Agenda of Audit, Risk and Finance Subcommittee

Audit, Risk and Finance Subcommittee

23 August 2022

Page No.

Karakia and Mihi Timatanga

1. Apologies

An apology has been received from Mr J Peters

2. Confirmation of Order of Business

3. Interests

3.1 Updates to the Interests Register

3.2 Identify any conflicts of interest in the agenda

4. Public Forum

5. Confirmation of Minutes

5.1 24 May 2022 7 - 16

Document number M19478

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 24 May 2022, as a true and correct record.

5.2 9 August 2022 17 - 19

Document number M19700

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 9 August 2022, as a true and correct record.

6. Chairperson's Report

7. Health, Safety and Wellbeing Quarterly Report - 30 June 2022 20 - 36

Document number R27092

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Health, Safety and Wellbeing Quarterly Report - 30 June 2022 (R27092) and its attachment (855153265-555).

8. Six-monthly update - Section 17A review programme 37 - 41

Document number R27005

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Six-monthly update - Section 17A review programme (R27005).

9. Quarterly Internal Audit Report 42 - 46

Document number R27030

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Internal Audit Report (R27030) and its attachment (1194974384-3166).

10. Quarterly Risk Report - 30 June 2022 47 - 75

Document number R26980

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Risk Report - 30 June 2022 (R26980) and its attachment (1759736513-9).

11. Privacy Act 2020 - Reporting 76 - 77

Document number R27082

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Privacy Act 2020 - Reporting (R27082)

2. Notes that future updates will be provided to the subcommittee six monthly.

12. Audit NZ: Audit Plan for year ending 30 June 2022 78 - 102

Document number R26917

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Audit NZ: Audit Plan for year ending 30 June 2022 (R26917) and its attachment (A2896447).

13. Bad Debts Write Off - Year Ending 30 June 2022 103 - 105

Document number R27036

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Bad Debts Write Off - Year Ending 30 June 2022 (R27036).

Confidential Business

14. Exclusion of the Public

Recommendation

That the Audit, Risk and Finance Subcommittee

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

2. 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 - Confidential Minutes - 24 May 2022	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)(g) To maintain legal professional privilege
2	Quarterly Update on Debts - 30 June 2022	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)(g) To maintain legal professional privilege
3	Quarterly Report 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

Karakia Whakamutanga

Audit, Risk and Finance Subcommittee Minutes - 24 May 2022

Minutes of a meeting of the

Audit, Risk and Finance Subcommittee

Te Kōmiti Āpiti, Kaute / Tūraru / Pūtea

Held via Zoom on Tuesday 24 May 2022, commencing at 9.00a.m.

Present: Mr J Peters (Chairperson), Her Worship the Mayor R Reese, Councillors J Edgar, R Sanson, Iwi Representative S Kelly and Mr J Murray

In Attendance: Councillors G Noonan and Y Bowater, Chief Executive (P Dougherty), Group Manager Infrastructure (A Louverdis), Group Manager Corporate Services (N Harrison), Group Manager Strategy and Communications (N McDonald), T eam Leader Governance (R Byrne) and Senior Governance Adviser (M Macfarlane)

Apologies : Councillor M Lawrey

Karakia and Mihi Timatanga

1. Apologies

Resolved ARF/2022/016

That the Audit, Risk and Finance Subcommittee

1. Receives and accepts the apologies from Councillor M Lawrey for attendance.

Murray/Her Worship the Mayor Carried

2. Confirmation of Order of Business

The Chairperson indicated Item 12: Quarterly Risk Report - 31 March 2022 would follow Item 8: The Health and Safety at Work Act 2015 and Elected Members

Auditor, John Mackey, was scheduled for Item 13: Quarterly Finance Report - 31 March 2022 on audit related matters.

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 22 February 2022

Document number M19252, agenda pages 8 - 14 refer.

Resolved ARF/2022/017

That the Audit, Risk and Finance Subcommittee

1. Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 22 February 2022, as a true and correct record.

Murray/Edgar Carried

6. Chairperson's Report

Document number R26893, agenda pages 15 - 16 refer.

The Chairperson took the report as read and noted that the committee needed to be flexible to address matters in a timely fashion.

Resolved ARF/2022/018

That the Audit, Risk and Finance Subcommittee

1. Receives the report Chairperson's Report (R26893).

Peters/Sanson Carried

7. Privacy Act 2020 - reporting

Document number R26518, agenda pages 17 - 21 refer.

Manager Governance and Support Services, Devorah Nicuarta-Smith, took the report as read and answered questions about legislative timelines and restrictions, safeguards being put in place since earlier breach and the handling of private information.

