Agenda of Audit, Risk and Finance Subcommittee

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

19 February 2019

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 13 November 2018 7 - 12

Document number M3892

Recommendation

That the Audit, Risk and Finance Subcommittee

Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 13 November 2018, as a true and correct record.

6. Chairperson's Report 13 - 13

Document number R10004

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Chairperson's Report (R10004).

7. Quarterly Report 1 October - 31 December 2018 14 - 38

Document number R9976

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Report 1 October - 31 December 2018 (R9976) and its attachments (A2119970, A2122871 and A2127285).

8. Quarterly Key Risks Report - 1 October to 31 December 2018 39 - 58

Document number R9884

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Key Risks Report - 1 October to 31 December 2018 (R9884) and its attachment (A2126109).

9. Health & Safety Quarterly Performance Report 1 October to 31 December 2018 59 - 74

Document number R9893

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Health & Safety Quarterly Performance Report 1 October to 31 December 2018 (R9893) and its attachment (A2118120).

10. Internal Audit - Quarterly Progress Report to 31 December 2018 75 - 78

Document number R9971

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Internal Audit - Quarterly Progress Report to 31 December 2018 (R9971) and its attachment (A2123169).

11. Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues to 31 December 2018 79 - 84

Document number R9938

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues to 31 December 2018 (R9938) and its attachment (A2119039).

12. Letter from Audit NZ on Annual Report for year ending 30 June 2018 85 - 113

Document number R9978

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Letter from Audit NZ on Annual Report for year ending 30 June 2018 and its attachment (A2104464).

Public Excluded Business

13. Exclusion of the Public

Recommendation

That the Audit, Risk and Finance 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	Quarterly Update on Legal Proceedings	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)(g) To maintain legal professional privilege

Item

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Particular interests protected (where applicable)

Quarterly Update on Legal Proceedings

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)(g)

To maintain legal professional privilege

Audit, Risk and Finance Subcommittee Minutes - 13 November 2018

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

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

On Tuesday 13 November 2018, commencing at 9.03a.m.

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

In Attendance: Councillors M Courtney, P Matheson, B McGurk, G Noonan, Chief Executive (P Dougherty), Group Manager Infrastructure (A Louverdis), Group Manager Community Services (R Ball), Group Manager Corporate Services (N Harrison), Group Manager Strategy and Communications (N McDonald), and Governance Adviser (R Terry)

Leave of Absence: Her Worship the Mayor R Reese

Apologies: Nil

1. Apologies

There were no apologies.

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 25 September 2018

Document number M3782, agenda pages 6 - 12 refer.

Resolved AUD/2018/052

That the Audit, Risk and Finance Subcommittee

Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 25 September 2018, as a true and correct record.

Barker/Dahlberg Carried

6. Chairperson's Report

The Chair noted that this was the first meeting with the new quarterly reporting format which would allow committee members to have access to more timely information.

7. Audit Reports on Long Term Plan 2018-28 and Consultation Document

Document number R9751, agenda pages 13 - 33 refer.

Policy Coordinator, Jane Loughnan presented the report.

Resolved AUD/2018/053

That the Audit, Risk and Finance Subcommittee

Receives the report Audit Reports on Long Term Plan 2018-28 and Consultation Document (R9751) and its attachments (A2066653 and A2066652).

Barker/Dahlberg Carried

8. Quarterly Report 1 July - 30 September 2018

Document number R9774, agenda pages 34 - 46 refer.

A Debtor Analysis document (A2072704) was tabled.

Senior Accountant, Tracey Hughes presented the report and provided an explanation of the new quarterly reporting, noting the reports to each committee would be as standardised as possible.

Ms Hughes answered questions on public transport options and capital expenditure and capital revenue.

A question was asked regarding debtors and the Chair decided that would be more appropriately answered in the public excluded section due to the need to protect privacy.

Resolved AUD/2018/054

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Report 1 July - 30 September 2018 (R9774) and its attachments (A2072704 and A2076104).

Barker/Dahlberg Carried

Attachments

1 A2072704 - Debtor Analysis September 2018

9. Health Safety and Wellbeing Performance Report

Document number R9828, agenda pages 47 - 60 refer.

Health and Safety Adviser, Malcolm Hughes presented the report and answered questions on the security incident in the customer service centre and on-going security issues at the Stoke Library.

