Date:
Time:
Meeting Room:
Venue:
Ex-officio
(Quorum 4 members)
Mike Giddey
Democracy Advisor
10 December 2014
Contact Telephone: (09) 307 7565
Email: mike.giddey@aucklandcouncil.govt.nz
Website: www.aucklandcouncil.govt.nz
Note:
The reports contained within this agenda are for consideration and should not be construed as Council policy
unless and until adopted. Should Members require further information relating to any reports, please contact
the relevant manager, Chairperson or Deputy Chairperson.
TERMS OF REFERENCE
Responsibilities
The Audit and Risk Committee will be responsible for:
Providing objective advice and recommendations to the Governing Body regarding the
sufficiency, quality and results of assurance on the adequacy and functioning of the councils
risk management, control and governance frameworks and processes.
Exercising active oversight of all areas of Auckland Council control and accountability (including
Council Controlled Organisations), in an integrated and systematic way, such that the results of
risk and assurance reviews and external audits may be incorporated in the priority-setting and
strategic planning processes.
Liaison with Audit NZ and, where necessary, the audit committees of CCOs to ensure robust
financial audits and reviews of the Auckland Council group
The members of the meeting remain (all Governing Body members if the meeting is a
Governing Body meeting; all members of the committee if the meeting is a committee
meeting).
However, standing orders require that a councillor who has a pecuniary conflict of interest
leave the room.
All councillors have the right to attend any meeting of a committee and councillors who are
not members of a committee may remain, subject to any limitations in standing orders.
Staff
Local Board members who need to hear the matter being discussed in order to perform their
role may remain. This will usually be if the matter affects, or is relevant to, a particular Local
Board area.
IMSB
Members of the IMSB who are appointed members of the meeting remain.
Other IMSB members and IMSB staff remain if this is necessary in order for them to perform
their role.
CCOs
Representatives of a CCO can remain only if required to for discussion of a matter relevant to the
CCO.
PAGE
Apologies
Declaration of Interest
Confirmation of Minutes
Petitions
Public Input
Extraordinary Business
Notices of Motion
10
11
13
15
43
14
49
15
53
16
11
12
13
PUBLIC EXCLUDED
17
63
C1
63
C2
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Apologies
Apologies from Mayor LCM Brown and Deputy Mayor PA Hulse have been received.
Declaration of Interest
Members are reminded of the need to be vigilant to stand aside from decision making
when a conflict arises between their role as a member and any private or other external
interest they might have.
Confirmation of Minutes
That the Audit and Risk Committee:
a)
confirm the ordinary minutes of its meeting, held on Tuesday, 16 September 2014,
including the confidential section, as a true and correct record.
Petitions
At the close of the agenda no requests to present petitions had been received.
Public Input
Standing Order 3.21 provides for Public Input. Applications to speak must be made to the
Committee Secretary, in writing, no later than two (2) working days prior to the meeting
and must include the subject matter. The meeting Chairperson has the discretion to
decline any application that does not meet the requirements of Standing Orders. A
maximum of thirty (30) minutes is allocated to the period for public input with five (5)
minutes speaking time for each speaker.
At the close of the agenda no requests for public input had been received.
Extraordinary Business
Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as
amended) states:
An item that is not on the agenda for a meeting may be dealt with at that meeting if(a)
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(b)
The presiding member explains at the meeting, at a time when it is open to the
public,(i)
(ii)
The reason why the discussion of the item cannot be delayed until a
subsequent meeting.
Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as
amended) states:
Where an item is not on the agenda for a meeting,(a)
(b)
That item is a minor matter relating to the general business of the local
authority; and
(ii)
Notices of Motion
At the close of the agenda no requests for notices of motion had been received.
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Item 9
Purpose
1.
Executive Summary
2.
Recommendation/s
That the Audit and Risk Committee:
a)
Attachments
There are no attachments for this report.
Signatories
Author
Authoriser
Page 9
Item 10
Purpose
1.
Executive Summary
2.
Audit New Zealand will provide a briefing on the work performed on the Long-term Plan
consultation document.
Recommendation/s
That the Audit and Risk Committee:
a)
Attachments
There are no attachments for this report.
Signatories
Author
Authorisers
Page 11
Purpose
1.
This report summarises the significant work undertaken by the Financial Control Unit since
September which involved working with Audit New Zealand.
Executive Summary
2.
Auckland Council is working closely with Audit New Zealand to resolve issues raised in
previous management reports and two new issues arising from the 2013/14 audit. In
addition we are working together as the Council is continuing its implementation plan
resulting from the adoption of the International Public Sector Accounting Standards (IPSAS).