Resolved ARF/2022/019

That the Audit, Risk and Finance Subcommittee

1. Receives the report Privacy Act 2020 - reporting (R26518)

Edgar/Sanson Carried

8. The Health and Safety at Work Act 2015 and Elected Members

Document number R26539, agenda pages 22 - 28 refer.

Heath Safety & Wellness Adviser, Malcolm Hughes, presented the report and answered questions on the Council providing safe spaces within Council facilities for elected members to meet with constituents, if any advice on duty of care had been sought to date and if so if it is legally privileged.

The meeting was adjourned at 09.37a.m. and reconvened at 09.42a.m.

Exclusion of the Public
Resolved ARF/2022/020
	That the Audit, Risk and Finance Subcommittee 1. Excludes the public from the following parts of the proceedings of this meeting. 2. 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)
8		Audit, Risk and Finance Subcommittee Meeting - The Health and Safety at Work Act 2015 and Elected Members	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 · Section 7(2)(c)(ii) To protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest
Peters/Her Worship the Mayor Carried

The meeting went into confidential session at 09.42a.m. and resumed in public session at 09.53a.m.

Resolved ARF/2022/022

That the Audit, Risk and Finance Subcommittee

1. Receives the report The Health and Safety at Work Act 2015 and Elected Members (R26539) and its attachment (A2873272).

Murray/Edgar Carried

The Chair advised the meeting would consider Agenda Item 12 at this point.

9. Quarterly Risk Report - 31 March 2022 (Agenda item 12)

Document number R26793, agenda pages 69 - 98 refer.

Chief Executive, Pat Dougherty, Heath Safety and Wellness Adviser, Malcolm Hughes, and Audit and Risk Analyst, Chris Logan, spoke to this report and tabled an additional document (A2891157).

Mr Dougherty, Mr Hughes and Mr Logan answered questions on existing civic house assessments, previous incidents and near misses at civic house, previous refurbishment plans, further investigations being undertaken, business continuity plans, risk mitigations, how reporting in the risk register is undertaken, how risks are assessed, how high risk matters are recorded, how high risk matters are reported to members and who should be registered in the conflicts of interest.

The meeting was adjourned at 10.42a.m. and reconvened at 10.58a.m.

Resolved ARF/2022/023
	*That the Audit, Risk and Finance Subcommittee* 1. Receives the report Quarterly Risk Report - 31 March 2022 (R26793) and its attachment (A2587873).
Edgar/Peters Carried
Attachments 1 Risk Assessment - Earthquake prone building elements Civic House - June 2022 (A2891157)

10. Quarterly Health, Safety and Wellbeing Report - 31 March 2022 (Agenda item 9)

Document number R26769, agenda pages 29 - 46 refer.

Heath Safety & Wellness Adviser, Malcolm Hughes, presented the report and answered questions on reporting of notifiable incidents, incidents reported at Heritage Park, staff survey results and investigations into the tiles in the Elma Turner Library tiles.

Resolved ARF/2022/024

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Health, Safety and Wellbeing Report - 31 March 2022
(R26769) and its attachment (A2872306).

Her Worship the Mayor/Kelly Carried

11. Draft Annual Internal Audit Plan to 30 June 2023 (Agenda item 10)

Document number R26801, agenda pages 47 - 55 refer.

Audit and Risk Analyst, Chris Logan, took report as read and answered questions about the way critical matters are being reported, potential of Senior Leadership Team and contractors being included in conflict of interest assessment and the migration to a new record management system.

Resolved ARF/2022/025

That the Audit, Risk and Finance Subcommittee

1. Receives the report Draft Annual Internal Audit Plan to 30 June 2023 (R26801) and its attachment (A2867251).

Sanson/Murray Carried

Resolved ARF/2022/025
Recommendation to Council
	*That the Council* 1. Approves the Draft Annual Internal Audit Plan for the year to 30 June 2023 (A2867251).
Sanson/Murray Carried

12. Adjournment of Meeting

Resolved ARF/2022/026

That the Audit, Risk and Finance Subcommittee

1. Adjourns the meeting at 12.54p.m. until 17 June at 9.00a.m. via Zoom.

Edgar/Sanson Carried

Karakia Whakamutanga

Minutes of part of a meeting of the

Audit, Risk and Finance Subcommittee

Te Kōmiti Āpiti, Kaute / Tūraru / Pūtea

Reconvened via Zoom on Friday 17 June 2022, commencing at 9.00 a.m.

