts show the actual number of mentions, as there was a risk of percentages being misleading for small base sample sizes.

5.    Discussion

          Overall Performance and Service

5.1      Fifty-five percent of residents are satisfied or very satisfied with Council’s overall performance which is a similar result compared with 2014 when this question was last asked.

5.2      Just over half of all residents had direct contact with Council staff in the last year and 67% of them are satisfied or very satisfied with the service they received.

          Council Activities

5.3      Residents were asked to rate their satisfaction with specific Council activities. Satisfaction levels for each activity were generally similar to results in previous years.

5.3.1   As with previous years, the highest levels of satisfaction were with Parks and Recreation (82% satisfied or very satisfied), Community Facilities (74%), and Water Supply (72%).

5.3.2   The lowest levels of satisfaction were with Flood Protection, Regulatory Compliance, and Environmental Management. Residents commented that there was too much flooding occurring and Council isn’t doing enough. Similarly, residents commented that Council isn’t doing enough to manage and improve the environment. Feedback on Regulatory Compliance was that it takes too long, the process is too complicated, and there are too many rules.

Transport

5.4      Forty-eight percent of residents are satisfied or very satisfied with Transport activities, a quarter are neutral and 27% are dissatisfied or very dissatisfied.

5.4.1   The main reasons given for dissatisfaction were residents saying that public transport is limited, roads are poor and need improvement, and cycleways need to be improved.

5.4.2   Residents were asked about components of the transport network in more detail and satisfaction levels had generally decreased compared with 2014 results. The lowest levels of satisfaction were with public transport (36% satisfied or very satisfied), with the main reason being residents feeling that it is not extensive enough and more buses are needed.

Facilities and Events

5.5      Residents were asked about their use of and satisfaction with several Council facilities, and their attendance at Summer and Arts Festival events.

5.5.1   Forty-one percent of residents have used or visited Riverside and/or Nayland Pool in the last year, a similar rate to 2016. Seventy-eight percent of pool users are satisfied or very satisfied with the swimming pools.

5.5.2   Fifty-nine percent of residents have visited the Suter Art Gallery in the last two years, and 85% of those are satisfied or very satisfied. Satisfaction levels are significantly higher than previous years and reflect the major redevelopment of the gallery which was completed in the last year.

5.5.3   Close to three-quarters of residents (72%) have used a public library in the past year, with the majority citing Elma Turner library as their main library. Eighty-eight percent of residents are satisfied or very satisfied with the public library service.

5.5.4   Two-thirds of residents attended events as the Summer Festival or Arts Festival, including the Masked Parade. Over half (55%) attended Summer Festival events, an increase compared with 2016 but similar to 2014 results. Thirty-nine percent attended the Masked Parade and 27% attended Arts Festival events.

Environment

5.6      Residents were asked what they felt is the single most important environmental issue facing the region. As in 2014, the last time this question was asked, the most common issue was water pollution. Other issues that were frequently mentioned included traffic/congestion and rubbish/recycling. Issues that were mentioned more frequently in 2017 than in 2014 included population growth and land use/urban sprawl.

5.6.1   Residents were then asked how important they felt it was for Council to focus on a range of specific environmental issues. Again, results were generally similar to 2014, with the top three issues being water quality in local streams and rivers, the coastal environment and beaches, and marine water quality. Waste minimisation, natural habitats and ecosystems, air quality and natural hazards were all also rated as important by at least 84% of residents. Natural landscapes and heritage sites/buildings were seen as relatively less important.

5.6.2   There has been a significant change in recycling habits with residents now putting out their recycling less frequently (every month or every fortnight) than previously, when the majority put out their recycling every week. This reflects the change in Nelson’s recycling collection since September 2016, with bigger bins now being collected at least every two weeks. There has been a significant decrease in the number of household who never put out their recycling, from 6% in 2014 to 2% in 2017. This is also consistent with an increase in recycling volumes since the new system was introduced.

5.6.3   Although about two-thirds of households compost their household food waste and their household garden waste, there has been a significant drop in the number, particularly for the composting of garden waste.

Communication and Consultation

5.7      Forty-five percent of residents feel informed or well-informed about Council and its services, a third are neutral, and 20% do not feel informed. The main reason for not feeling informed included residents not hearing from Council and feedback that Council needed to communicate more.

5.7.1   In response to a question on how residents would prefer to get news or information about what Council is doing, there is an increasing preference for communication via social media and the Council website. However, a significant portion of residents still prefer print communication methods such as articles in the paper, flyers in the mail, addressed mail or Council publications. The 16-39 year age group were more likely to mention social media, while the 65 years and over age group were more likely to mention articles in the paper.

5.7.2   Forty-two percent of residents are satisfied or very satisfied with opportunities to provide feedback and take part in Council decision-making, a third are neutral and 17% are dissatisfied or very dissatisfied. The main reasons for dissatisfaction were residents feeling there is not a lot of communication or consultation from Council.

6.    Options

6.1      The preferred option is to release the results to the public. This supports the Community Outcome around Council providing information to help our leaders understand their communities. Communicating the results, including how they feed into Long Term Plan decisions, also provides a feedback loop to those residents who took part in the survey and helps maintain good response rates to future surveys and consultation.

 

Nicky McDonald

Senior Strategic Adviser

Attachments

Attachment 1:  A1789495 2017 Residents 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 that Council provides leadership and fosters partnerships, a regional perspective, and community engagement.