Resolved AUD/2018/055

That the Audit, Risk and Finance Subcommittee

Receives the report Health Safety and Wellbeing Performance Report (R9828) and its attachment (A2069618).

Dahlberg/Murray Carried

10. Internal Audit - Quarterly Progress Report to 30 September 2018

Document number R9772, agenda pages 61 - 62 refer.

Internal Audit Analyst, Lynn Anderson presented the report and noted that the two remaining audits would be coming back to the next Audit, Risk and Finance meeting.

Resolved AUD/2018/056

That the Audit, Risk and Finance Subcommittee

Receives the report Internal Audit - Quarterly Progress Report to 30 September 2018 (R9772).

Her Worship the Mayor/Barker Carried

11. Quarterly Key Risks Report - 1 July to 30 September 2018

Document number R9524, agenda pages 63 - 85 refer.

Manager Business Improvement, Arlene Akhlaq presented the report and answered questions on cyber risk rating, social media and homelessness.

Resolved AUD/2018/057

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Key Risks Report - 1 July to 30 September 2018 (R9524) and its attachments (A2069462 and A2079218).

Dahlberg/Her Worship the Mayor Carried

12. Exclusion of the Public

Resolved AUD/2018/058

That the Audit, Risk and Finance Subcommittee

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

Barker/Murray 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	Audit, Risk and Finance Subcommittee Meeting - Public Excluded Minutes - 25 September 2018	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)(g) To maintain legal professional privilege
2	Quarterly Report 1 July - 30 September 2018 Outstanding debtor discussion	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

Item

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Particular interests protected (where applicable)

Audit, Risk and Finance Subcommittee Meeting - Public Excluded Minutes - 25 September 2018

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)(g)

To maintain legal professional privilege

Quarterly Report 1 July - 30 September 2018

Outstanding debtor discussion

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

The meeting went into public excluded session at 11.01a.m. and resumed in public session at 11.10a.m.

Please note that the only business transacted in public excluded was to receive the minutes of the previous meeting, and to discuss outstanding debtors, as noted in the Quarterly Report. This business has been recorded in the public minutes, as in accordance with the Local Government Official Information Meetings Act 1987, no reason for withholding this information from the public exists.

13. Confirmation of Minutes – Public Excluded

13.1 25 September 2018

Document number M3783, agenda pages 3 - 4 refer.

Resolved AUD/2018/059

That the Audit, Risk and Finance Subcommittee

Confirms the minutes of part of the meeting of the Audit, Risk and Finance Subcommittee, held with the public excluded on 25 September 2018, as a true and correct record.

Barker/Dahlberg Carried

14. Quarterly Report 1 July – 30 September 2018 – Public Excluded
	There was a discussion around the outstanding debtors listed on the Quarterly Report.

15. Re-admittance of the Public

Resolved AUD/2018/060

That the Audit, Risk and Finance Subcommittee

Re-admits the public to the meeting.

Peters/Barker Carried

There being no further business the meeting ended at 11.10a.m.

Confirmed as a correct record of proceedings:

Chairperson Date

Item 7: Quarterly Report 1 October - 31 December 2018

Audit, Risk and Finance Subcommittee

19 February 2019

REPORT R9976

Quarterly Report 1 October - 31 December 2018

1. Purpose of Report

1.1 To inform the members of the Audit, Risk and Finance Subcommittee of the financial results of activities for the six months ending 31 December 2018, compared to the approved operating budget.

1.2 To highlight any material variations.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Report 1 October - 31 December 2018 (R9976) and its attachments (A2119970, A2122871 and A2127285).

3. Background

3.1 The financial reporting focuses on the six month performance compared with the year to date approved budgets.

3.2 Unless otherwise indicated, all measures are against approved operating budget, which is the 2018/19 Long Term Plan budget plus any carry forwards, plus or minus any other additions or changes as approved by Council throughout the year.

3.3 Officers have assessed budgets and applied a range of phasing mechanisms depending on the nature of the expenditure to reflect the anticipated timing of actual income and expenditure.

3.4 In order to meet reporting timeframes, accruals for both operating and capital expenditure are made for transactions in the third month of each quarter, reversing in the first month of the following quarter. The effect of these accruals on the year to date results will decrease as we go through the year.

3.5 The contents of this report will be a work in progress, and staff welcome feedback from all committees. In the interests of efficiency it is proposed to keep the contents of the quarterly reports standard to all committees and avoid customisation where possible.