Present: Mr J Peters (Chairperson), Councillors R Sanson and M Lawrey

In Attendance: Group Manager Corporate Services (N Harrison), Group Manager Strategy and Communications (N McDonald), Senior Governance Adviser (M Macfarlane) and Assistant Governance Adviser (A Bryce-Neumann)

Leave of absence: Her Worship the Mayor R Reese

Apologies : Councillor J Edgar, Mr J Murray and Iwi Representative S Kelly

Karakia and Mihi Timatanga

13. Apologies

Resolved ARF/2022/027

That the Audit, Risk and Finance Subcommittee

1. Receives and accepts the apologies from Councillor J Edgar, Mr J Murray and Iwi Representative S Kelly

Peters/Lawrey Carried

14. Quarterly Internal Audit Report - 31 March 2022 (Agenda item 11)

Document number R26792, agenda pages 56 - 68 refer.

Audit and Risk Analyst, Chris Logan, took the report as read.

Group Manager Strategy & Communications, Nicky McDonald, answered questions about Local Government Act Section 17a reviews, timing around reviews being brought to committee, which committee is appropriate to receive the updates and reports updating reviews. Mr Logan answered questions on regulatory services activities, the lack of suitable benchmarks available and how activities are tracking.

In response to questions, the Chairperson updated the committee on Greenmeadows Pūtangitangi review progress, the terms of reference, frequency of meetings held, delays encountered and expectation of completion of work.

Resolved ARF/2022/028

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Internal Audit Report - 31 March 2022 (R26792) and its attachments (A2915304 and A2866388).

Sanson/Lawrey Carried

15. Quarterly Finance Report - 31 March 2022 (Agenda item 13)

Document number R26662, agenda pages 99 - 127 refer.

Manager Finance, Prabath Jayawardana, , took the report at read.

Group Manager Corporate Services, Nikki Harrison, , answered questions on forestry expenditure exceeding forestry income, the prudence of council’s current approach and if a Local Government Act Section 17a review is required.

Mr Jayawardana answered questions on base expenditure, savings, likely tracking, projects with predicted underspend.

Resolved ARF/2022/029

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Finance Report - 31 March 2022 (R26662) and its attachments (A2881543, A2867009, and A2880764).

Lawrey/Sanson Carried

16. Exclusion of the Public

Resolved ARF/2022/030

That the Audit, Risk and Finance Subcommittee

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

Peters/Lawrey Carried

Agenda 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 - Confidential Minutes - 22 February 2022	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)(g) To maintain legal professional privilege · Section 7(2)(c)(ii) To protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest
2	Quarterly Update on Debts - 31 March 2022	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)(g) To maintain legal professional privilege
3	Quarterly Report 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

The meeting went into confidential session at 09:36a.m. and resumed in public session at 09.55a.m.

Karakia Whakamutanga

17. Restatements

It was resolved while the public was excluded:

1	Quarterly Update on Debts - 31 March 2022
	2. Agrees that the Report (R26806) and its attachment (A2878713) remain confidential at this time.

2	Quarterly Report on Legal Proceedings
	2. Agrees that the report Quarterly Report on Legal Proceedings (R26719) and its attachment (A2882014) remain confidential.

There being no further business the meeting ended at 09.55a.m.

Confirmed as a correct record of proceedings by resolution on (date)

Resolved

Audit, Risk and Finance Subcommittee Minutes - 9 August 2022

Minutes of a meeting of the

Audit, Risk and Finance Subcommittee

Te Kōmiti Āpiti, Kaute / Tūraru / Pūtea

Held via Zoom on Tuesday 9 August 2022, commencing at 9.02a.m.

Present: Mr J Peters (Chairperson), Her Worship the Mayor R Reese, Councillors R Sanson, Mr J Murray and Ms S Kelly

In Attendance: Councillor G Noonan, Chief Executive (P Dougherty), Group Manager Infrastructure (A Louverdis), Group Manager Corporate Services (N Harrison), Senior Governance Adviser (M Macfarlane) and Assistant Governance Advisor (A Bryce-Neumann)

Apologies : Councillor J Edgar for attendance and Councillor M Lawrey for lateness

Karakia and Mihi Timatanga

1. Apologies

Resolved ARF/2022/035

That the Audit, Risk and Finance Subcommittee

1. Receives and accepts the apologies from Councillor J Edgar for attendance and Councillor M Lawrey for lateness.

Murray/Sanson 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. Chairperson's Report

There was no Chairperson’s report.

6. Review into events leading to issue of Civic House Earthquake Prone Building notices

Document number R27007, agenda pages 4 - 56 refer.

The Chairperson noted this internal report was requested formally by the Chief Executive.

Manager Business Improvement, Arlene Akhlaq, introduced the report noting there were some errors requiring correction and that improvements had been identified, particularly around notification to elected members.