Recommendation/s
That the Audit and Risk Committee:
a)
Discussion
3.
Following the completion of the audit of the 2013/14 Annual Report, we met with Audit New
Zealand and agreed on the status of the prior year recommendations. As reported at the
September Audit and Risk Committee there are 19 items which are in progress which need
to be resolved. We are developing a programme of work to progress the issues identified.
We have held discussions with Audit New Zealand regarding the final management letter for
the 2013/14 year and have seen an initial draft version of the letter outlining their findings.
Two new items have been identified, management of software licences and the
management of staff with high annual leave balances. We will work with Audit New Zealand
to finalise the draft management report for us to provide our comments. Once the letter is
finalised we will present it to the next Audit and Risk Committee meeting on 18 February
2015.
4.
Financial Control have prepared consolidated financial information based on the first quarter
results of the 2014/15 financial year. This financial information, which was the subject of an
Audit New Zealand review, was supplied to the Auckland Council Treasury department for
the offer document which supports the European Medium Term Notes comfort letter.
5.
Audit New Zealand has also undertaken the first Interim Audit for the 2014/15 financial year
and is in the process of completing the audit of the Long Term Plan consolidation document
which is due to be adopted on 18 December.
6.
Preparation for the half year report and audit review are underway, with the revised
accounting policies and pro forum financial statements redrafted as required for the
implementation of IPSAS.
7.
Accounting policy papers on exchange/non exchange revenue, and related parties are in the
process of being prepared and supplied to Audit New Zealand to support our interpretation
of the new IPSAS.
Update on Financial Control interactions with Audit New Zealand during the last quarter
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Item 11
Item 11
8.
Work continues on analysing several specific arrangements the Council has historically
entered into to determine the impact of the IPSAS Service Concession Arrangement
standard.
Consideration
Local Board Views and Implications
9.
Local boards have not been consulted because the report deals primarily with internal
management issues.
The report does not have any particular benefit or adverse effects on Maori.
General
11.
Nil.
Implementation Issues
12.
No issues.
Attachments
There are no attachments for this report.
Signatories
Author
Authorisers
Update on Financial Control interactions with Audit New Zealand during the last quarter
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Purpose
1.
This report presents the pro forma financial statements as at 31 December 2014 for
Auckland Council and group and the relevant accounting policies.
Executive Summary
2.
The Audit and Risk Committee reviews the attached pro forma financial statements and
approves the relevant changes in accounting policies for the purpose of the financial
reporting for the six months ended 31 December 2014.
Recommendation/s
That the Audit and Risk Committee:
a)
b)
approve the accounting policies contained within the pro forma financial statements
for the preparation of 2015 half year Auckland Council and Group financial
statements and delegate to Mr Roy Tiffin or Mr Paul Conder authority to approve
any amendments resulting from consultation with Audit New Zealand.
Discussion
3.
The 31 December 2014 pro forma financial statements and notes should be read in
conjunction with 30 June 2014 annual report as it contains only significant changes from 30
June 2014.
4.
The primary statements and certain notes contained in the 31 December 2014 pro forma
financial statements have been amended to reflect the adoption of International Public
Sector Accounting Standards (IPSAS) which came into effect on 1 July 2014.
5.
The revised accounting policies and pro forma financial statements have been sent to Audit
New Zealand after taking into consideration Audit New Zealands initial feedback on the
treatment of exchange and non-exchange revenue transactions. Auckland Council is
waiting for Audit New Zealands technical team to confirm whether they are comfortable with
the revised proposed accounting policies and disclosures.
Consideration
Local Board Views and Implications
6.
This report applies to the preparation of pro forma financial statements for the council and
group. The views of local boards have not been sought.
The pro forma financial statements do not affect the achievement or reporting of Councils
contribution towards Mori outcomes.
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Item 12
Item 12
General
8.
There are no financial or resourcing issues arising from the adoption of this report.
Implementation Issues
9.
Attachments
No.
Title
Page
17
Signatories
Author
Authorisers
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 16
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 17
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 23
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 24
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 25
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 31
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 32
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 33
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 34
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 35
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 36
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 37
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 38
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 39
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
Page 40
Attachment A
Item 12
Auckland Council Group Pro Forma Financial Statements and Approval of Accounting Policies for 31
December 2014
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Item 13
Purpose
1.
To approve the recommendations and processes that ensures the Audit and Risk
Committee has oversight of Auckland Councils substantive Council Controlled
Organisations (CCO) risks in relation to the Auckland Council Annual Report, and in
compliance with the Audit and Risk Committees terms of reference.
Executive Summary
2.
This report recommends the process for the reporting of risks of the substantive CCOs to
the Auckland Councils Audit and Risk Committee.