4. Discussion

4.1 For the six months ending 31 December 2018, the activity surplus/deficits are $1.3 million favourable to budget. This is made up of income ahead of budget $3.3 million and expenditure ahead of budget $2.1 million.

4.2 The most significant variances are:

· $1.1m unbudgeted income reflecting the special dividend declared by Port Nelson Limited in September 2018 and the 2017/18 Nelson Airport Limited dividend that was expected in the last financial year but declared too late to be accrued.

· $1m ahead of budgeted income for Forestry harvesting, with offsetting expenditure of $1.1 million.

· $586,000 ahead of budget festivals expenditure with offsetting income of $416,000, relating to a delay in moving to a gross contract.

· Water by meter income is $522,000 ahead of budget relating to higher meter readings than anticipated YTD.

· $337,000 behind budget for income from public transport tickets. This reflects that the bus service was budgeted as a gross contract (all income and expenditure flowing through Council), but this is not now expected to take place until the new financial year. There are offsetting savings in expenditure of $303,000.

· Salaries and wages are currently just behind budget ($123,000) reflecting the lower number of weekdays in December. However business unit overheads are currently $207,000 ahead of budget, particularly insurance costs and relieving/temp staff.

· Unbudgeted recovery costs from the February 2018 storms have been incurred in the Parks and Transport activities particularly, $287,000 YTD (note that income from insurance of $302,000 has been received in relation to these events).

4.3 Financial information provided in Attachment 1 includes:

4.3.1 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).

4.3.2 Operating income and expenditure displayed against budget for both committee and category. Significant variances are noted against committees. Each committee will receive a more detailed analysis of variances by cost centre.

4.3.3 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.

4.3.4 High level balance sheet. The current year balance sheets do not include consolidations.

4.3.5 A debtor analysis graph over 13 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.

4.3.6 Two capital expenditure graphs – The line graph records actual expenditure against approved budget, and quarter two forecast (current understanding of most likely outcome). The bar graph records year to date expenditure against approved budget by committee.

4.4 Capital expenditure is $4.4 million under approved budget year to date (including NRSBU). Expenditure phasing was completed early in the financial year, sometimes using limited information. As such the timing of expenditure may differ significantly from that expected when phasing was set.

4.4.1 In response to comments made at the last meeting of this subcommittee, Attachment 2 is a new chart representing the project health for all projects reported to other committees.

4.4.2 Project health is analysed based on three factors; quality, time and budget. From the consideration of these three factors the project is summarised as being on track (green), some issues/risks (yellow), or major issues/risks (red). Projects that are within 5% of their total budget are considered to be on track for the budget factor.

4.4.3 More detailed project sheets are supplied in Attachment 3 for all projects with a red health assessment along with all projects with a budget greater than $1m in the current financial year.

4.4.4 The quarter two forecast for capital expenditure is $4.5 m less than approved budget ($37.6 million vs $42.1 million excluding vested assets and consolidations). Project managers will have a better feel for forecasts as we move through the year.

5. Key Performance Measures

5.1.1 The pie chart below shows overall Council performance to 31 December 2018 against performance measures set in the Long Term Plan. To date, 66% of measures are on track to achieve the target by the end of the financial year (25% are not measured yet).

5.1.2 Other committees will receive more detailed information including a table showing the measure, target, a comment on performance and the result to date for the performance areas relevant to their delegations.

6. Other notable achievements or issues

6.1 A funding application was made to MPI’s Hill Country Erosion Fund which resulted in a $1.3 million grant to Nelson City Council to address forestry retirement and erosion management in the region.

6.2 An inventory of Council’s carbon emissions was initiated ahead of an audit in April 2019 through the Certified Emissions Measurement and Reduction Scheme (CEMARS) programme.

6.3 Downer is the current roading maintenance contractor. They have had the contract since 1 July 2017. The contract was let for an initial 3 years plus a possible 2 plus 2 year extension. At their request, and due to financial losses they could not sustain, Downer have been released from the contract and it will end on 30 June 2019. Forcing Downer to continue with delivery of this contract, at previously agreed contract rates, risked poor service delivery, a breakdown of established relationships and dissatisfied road users. An agreement has been reached that will see Downer continue to carry out work for the council until the end of June 2019 and officers have gained assurance that the work will be to the highest standard. Council will be re-tendering the contract again in January with the aim of having a new contract in place by 1 July 2019.