Ms Akhlaq, Chief Executive, Pat Dougherty, and Group Manager Corporate Services, Nikki Harrison, answered questions on

· What steps would be put in place to ensure there wasn’t a repeat of what happened

· If the risk management process would be updated

· If the operational recommendations to the Chief Executive would be shared with the committee, and if so, if they would be available before the end of the triennium

· What key challenges were identified

· What the perceived role of governance was under the Health and Safety Act and what information should be provided to elected members

Attendance: Councillor M Lawrey joined the meeting at 9.36a.m.

· If elected members should have greater awareness of discussions at the Senior Leadership level

· How updates were recorded on status reports

· Why an officer response wasn’t triggered and a series of steps and notifications initiated when the Earthquake Prone Building notice was issued

· Clarification on the regulatory role compared to the health and safety role.

The Chairperson noted that the report didn’t cover all the terms of reference at this stage and an additional report was requested.

Resolved ARF/2022/036

That the Audit, Risk and Finance Subcommittee

1. Receives the report Review into events leading to issue of Civic House Earthquake Prone Building notices (R27007 and its attachment (1759736513-10).

2. Requests a further report identifying and addressing the terms of reference that relate to the recommendations and appropriate separation of regulatory and ownership roles.

Her Worship the Mayor/Murray Carried

Karakia Whakamutanga

There being no further business the meeting ended at 10.22a.m.

Confirmed as a correct record of proceedings by resolution on (date)

Resolved

Item 7: Health, Safety and Wellbeing Quarterly Report - 30 June 2022

Audit, Risk and Finance Subcommittee

23 August 2022

REPORT R27092

Health, Safety and Wellbeing Quarterly Report - 30 June 2022

1. Purpose of Report

1.1 To provide the Subcommittee with a report on health, safety and wellbeing data collected over the period April to June 2022.

1.1 To update the Subcommittee on key health and safety risks, including controls and treatments.

2. Summary

2.1 Heavy ceiling tile remediation and COVID-19 controls have been a significant health and safety focus areas for this reporting period.

2.2 Council’s key health and safety risks remain unchanged since the previous report.

3. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Health, Safety and Wellbeing Quarterly Report - 30 June 2022 (R27092) and its attachment (855153265-555).

4. Background

4.1 Elected members, as ‘Officers’ under the Health and Safety at Work Act 2015 (HSWA), are required 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 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.

5. Discussion

5.1 Incidents of note:

5.1.1 No staff injury or illness incidents of minor severity or greater were reported this period.

5.1.2 Contractor injury or illness incidents included a lost time injury due to a loose section of pavement falling into an excavation and a subcontractor being struck in the face by a scaffolding component. Contractors have completed incident investigations for these incidents.

5.1.3 A public injury occurred when a car crashed at a Council site under temporary traffic management. Improvements were made to the traffic management plan.

5.1.4 A significant near miss for this period was a tree falling onto a caravan at Brook Valley Holiday Park (BVHP) during high winds, the process for assessing trees and removing dangerous trees or limbs from campsites is being reviewed.

5.1.5 Four security incidents reported related to difficult customers at BVHP and five related to break ins or vandalism at Founders Heritage Park (Founders). Security improvements at Founders and Council campgrounds are ongoing.

5.1.6 The Marina reported a number of incidents related to criminal behaviour on vessels in the marina, this is partly attributed to improved reporting of incidents. More effective liaison with police is occurring and CCTV improvements are planned.

5.2 COVID-19 Response

5.2.1 After a peak of 35 staff testing positive for COVID-19 in March the data shows the long tail of the Omicron outbreak. Data for July has been included to show the significance of the second wave with 49 staff reporting positive tests for July.

5.2.2 A recent workplace outbreak (July) and the high prevalence of seasonal illness has significantly impacted some teams.

5.2.3 Surveillance monitoring using Rapid Antigen Tests (RATs) at Council has been reviewed with a plan developed for each setting of the COVID Protection Framework (traffic lights). This will see less routine monitoring at orange but more targeted use of RATs in areas of higher risk.

5.2.4 Changes to the reporting of COVID-19 test results has resulted in a far more streamlined process and better allows for a timely response to information about possible workplace exposure to COVID-19.

5.3 Lead Indicators

5.3.1 Data relating to overspeed events as reported by the ERoad in vehicle monitoring is not included in this report while an issue with the completeness of the data is resolved.

5.3.2 Contractor health and safety oversight activities have increased from last quarter but are still impacted by COVID-19 controls.

5.3.3 Increasing the number of workstation assessments completed has proved a significant challenge due to the close contact nature of these assessments. A new approach with improved self-help resources and more targeted in person assessments is planned.