Recommendation
That the Audit and Risk Committee:
a)
request each substantive Council Controlled Organisation provide an Audit Summary Letter
and associated actions/plans to resolve issues identified, to the Audit and Risk Committee
at its September meeting, based on the key findings noted by the CCOs auditor.
b)
note each substantive Council Controlled Organisation will provide regular reporting to the
Council Controlled Organisation Governance and Monitoring Committee as part of the
regular quarterly report and include the following risk information:
(i)
(ii)
an update on the approach to risk management, internal audit and external audit
(iii)
(iv)
(v)
c)
any key risks that are of a senior management or governance level that could impact
on the wellbeing or reputation of the Council Controlled Organisation or Auckland
Council
note a report will be provided to the Audit and Risk Committee summarising the risk issues
identified by the substantive Council Controlled Organisations in their quarterly reports to
the CCO Governance and Monitoring Committee.
Discussion
CCO boards and risk management
3.
At the 16 September 2014 Audit and Risk Committee meeting the committee agreed that a
long-term solution covering nature, scope and timing of risk reporting by CCOs would be
developed and implemented for the 2015 reporting programme.
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Item 13
The Audit and Risk Committee is asking CCOs to provide evidence of a robust process of
risk identification and analysis ensuring risk is appropriately addressed at a governance
level.
6.
The following processes are proposed to assist the committee in exercising active oversight
and accountability of CCOs in an integrated and systematic way.
An Audit Summary Letter is to be provided to the councils Audit and Risk Committee
outlining the key findings and how the CCO proposes to address the findings. The key
findings could be those points that the Auditor considers essential and necessary
management improvements.
8.
The Audit Summary Letter would preferably be signed by the Chair of the CCO Audit and
Risk Committee (or equivalent).
9.
An example of the Audit Summary Letter has been previously supplied by Watercare
Services Limited and is attached at Appendix A. The Audit and Risk Committee showed a
preference for this format of risk reporting.
As part of the Statement of Intent quarterly reporting programme, CCOs will be required to
provide additional risk information as part of their quarterly reporting requirements.
11.
(ii)
an update on the approach to risk management, internal audit and external audit
(iii)
(iv)
(v)
12.
any key risks that are of a senior management or governance level that could impact
on the wellbeing or reputation of the CCO or Auckland Council
A report will be provided to the Audit and Risk Committee summarising the risk issues
identified by the substantive Council Controlled Organisations in their quarterly reports to the
CCO Governance and Monitoring committee.
Disclosure Statement
13.
Auckland Council currently has a number of bonds quoted on the New Zealand Debt
Exchange as well as the Singapore and Swiss Exchanges. As a result the council is subject
to continuous disclosure obligations which it must comply with under the NZX Main Board
and Debt Market Listing Rules (Listing Rules) and the Financial Markets Conduct Act 2013
(FMCA). Similar obligations apply to the Singapore and Swiss exchanges.
14.
15.
Councils continuous disclosure obligations under the Listing Rules require that once the
council becomes aware of any material information it must immediately release that material
information to the NZX unless certain permitted exceptions apply. The consequences of the
council failing to comply with its continuous disclosure obligations may attract disciplinary
action from the NZX. Such failure will also be a contravention of the FMCA which may give
rise to civil liability for council and for its officers.
16.
In order to maintain councils compliance with FMCA and Listing Rules CCOs must advise
the council of any material information that could affect councils ability to maintain
compliance with its continuous disclosure obligations.
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17.
Councils legal department are developing a Disclosure Register and implementation of this
process will include the CCOs. The timeframe for this work to be completed is in the first
quarter of 2015.
Consideration
Local Board Views and Implications
18.
The matters raised in this report relate to CCO accountability and governance which is a
Governing Body function.
Oversight of CCO risk by the councils Audit and Risk Committee has no specific
implications for Mori wellbeing and does not raise any matters requiring iwi consultation.
Implementation Issues
20.
Internal Audit will be responsible for ensuring compliance with the approved
recommendations outlining risk reporting by CCOs.
Attachments
No.
Title
Page
47
Signatories
Author
Authorisers
John Bishop - Treasurer and Manager CCO Governance & External Partnerships
Kevin Ramsay - Chief Financial Officer
Grant Taylor - Governance Director
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Item 13
Attachment A
Item 13
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Item 14
Purpose
1.
This report summarises the activities undertaken by the Health and Safety Department to
prepare for the proposed Health and Safety Legislation to be enacted in late 2015, and as
follow-up from our two yearly Accident Compensation Corporation (ACC) audit.
Executive Summary
2.