6.4 Market conditions are showing that our local contractors are all busy, with some identifying that they have confirmed forward work through until 2020. This is and will result in potential delays to construction of Council projects. Council Officers are meeting with contractors to look at potential ways forward, and will also approach the contractor’s federation to seek help.

6.5 Good progress has been made in filling vacancies within the capital projects and utilities teams, however a number of internal promotions and transfers and resignations have occurred over the quarter, therefore the resource risk in these areas continues. The developing climate change and land management (hill country erosion) programmes in the Science and Environment team will put pressure on existing resources.

Author: Tracey Hughes, Senior Accountant

Attachments

Attachment 1: A2119970 - Dashboards and Charts to 31 December 2018 ⇩

Attachment 2: A2122871 - Q2 Project Health Summary ⇩

Attachment 3: A2127285 - Project sheets for projects > $1m or project health = red ⇩

Item 8: Quarterly Key Risks Report - 1 October to 31 December 2018

Audit, Risk and Finance Subcommittee

19 February 2019

REPORT R9884

Quarterly Key Risks Report - 1 October to 31 December 2018

1. Purpose of Report

1.1. To provide information to the Audit, Risk and Finance Subcommittee on the key organisational risks.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Key Risks Report - 1 October to 31 December 2018 (R9884) and its attachment (A2126109).

3. Background

3.1 Following the previous meeting of the Subcommittee held on 13 November 2018, this quarterly risk report continues to evolve, and reports on risks as follows:

· risks to the Council’s top priorities as set out in the Long Term Plan 2018-28 (section 4). This section is a new addition to this quarterly report, and risks at this level are still being identified and evaluated;

· risks to matters which could substantially affect the whole of Council’s operations (section 5); and

· risks affecting local operations at Group level (section 6).

3.2 There are minor changes to the layout of the heat map, and the attachment to make them more efficient to produce.

3.3 Upcoming risk management activities include:

· Review of risk management processes, to be scheduled from April 2019;

· Analysis of options for consolidating the organisation’s tools for recording risks, to be scheduled from June 2019; and

· Risk maturity benchmarking exercise, to be scheduled for completion during the annual plan year 2019/20.

4. Risks to Achieving Council Long Term Plan Top Priorities

4.1 The Council’s current Long Term Plan contains four top priority areas for action: Infrastructure, Environment, CBD Development and Lifting Council Performance. In some of these areas the objectives to which risks need to be managed are clear, in others the focus is more recent and so objectives need further definition before more thorough analysis of risk can begin.

4.2 Infrastructure is already core Council business. The objective here is to maintain the services provided (water supply, waste water and stormwater management, waste management, and transport networks) to meet current and foreseeable needs of the community. The areas of risk, their controls and treatments are set out in more detail in attachment one.

4.3 Environment is also core Council business, and covers both regulatory and non-regulatory functions. Management of the environment includes biodiversity, biosecurity, air quality, freshwater and coastal water quality and quantity. Climate change actions to reduce emissions, and engage with the community sit within this area.

4.4 CBD Development: Within this priority area Council is working towards the Nelson CBD becoming an enhanced commercial, residential and cultural centre for Te Tau Ihu. More thorough risk analysis will begin following further development of specific objectives.

4.5 Lifting Council Performance: This new priority area is about how Council operates to facilitate many of the other goals of the Nelson community. The objectives to which risks need to be managed for this area will need to be developed over time, so at this point, as for CBD development, no formal risk assessment has been made.

5. Key Organisational risks

5.1 During quarter two, the key organisational risks which could affect the whole organisation’s capacity to deliver on it’s objectives were reviewed. The following are considered as not reasonably likely to affect the organisation’s capacity for delivery as a whole:

· Fraud, corruption or theft of Council property

· Privacy breaches

· Reputation damage from negative public perceptions

5.2 There remain seven risk areas in each of which there are credible events which could significantly affect the whole organisation’s ability to deliver on it’s objectives.

5.3 At end of quarter two, the known key risk areas for the four LTP top priorities, and the seven key organisational risks, are as summarised in the heat map, and table below. Risk areas three and four are not yet assessed and so do not appear on the heat map.