5.4 Due Diligence Activities

5.4.1 Four safe work observations or safety tours were reported for this period. Two SLT members and one elected member attended a visit to Saxton Field. The focus was on the safety of traffic control devices (bollards) on pathways. Three other site visits were completed by an SLT member.

5.4.2 The Omicron COVID -19 outbreak continues to impact the scheduling of these visits.

6. Key Health, Safety and Wellbeing Risks

6.1 Key health safety risks are assessed to be unchanged since the last report.

6.2 Changes to treatments and controls since the previous report are shown in red text.

6.3 Controlling the risk of heavy suspended ceiling tiles falling or whole ceiling systems failing during an earthquake in Civic House and Elma Turner Library is an ongoing focus area and significant progress has been made in regard to the highest risk spaces.

Author: Malcolm Hughes, Health Safety and Wellness Adviser

Attachments

Attachment 1: 855153265-555 Health, Safety and Wellbeing Report - April-June 2022 ⇩

Item 8: Six-monthly update - Section 17A review programme

Audit, Risk and Finance Subcommittee

23 August 2022

REPORT R27005

Six-monthly update - Section 17A review programme

1. Purpose of Report

1.1 To provide an update on the service delivery review and contract review work programmes, as requested by the subcommittee, for the period 1 March 2022 to 28 February 2024.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Six-monthly update - Section 17A review programme (R27005).

3. Background

Recent decisions

3.1 A schedule of s17A activity reviews to be carried out in 2022 and 2023 was presented to the Audit, Risk and Finance subcommittee on 22 February 2022. As contract reviews are undertaken as needed they were not included in the schedule.

3.2 At the meeting of 22 February 2022, it was resolved that the subcommittee:

Requests a six-monthly report to the Audit, Risk and Finance subcommittee providing a rolling 2-year contract review work programme and section 17A review work programme as well as monitoring of progress on the completion of the reviews.

This report is in response to this resolution.

3.3 Recommendations were also made to Council, which were resolved on 10 March 2022. Utilities activities and the Nelson Regional Sewerage Business Unit were made exempt from review for 2022 and 2023 due to the Government’s Three Waters Reform programme. Council also approved retention of the current threshold that triggers a service delivery review ($100,000 per annum).

About s17A reviews

3.4 Service delivery reviews are a requirement of section 17A of the Local Government Act 2002. They determine whether the existing means of delivering a service remains the most efficient, effective and appropriate method. This includes consideration of the current method of governance, funding, and delivery of the service alongside the alternative options that are available. They are not about the quality of services themselves, which are reviewed as part of activity management plan development.

3.5 Council undertakes reviews of service areas, such as a business activity within Council (activity reviews), and reviews of services which are delivered via contract, such as a maintenance contract (contract reviews). Activity reviews may encompass the review of one or more service contracts.

3.6 Under the Act, Council is required to undertake s17A service delivery reviews when it is considering a significant change to a level of service, and no later than every six years. Contract reviews are undertaken within two years before the expiry of a contract.

3.7 Council staff are required to undertake ‘desktop reviews’, which are signed off by SLT. The legislation does not prescribe a process for the signoff of these reviews. Desktop reviews can recommend more in-depth reviews, which go to the relevant committee if changes to service delivery are recommend.

Exemptions

3.8 Section 17A(3) provides two exemptions to the review requirements:

17A(3)(a) A local authority is not required to undertake the review in respect of a function to the extent that delivery arrangements are bound by legislation, contract or binding agreement so that they cannot be changed within the next two years;

17A(3)(b) A local authority is not required to undertake the review if it is satisfied that the potential benefits do not justify the cost of the review.

3.8.1 Section 17A(3)(b) is for circumstances where the service is small or where cost savings resulting from a review may be minor. In 2015, Council, using the Procurement Policy as a guide, set a threshold that activities with a value below $100,000 be exempt from review.

3.8.2 Under the legislation costs and benefits other than financial matters (such as staffing resources) can also be considered. Council’s review template provides for other considerations for exemption including; time, policy and regulatory changes, cost and capacity implications and the views of service users. This is part of the required desktop review.

3.8.3 Although there is a financial threshold operating, reviews below this level can be brought to the relevant committee if it is considered that other factors warrant it.

4. Update on activity reviews

Due in 2022 (calendar year)

4.1 Thirteen activity reviews are due in 2022.

4.2 As at August 2022, eight have been completed and signed off by SLT:

· Cemeteries

· Crematorium

· Resource Management Policy and Planning

· General Building Maintenance

· Roading Maintenance

· Transfer Station

· Forestry

· Recycling

4.3 Four are underway and planned to be signed-off by SLT by the end of 2022:

· Civil Defence Emergency Management

· Community Facilities Management

· Science and Environment

· Strategic Policy, Bylaws and Asset Management Planning

4.4 One (Swimming Pools) has not yet commenced but is planned to be completed and signed-off by SLT in 2022.

Due in 2023 (calendar year)

4.5 Three of the activity reviews which were due by the end of 2023 have been completed early as part of larger pieces of work:

· Public Transport – a review of this service was undertaken through the Regional Land Transport Plan process in 2021.