The continued health and safety of our employees, contractors and visitors is one of our
highest risks and therefore its management is a high priority for the organisation. The
purpose of this report is to advise the committee of the key activities that have been
completed and those that are underway to improve the practices and culture of the
organisation to meet this challenge.
Recommendation
That the Audit and Risk Committee:
a)
Discussion
3.
4.
Change in Legislation
New Zealand will have new Health and Safety Legislation in 2015, as a result of the Royal
Commission into health and safety practices in New Zealand. The legislation has not been
enacted yet, but the changes are likely to place significant additional responsibilities on
organisations to improve their health and safety management. Under this legislation it is
likely that elected members will have the due diligence obligations of an officer but will not
be subject to prosecution, if they fail to meet those obligations.
Auckland Council is preparing to meet the requirements of the proposed legislation by;
Conducting a compliance review a check of our current system against the new
legislation (planned for April 2015 when the legislation will be finalised). There will be
actions from the review and these will be planned and implemented before the Act is
enforced in September 2015.
Preparing to meet the officers due diligence requirements there are six requirements
specifically for officers (likely to be the Executive Lead Team) under the proposed
legislation, mainly around positive due diligence. That is, officers are required to understand
what risks there are in the business and how those risks are managed. They are expected
to get first-hand knowledge of those risks and health and safety management techniques.
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Item 14
5.
6.
Consideration
Local Board Views and Implications
7.
Local boards have not been consulted because the report primarily deals with internal
management issues.
This report does not have any particular benefit or adverse effects on Mori.
General
9.
Page 50
Implementation Issues
10.
Attachments
There are no attachments for this report.
Signatories
Author
Authorisers
Page 51
Item 14
Item 15
Purpose
1.
This report summarises the activities undertaken by the Risk Management department since
the last report to the Audit and Risk Committee in September 2014.
Executive Summary
2.
The Risk Management department continued to implement the Enterprise Risk Management
Policy and Framework as per the Enterprise Risk Management Strategic Plan 2012-17.
Recommendation
That the Audit and Risk Committee:
a)
Discussion
3.
4.
Risk Report
The top risks were finalised and agreed by the Executive Leadership Team (ELT). The risk
owners continue to work on the risk treatment plans to further improve risk management
processes at council. Auckland Council Risk Report is included as Attachment A.
5.
6.
Operational Risk
Key operational risks are reported to the ELT in the monthly performance report.
Management are continuing to focus on key risks and improving the risk culture across
council. Auckland Council is on a journey of creating a high performing organisation and
uses the Balanced Scorecard model with key focus areas being Customer and
Community, People, Financial and Productivity. Specific measures were defined and
approved by ELT.
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Item 15
7.
8.
9.
10.
Liability Risk Framework to ensure that council minimizes potential risk exposures
around financial liability, through contractual arrangements, health and safety and other
regulatory or compliance requirements, the team continues to work with the relevant
areas, as and when required. Risk Management continues to collaborate with
Procurement, Legal Services and Insurance to bring consistency in managing
Professional Indemnity and Public Liability insurance requirements across council. In
addition, the transformation of the health and safety programme continues.
Treasury Risk Framework quarterly and ad hoc meetings, as appropriate, are held
with the Treasury team to review treasury risks, potential non-compliance to policy and
emerging risks in the debt markets.
Fraud Risk Framework we continue to work closely with the Integrity and
Investigations Manager to minimize fraud risks and assist as and when required.
11.
CCO Engagement
There are plans for greater engagement with CCOs next year.
Page 54
12.
Workplace Strategy
Payment Card Industry Data Security Standards (PCIDSS) ongoing advice being
provided
Consideration
Local Board Views and Implications
13.
Local boards have not been consulted because the report primarily deals with internal
management issues.
This report does not have any particular benefit or adverse effects on Mori.
General
15.
None
Implementation Issues
16.
None
Attachments
No.
Title
Page
57
Signatories
Author
Authorisers
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Item 15
Attachment A
Item 15
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Attachment A
Item 15
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Attachment A
Item 15
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Attachment A
Item 15
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Attachment A
Item 15
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Attachment A
Item 15
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exclude the public from the following part(s) 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
follows.
This resolution is made in reliance on section 48(1)(a) of the Local Government Official
Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or
section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the
proceedings of the meeting in public, as follows:
C1
s48(1)(a)
The public conduct of the part of
the meeting would be likely to result
in the disclosure of information for
which good reason for withholding
exists under section 7.
C2
s48(1)(a)
The public conduct of the part of
the meeting would be likely to result
in the disclosure of information for
which good reason for withholding
exists under section 6.
Public Excluded
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