ID	Risk Area	Rating	Owner
1	Council priority area: Infrastructure	High	Group Manager Infrastructure
2	Council priority area: Environment	Medium	Group Manager Environmental Management
3	Council priority area: CBD Development	Not yet rated	Chief Executive
4	Council priority area: Lift Council Performance	Not yet rated	Chief Executive
5	Lifeline service failure from natural hazards and similar events	High	Group Manager Infrastructure
6	Illness, injury or stress from higher hazard work situations	Medium	Group Manager Corporate Services
7	Loss of service performance from ineffective contracts and contract management	Medium	Chief Executive
8	Compromise of Council service delivery from information technology failures	Low	Group Manager Corporate Services
9	Compromised decision making and public information from incomplete and difficult to access records	Medium	Group Manager Strategy and Communications
10	Council work compromised by loss of and difficulties in replacing skilled staff	Medium	Manager People and Capability
11	Legal liability and reputation loss from inadequate consideration of the law in decision making	Medium	Group Manager Strategy and Communications

5.4 The two risk areas rated as high relate to major disruptive events over which the organisation has no control (e.g. earthquakes, major storm events etc). Council continues to progress the way it responds to these events, which will over time lessen the impact of these major disruptions.

5.5 The remaining key organisational risk areas all have a residual risk rating of “medium” or lower, so are currently managed to within Council’s risk criteria. Further information for each of the key organisational risks is included in Attachment one. Planned treatments are intended to lower the likelihood and/or consequence rating, and where further treatments are planned, the anticipated risk movement is indicated in the attachment by an arrow.

6. Risk Areas for Each Group

6.1 Infrastructure Group: Staff shortages as reported in the last quarter continue. A number of vacancies have been filled, however resignations were received during the quarter, with the result that the heavy workload across all Infrastructure Group business units continues. This is likely to impact timeframes for completion of lower priority work. Market conditions are favourable for local contractors, with some identifying that they have confirmed forward work through until 2020. This is likely to result in delays to construction of Council projects, and/or increased construction costs.

The current road maintenance contractor, Downer, is being released from the contract at the end of June 2019 at their request. Officers expect to have a new contractor in place as the existing contract concludes, however the retender of this contract and set up of services with a new contractor will be a priority, and will further impact the Group’s workload during quarters three and four.

6.2 Community Services Group: There is some impact on the ability to fully achieve the Group’s planned outcomes for this year, due in part to the flow on effects of the large events Council has been involved in, which have displaced resources from the original work programme. Further progress on the Elma Turner Library development project is dependent on a future Council decision regarding the precise location of the facility. There appear to be some emerging risks in the delivery of the Parks and Facilities portfolio of work for the year, the impact of this is being assessed.

6.3 Environmental Management Group: During quarter two the Group received a significantly increased volume of building and resource consent applications. Additionally, higher than expected resources were needed for the implementation of the AlphaOne online building consent system. These events have impacted the Group’s ability to meet 100% of statutory timeframes for consent processing. The revised consultation timeframe for the draft Nelson Plan is currently on track; adequate review time for elected members is needed, and there is a small risk around aligning a feasible review schedule with the planned consultation timeframe.

6.4 Strategy and Communications Group: There are continuing risks around the management of social media. The volume of reactive work, particularly across legal and governance support is putting pressure on resources. As a result there has been an increased use of external resources, particularly for legal support.

6.5 Corporate Services Group: The E-bus ticketing project has experienced a number of delays since its inception in 2014. This is causing some additional cost for council because of the extended need for project management, which is being provided from within the Corporate Services Group due to the implications for customer service and financial transaction processing. It is clear that officers were not made fully aware of the local effort that would be needed after go live, particularly in the Finance team; the impact of this will need further assessment.

Author: Arlene Akhlaq, Manager Business Improvement

Attachments

Attachment 1: Key organisational risks report Quarter 2 October to December 2018 (A2126109) ⇩

Item 9: Health & Safety Quarterly Performance Report 1 October to 31 December 2018

Audit, Risk and Finance Subcommittee

19 February 2019

REPORT R9893

Health & Safety Quarterly Performance Report 1 October to 31 December 2018

1. Purpose of Report

1.1 To provide the subcommittee with a quarterly report of health, safety and wellbeing data collected over the October to December quarter of 2018.