· Nelson Marina services were reviewed in 2021 and recommendations for a new governance model were made.

· Saxton Field services were reviewed under the master Open Spaces contract review in 2021.

· Regulatory Compliance services (delivered by contract) were reviewed in 2022. A report on the review will be brought to the Environment and Climate Committee, as requested by Committee resolution in April 2021, in September 2022.

4.6 The remaining activity reviews programmed for the 2023 calendar year are:

· Arts, Heritage and Heritage Houses

· Building Consents and Building Inspection Services

· City Development

· Community Partnerships and Investment

· Community Property portfolio

· Corporate Services

· Festivals and Events

· Founders Park

· Golf course – Waahi Taakaro

· Libraries

· Motor Camps

· Nelson Airport

· Nelson Arts Festival

· Nelson Regional Economic Development Agency – Economic Services

· Parks and Reserves

· Port Nelson

· Resource Consents

· Solid Waste

· Solid Waste Management – Landfill

· Tasman Bay Heritage Trust and Nelson Museum

· The Bishop Suter Trust – Suter Gallery

5. Update on contract reviews

5.1 Where reviews of contracts are required, and not incorporated into broader activity reviews, separate reviews are undertaken. The award or extension of contracts is reported to the Tenders Subcommittee (if over $2.5 million) and the respective committees/subcommittees through quarterly reports (if over $300,000).

5.2 Recently completed contract reviews

5.2.1 Contract has been awarded/extended:

· Cycle Skills Training

· Election Services

· Forestry

· Roading Network Maintenance and Renewals (excluding electrical services)

· Valuation and Database Management Services

5.2.2 Contract is yet to be awarded/extended:

· Open Space (Operations and Maintenance)

· Regulatory Services

· Roading Electrical Maintenance

· Roadside Vegetation Control

5.3 Contract reviews that are currently underway

· External Legal Services

5.4 Upcoming contract reviews

5.5 Based on the information provided by staff in Council’s contract management system LawVu, there are two more contracts for services with an annual value over $100,000 which are due to expire by the end of February 2024, and that are not anticipated to be covered within a programmed activity review:

· Traffic Counting

· Operational Services at Brook Waimarama Sanctuary

5.6 These contracts may not be subject to a full review, due to exemption criteria. This will be determined at the initial desktop review.

6. Next steps

6.1 Staff will progress the reviews which are underway and planned over the remainder of 2022.

6.2 Staff plan to provide the next update on the progress of Council’s s17A reviews to the relevant committee in early 2023.

Author: Laura Bruce, Policy Coordinator

Attachments

Nil

Item 10: Quarterly Risk Report - 30 June 2022

Audit, Risk and Finance Subcommittee

23 August 2022

REPORT R26980

Quarterly Risk Report - 30 June 2022

1. Purpose of Report

1.1 To provide information to the Audit, Risk and Finance Subcommittee on the organisational risks through to end of quarter four 2021-22.

Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Quarterly Risk Report - 30 June 2022 (R26980) and its attachment (1759736513-9).

2. Background

2.1 This report includes information on risk management practice, a summary of Council risks and a deeper dive into key risk areas, sliced by risk theme (organisational risks) and reporting group

3. Risk Management Practice

3.1 The 2021-22 risk management work plan was partially completed:

3.1.1 risk training for two business units was completed (target four);

3.1.2 partly automated risk reporting is provided quarterly to Group Managers and the Chair of the Audit, Risk and Finance Subcommittee;

3.1.3 reporting enterprise level risk metrics to test against an organisation wide risk appetite has not been completed as enterprise level risk metrics, such as value at risk or probability of adequacy, are problematic to generate using the risk register for the following reasons:

· Losses from different consequence domains cannot be easily converted to an equivalent single measure (normally financial). For instance, whilst losses from the ‘Financial’ consequence domain can be measured relative to balance sheet items, there is no defined ‘Relationship with Iwi’ asset even though a ‘Relationship with Iwi’ loss would likely impact to the profit and loss accounts, through to increased cost of working, over multiple years.

· The relationship/correlation between risks is not easily quantified whilst noting that some qualitative allowance has been made for risks tagged with the same organisation risk.

· Given the above, the same enterprise level risk reporting as per Section 5 will continue.