3.   Risk

There is low 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 Audit Risk and Finance Subcommittee has the responsibility for Council’s financial and service performance. The Audit Risk and Finance Subcommittee has the power to make a recommendation to Council on this matter.

 

 



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

Audit, Risk and Finance Subcommittee

8 September 2017

 

 

REPORT R7805

Draft Annual Report 2016/17

     

 

1.       Purpose of Report

1.1      To provide a copy of the draft Annual Report 2016/17.

2.       Summary

2.1      A draft Annual Report for the 2016/17 financial year has been prepared. It has not yet been audited and is likely to have some changes as a result of the audit process.

2.2      The draft Annual Report 2016/17 is provided, as Attachment 1, for information.

 

 

3.       Recommendation

That the Subcommittee

Receives the report Draft Annual Report 2016/17 (R7805) and its attachment (A1703959); and

Relinquishes its delegation in regard to recommending the adoption of the Draft Annual Report 2016/17, provided that there are no material changes to the draft resulting from the audit.

Recommendation to Council

That the Council

Notes the draft Annual Report 2016/17 has been prepared and will be audited before being presented to Council for adoption; and

Notes that if there are material changes to the draft resulting from the audit, these will be brought back to the Audit Risk and Finance Subcommittee on 28 September 2017; and

Notes that, if there are no material changes to the draft resulting from the audit, due to timing constraints, the final Annual Report 2016/17 will be presented directly to Council for adoption, rather than via the Audit, Risk and Finance Subcommittee.

 

 

 

4.       Background

4.1      The purpose of the Annual Report is to compare Council’s actual performance against the targets as set out in the Long Term Plan 2015-25 and Annual Plan 2016/17. It also provides accountability to the Nelson community for the decisions made throughout the year.

4.2      An Annual Report must be completed and adopted within four months of the end of the financial year to which it relates (i.e. by 31 October 2017) and must be audited by the Auditor-General.

5.       Discussion

5.1      The attached draft Annual Report 2016/17 is intended to provide Council with information officers have to date to give as complete a picture as possible. This is not the final Annual Report for the year, and has not yet been audited. It is likely to require modification through the auditing process. Some sections are still to be completed.

5.2      As the final Annual Report 2016/17 is required to be adopted by Council within four months of the end of the financial year, it is proposed that it be brought to be brought to Council for adoption at Council’s 19 October meeting. Given the time constraints, it is recommended that the Annual Report be presented directly to Council, rather than to the Audit, Risk and Finance Subcommittee first.

5.3      However, if there are material changes to the draft Annual Report resulting from the audit, these will be brought to the 28 September 2017 Audit Risk and Finance subcommittee for information.

5.4      The surplus before revaluation is $10.4 million more than budgeted.  There are multiple reasons for this variance which will be detailed in the final Annual Report. 

5.5      The following items are higher than budgeted - vested assets $2.7 million, swap revaluation $3 million and forestry net income $1.2 million.  The following items are lower than budgeted – salaries $1.2 million and finance costs $1.3 million.

6.       Options

6.1      This report is provided for information. The Audit Risk and Finance Subcommittee has the option to receive this report and attachment or not to receive this report and attachment. It is recommended that the Subcommittee receives this report and notes the final Annual Report 2016/17, with any changes resulting from the audit process, will be presented directly to Council due to the meeting schedule otherwise not aligning with Council’s requirement to have adopted the Annual Report 2016/17 before the end of October.

 

7.       Conclusion

7.1      An Annual Report must be completed to comply with section 98 of the Local Government Act 2002.

7.2      The purpose of this report is to provide Council with a draft of the Annual Report 2016/17. A final, audited report will be provided to Council for adoption on 19 October 2017.

 

Jane Loughnan

Policy Coordinator

Attachments

Attachment 1:  Draft Annual Report 2016/17 (unaudited) (A1703959) (Circulated separately)

 

 

Important considerations for decision making

1.   Fit with Purpose of Local Government

The Annual Report 2016/17 is a requirement of the Local Government Act 2002 and fits the purpose of local government by providing information about Council’s performance during 2016/17, thereby promoting accountability.

2.   Consistency with Community Outcomes and Council Policy

The Annual Report 2016/17 contributes to the community outcomes by measuring performance across the full range of Council activities.

3.   Risk

The content of the Annual Report is prescribed by statue so there is a very low risk that it will not achieve the required outcome. There is a risk that Council would not be able to adopt the Annual Report 2016/17 by 30 October and meet the requirements under the Local Government Act 2002 if the final Annual Report is presented to Audit Risk and Finance first, rather than going directly to Council.

4.   Financial impact

Preparation and publication of the Annual Report can be achieved within funding allocated in the Annual Plan.

5.   Degree of significance and level of engagement

The decision to receive this report is of low significance. The final audited Annual Report will be provided to Council for adoption in October. There will be a summary Annual Report available following adoption of the final audited Annual Report and this will also be made available to the public.

6.   Inclusion of Māori in the decision making process

There has been no consultation with Maori on this item.

7.   Delegations

The Audit, Risk and Finance Subcommittee has the area of responsibility to consider Council’s Annual Report. Due to the meeting schedule, it is recommended that the final Annual Report 2016/17, with changes from the audit process be presented directly to Council without it first going to the Audit Risk and Finance Committee.