1.2 To update the subcommittee on key health and safety risks, including controls and treatments.

2. Summary

2.1 Injury, illness, hazard and near miss data for the period does not indicate any concerning trends.

2.2 There have been significantly fewer security incidents at Stoke Library than during the same period last year.

2.3 There have been no significant changes to the ‘Key Health and Safety Risks’ section of the report.

3. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Health & Safety Quarterly Performance Report 1 October to 31 December 2018 (R9893) and its attachment (A2118120).

4. Background

4.1 Councillors, as ‘Officers’ under the Health and Safety at Work Act 2015, are expected to undertake due diligence on health and safety matters. Council’s Health and Safety Governance Charter states that Council will receive quarterly reports regarding the implementation of health and safety. Council has delegated the responsibility for health and safety to the Audit, Risk and Finance Subcommittee.

4.2 Health, safety and wellbeing performance data reports provide an overview of health and safety performance based on key lead and lag indicators. Where a concerning trend is identified more detail is provided in order to better understand issues and implement appropriate controls.

4.3 Reporting on key health and safety risks provides further depth and detail to the health and safety risks reported in the organisational risk report.

5. Discussion

5.1 Data Reports

5.1.1 Significantly fewer security incidents were reported at Stoke Library than for the same period last year.

5.1.2 Over-speed events for the period as recorded by the E-Road in vehicle monitoring system are higher than expected for the period. A large number of the over speed events for this period occurred during two long journeys undertaken by staff who were relatively new to Council.

‘5.2 Incidents of note

5.2.1 A sub-contractor’s worker received minor injuries when the roller he was operating rolled over and down a bank. The incident occurred at the closed Eves Valley landfill which is managed by the Nelson Tasman Regional Landfill Business Unit. A comprehensive investigation has been completed into this high potential incident by the contractor. The incident was found to be caused by the malfunction of a critical operator control mechanism.

5.2.2 The most significant security incident for this period was an upset dog owner striking the windows of the customer service centre (CSC) with a baseball bat when he could not enter the building. The CSC had been locked down immediately prior to his arrival as staff had been warned that that this customer was likely to arrive and behave aggressively.

5.2.3 Although occurring outside this reporting period two Council enforcement officers were assaulted in separate incidents in January. The first incident occurred when an officer was struck from behind after issuing an infringement notice under the freedom camping bylaw. Later the same day a parking enforcement officer was also struck from behind by the same person while talking to a different member of the public. The alleged offender was located by the Police and arrested.

5.3 Key Health and Safety Risk Update

5.3.1 All key health and safety risks have been assessed to remain as medium risks.

5.3.2 The effectiveness of improved controls to mitigate the risks associated with customer aggression has not yet been reflected in the data across all areas of Council, resulting in this risk continuing to be assessed as medium.

5.3.3 Where new treatments have been planned or have been implemented as controls since the last report this is indicated by red text in the attachment.

5.3.4 Where possible timeframes are indicated for treatments.

5.4 Due Diligence Activities

5.4.1 Councillor Walker participated in a safe work observation at the Tantragee water treatment plant during the filter membrane renewal project.

5.4.2 SLT members completed safe work observations of building inspections, a planning site visit and the Tantragee water treatment plant.

5.5 General Work Programme

5.5.1 A Civic House earthquake drill coinciding with the national shakeout in October was a success.

5.5.2 A CCTV upgrade at Elma Turner Library has been completed.

5.6 Staff Wellbeing Initiatives

5.6.1 A range of activities organised for mental health awareness month (October) had good levels of participation from staff with the rooftop garden a particular highlight.

5.6.2 The wellness team welcomed Nicky McDonald as the SLT representative at its October meeting.

5.6.3 Several workgroups organised their own wellbeing activities in the lead up to the summer holiday. Examples of this were a 12 days of Christmas initiative by the finance and property business unit and a pool competition for the environmental management group.

Author: Malcolm Hughes, Health and Safety Adviser

Attachments

Attachment 1: A2118120 - Health, Safety and Wellbeing Performance Report 1 October - 31 December 2018 ⇩

Item 10: Internal Audit - Quarterly Progress Report to 31 December 2018

Audit, Risk and Finance Subcommittee

19 February 2019

REPORT R9971

Internal Audit - Quarterly Progress Report to 31 December 2018

1. Purpose of Report

1.1 To update the Audit, Risk and Finance Subcommittee on the internal audit activity for the quarter to 30 December 2018.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Internal Audit - Quarterly Progress Report to 31 December 2018 (R9971) and its attachment (A2123169).