3.1.4 The risk management maturity self-assessment was completed and reported in quarter one of 2021-22; and

3.1.5 A review of the descriptions for the consequence domain Legal Compliance has been postponed to quarter one of 2022-23 (previously third quarter of 2021-22) following an initial scan which showed that the current description is similar to other councils so changes are likely to be minor.

4. Putting Organisational Risks in Context

4.1 This section summarises risks relating to Council and joint operations. Risks relating to subsidiaries and joint ventures are limited to ownership risks. Risks relating to contracted-out activities is limited to residual/non-contracted-out risks. Specific asset, activity, legal matter or project risks, are rolled up into more general asset, activity, legal or project risks however any significant items are summarised in the last section.

4.2 There were 439 risk entries in the centralised register at 31 March 2021 compared to 431 in the prior quarter, with eight risks deleted and sixteen risks added.

4.3 Thirteen of the risk entries have status overdue as treatments have not been signed off compared to nine in the prior quarter. Ten to twenty overdue risk entries is considered reasonable given the treatment renewal process is new and the sign-off delays associated with newly identified risks.

4.4 The following chart is the heatmap for all the risk entries, noting that inherent risks are notionally before controls (including risk transfers), whilst residual risks are notionally after controls.

4.5 Risk entries are categorised in two ways:

4.5.1 risks with no apparent common theme or cause^{^[1]} and hence are unlikely to pose a threat at an organisational level (310 risk entries), and

4.5.2 risks with identified common themes or causes which create risk concentrations that pose a threat at an organisational level^{^[2]} (129 risk entries)

4.6 The latter is the focus of this report of which further detail is provided the next section.

5. Key Risk Areas By Theme (Organisational Risks)

5.1 There have been no organisational risk movements to report during quarter four of 2021-22.

5.2 A summary of key risk themes is provided below. The attachment to this report describes each risk theme in more detail, its existing controls and planned risk treatments. For ease of comparison to the prior quarter, new text in the attachment has been coloured red.

5.3 R1 - Central-government-led-reforms (Owner: Chief Executive). A strategic review has defined the project stages for managing organisational changes within the three-waters transition program. The risk rating was increased to Very High last quarter and remains rated as Very High but may return to High next quarter.

5.4 R2 - Lifeline services failure (Owner: Group Manager Infrastructure). There was a boil water notice issued in the quarter however the likely cause of the E.coli results was water quality sampling/testing issues and not contamination within the drinking water supply network. No new emerging risks to report at this time. The risk rating remains at Medium.

5.5 R3 - Illness, injury or stress from higher hazard work situations (Owner: Group Manager Corporate Services). Staff vacancies across various operating groups continue, impacting workloads and staff stress. The risk rating remains at High.

5.6 R4 - Loss of service performance from ineffective contracts and contract management (Owner: Chief Executive). Work on planned treatments paused due to staff vacancies. The risk rating remains at Medium.

5.7 R5 - Compromise of Council service delivery from information technology failures (Owner: Group Manager Corporate Services). Council has been working closely with security vendors over the quarter preparing for finance and document management cloud migration and various other incremental security improvements. The risk rating remains at Low.

5.8 R6 - Council work compromised by loss of and difficulties in replacing skilled staff (Manager People and Capability). At end of May there were 47 vacancies, some of which have been open for some time despite repeated recruitment efforts, engaging recruitment consultants and re-evaluating the job description. The organisational risk rating remains at Medium.

5.9 R7 – Legal Risk (Group Manager Strategy and Communications). No new emerging organisational risks to report at this time noting that any new legal proceedings or emerging areas of increased litigation risk are separately reported in the quarterly report on legal proceedings. The organisational risk rating remains at Medium.

5.10 R8 - Reputation damage and loss of public trust in the organisation (Group Manager Strategy and Communications). No new emerging risks to report at this time. The risk rating remains at Medium.

5.11 R9 - Disruption to Council service delivery due to significant increase in COVID-19 cases (Owner: Chief Executive). Insignificant impact on council services to date. The organisational risk rating remains at Medium.

6. Key Risk Areas By Reporting Group

6.1 Office of the Chief Executive: New risk related to the Public Service Association initiating bargaining for multi-employer collective agreement for top-of-the-south councils – rated Medium. Elevated organisational uncertainty given current Chief Executive finishes their role in December 2022 and a replacement is yet to be found and the Group Manager Environmental Management finishes their role in September 2022 and a replacement is yet to be found.

6.2 Infrastructure Group: COVID-19 related risks are being realised including on-site project delays from Omicron self-isolation requirements and previously noted related supply chain risks for materials. The Utilities and Roading business units, NTRLBU and NRSBU labour and contractor capacity remains constrained resulting in elevated operational risk. For the Utilities team, the situation is expected to deteriorate especially with the work expected on the three-waters reform; resourcing risks related to three-waters reform are being explored by the Three Waters Transition project team.

6.3 Community Services Group: Risks associated with Council owned campgrounds (two operated and one leased) remain elevated whilst non-compliance remediation actions are being implemented. Specifically, the risk around displacing vulnerable people is being closely managed at present through significant support being provided to residents. Other risks associated with the work programme are being reported and monitored through Strategic Development and Property Subcommittee. There was one high risk notification to the Chair of the Audit, Risk and Finance subcommittee over the quarter.

6.4 Environmental Management Group: All business units in this group have at least one staff vacancy. Non-priority work is being deferred where it can be including in City Development. The risk of non-compliance with statutory timeframes (resource and building consents) is being realised. An instance of Land Information Memo (LIM) disclosure risk (rated Low) was identified during the quarter. New LIM risk treatments are being considered as part of the LIM improvement project.

6.5 Strategy and Communications Group: Retention and recruitment remains an area of underlying risk. There was one high risk notification to the Chair of the Audit, Risk and Finance subcommittee and Mayor over the quarter.

6.6 Corporate Services Group: Whilst a temporary resource has been secured, three of the five accountancy roles are vacant. The Finance and Accounting business unit is focussed on meeting statutory reporting, such as the annual reporting. Non-statutory work, such as senior leadership reporting and business partnering, is being deferred.

Author: Chris Logan, Audit and Risk Analyst

Attachments

Attachment 1: 1759736513-9 - 4Q22 key organisational risks for ARF ⇩

Item 13: Bad Debts Write Off - Year Ending 30 June 2022

Audit, Risk and Finance Subcommittee

23 August 2022

REPORT R27036

Bad Debts Write Off - Year Ending 30 June 2022

1. Purpose of Report

1.1 To inform the Audit and Risk Subcommittee of the level of bad debts written off for the year ending 30 June 2022.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

1. Receives the report Bad Debts Write Off - Year Ending 30 June 2022 (R27036).

3. Discussion

3.1 There are no bad debts over $10,000 to be written off for the year ending 30 June 2022.

3.2 Under officer delegation, the Group Manager Corporate Services has written off 6 debts under $10,000 per debtor at 30 June 2022 (excluding GST).

Under $10,000
	Write-off 2022		Write-off 2021
	$	No.	$	No.
Dog Impounding	$983	3	$2,322	14
Marina Fees	$0	0	$440	1
General Debtors	$2,681	1	$688	2
Regulatory	$500	2	$1,099	3
Total	$4,164	6	$4,549	20

3.3 A comparison of debts to be written off between 21/22 and 20/21 is as follows:

Summary
	Write-off 2022	Write-off 2021
	$	$
Over $10,000	$0	$41,990
Under $10,000	$4,164	$4,549
Cost for year	$4,164	$46,539

3.4 The decision to write off debt is an administrative one - although the debts are written off from an accounting point of view, a record is kept and if an opportunity to recover the debt arises, action will be taken. Most of this balance sits with Credit Recoveries Limited, Council’s debt recovery agency, which continues recovery activities. Every possible effort has been made to locate and obtain payment from these debtors.

Author: Prabath Jayawardana, Manager Finance

Attachments

Nil

Important considerations for decision making

2. Fit with Purpose of Local Government

This report deals with process matters in relation to cost effective service delivery which benefits the economic wellbeing of the community.

3. 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.

4. Risk

There is limited risk from writing off these bad debts as most will continue to be followed up by the credit recovery agency.

5. Financial impact

Writing off the debts has a one-off impact on revenue of $4,164.

6. Degree of significance and level of engagement

This matter is of low significance because the amounts being written off are immaterial.

7. Climate Impact

There is no climate impact in writing off these debts.

8. Inclusion of Māori in the decision making process

No engagement with Māori has been undertaken in preparing this report.

9. Delegations

The Audit Risk and Finance Subcommittee has the following delegations to consider bad debt writeoffs.

Areas of Responsibility:

· Audit processes and management of financial risk

Powers to Decide:

· None

Powers to Recommend to Council

· To write off outstanding accounts receivable or remit fees and charges of amounts over the Chief Executive’s delegated authority

[1] Commonly referred to as either: activity risks or day-to-day operational risks

[2] Commonly referred to as either: corporate risks, strategic risks, or organisational risks

Excerpt from Nelson City Council Delegations Register (A11833061)

Audit, Risk and Finance Subcommittee

Areas of Responsibility

Powers to Decide

Powers to Recommend to Council