3. Background

3.1 Under Council’s Internal Audit Charter approved by Council on 15 November 2018, 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.

3.2 The current Internal Audit Plan for the year to 30 June 2019 was approved by Council on 15 November 2018. It provides for up to three audits - two planned, with an allowance for a third unplanned audit.

3.3 Included in the attached report is an update on the two outstanding audits from the last financial year – Monitoring and Management of Contractor Performance, and Council-Owned Property and Facilities Maintenance. Each of these has now been concluded.

4. Conclusion

4.1 The attached report shows that the Internal Audit Plan for the year ended 30 June 2019 is on track.

Author: Lynn Anderson, Internal Audit Analyst

Attachments

Attachment 1: A2123169 - Quarterly Report on Progress of Internal Audits to 31 December 2018 ⇩

Item 11: Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues to 31 December 2018

Audit, Risk and Finance Subcommittee

19 February 2019

REPORT R9938

Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues to 31 December 2018

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 31 December 2018.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Internal Audit - Summary of New or Outstanding Significant Risk Exposures and Control Issues to 31 December 2018 (R9938) and its attachment (A2119039).

2. Background

2.1 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.

2.2 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.

3. Summary

3.1 Issues identified in the attachment (A2119039), Summary of New and Outstanding Significant Risk Exposures and Control Issues Identified from Internal Audits, relate to internal audits performed to 31 December 2018.

3.2 The attached report shows three high risks outstanding from the previous report presented to the Audit, Risk and Finance Subcommittee meeting of 14 August 2018. Details of new progress on each are shown in red.

3.3 Two new high risks are from the Control Environment audit completed earlier in 2018. These relate to risk management – resource allocation to ensure it can be properly addressed where appropriate, and a reflection of whether the procedures and policies initially implemented remain fit for purpose for Council. There has been good progress in addressing both areas.

3.4 There have been an additional four high risks added from external consultant reviews since the last report, three from the Monitoring and Management of Contractor Performance review, and one from the review of Council-Owned Property and Facilities Maintenance. The primary concerns identified are the absence of a centralised contract database and effective performance management tools, and the lack of integration between Council’s asset management and financial databases. The latter issue could be impacting on the integrity of the data which informs Council’s asset planning.

3.5 Work to reduce the unacceptable risks identified from these latest reviews will form part of the organisational improvement interventions to be driven by the Business Improvement Team. The Senior Leadership Team’s expectations relating to the priority areas for improvement will be sought at their meeting of 30 January 2019. Discussions at this meeting are intended to include contract, risk, project, and asset management and will help direct the Business Improvement Team's drive for improvements to reduce these (and other) identified unacceptable risks. The Business Improvement Team’s programme of work covering an agreed period will then be developed, and implementation commenced. The Subcommittee will be updated on the focus areas at their 19 February meeting.

Author: Lynn Anderson, Internal Audit Analyst

Attachments

Attachment 1: A2119039 - Summary of New or Outstanding Significant Risk and Control Issues Identified from Internal Audits to 31 December 2018 ⇩

Item 12: Letter from Audit NZ on Annual Report for year ending 30 June 2018

Audit, Risk and Finance Subcommittee

19 February 2019

REPORT R9978

Letter from Audit NZ on Annual Report for year ending 30 June 2018

1. Purpose of Report

1.1 To provide the letter to the Council on the audit for the year ending 30 June 2018 from Audit NZ.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Letter from Audit NZ on Annual Report for year ending 30 June 2018 and its attachment (A2104464).

2. Discussion

2.1 Audit New Zealand (Audit NZ) issued an unmodified audit opinion on 25 October 2018 for the financial year ending 30 June 2018. This means that it was satisfied that the financial statements fairly reflected Council's activities for the year and its financial position at the end of the financial year.

2.2 After the audit is completed, Audit NZ issues a management letter to Council outlining the findings of the audit.

2.3 In the letter to Council issued on 5 December 2018 (Attachment 1) Audit NZ comment on the matters raised in the Audit Plan letter including:

· Valuation of infrastructure assets

· Nelson Tasman Regional Landfill business unit

· Property, plant and equipment matters

· Assessment of building assets for impairment

· The risk of management override of internal controls.

2.4 Other matters arising from the audit include

· Approval of staff time charged to capital projects

· Lack of system restriction/controls to prevent any unauthorised data editing for call out time measures

· Financial statements preparation process

· Related party processes