Agenda of Risk and Audit Committee Meeting

Risk and Audit Committee Meeting Agenda 14 February 2019

MINUTES OF Central HAwkes Bay District Council
Risk and Audit Committee Meeting
HELD AT THE Council Chamber, 28-32 Ruataniwha Street, Waipawa
ON Thursday, 29 November 2018 AT at the conclusion of the Finance and Planning Committee meeting

PRESENT: Cr Tim Aitken (Chairperson)

Cr Gerard Minehan

Cr David Tennent

IN ATTENDANCE:

Cr Kelly Annand

Cr Ian Sharp

Cr Shelley Burne-Field

Cr Tim Chote

Dr Roger Maaka (Maori Consultative Representative)

Joshua Lloyd (Group Manager, Community Infrastructure and Development)

Monique Davidson (CEO)

Bronda Smith (Group Manager, Corporate Support and Services)

Nicola Bousfield (People and Capability Manager)

Lisa Harrison (Organisation Transformation Lead)

Leigh Collecutt (Governance and Support Officer)

1 Apologies

Mayor Alex Walker

Cr Muggeridge

2 Declarations of Conflicts of Interest

None

3 Standing Orders

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr Tim Aitken

THAT the following standing orders are suspended for the duration of the meeting:

· 20.2 Time limits on speakers

· 20.5 Members may speak only once

· 20.6 Limits on number of speakers

· THAT 21.4 Option C under section 21 General procedures for speaking and moving motions be used for the meeting.

Carried

4 Confirmation of Minutes

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr Tim Aitken

That the minutes of the Risk and Audit Committee Meeting held on 18 October 2018 as circulated, be confirmed as true and correct.

Carried

5 Local Government Act Compliance – Planning, Decision Making and Accountability

Council is required to make decisions in accordance with the requirements of Part 6 Subpart 1 of the Local Government Act 2002.

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr Tim Aitken

THAT the Risk and Audit Committee has read the reports associated with items 6.1 and 6.2and considers in its discretion under Section 79(1)(a) that sufficient consultation has taken place in addition to the Councillors knowledge of the items to meet the requirements of Section 82(3) in such a manner that it is appropriate for decisions to be made during the course of this meeting.

Carried

6 Report Section

6.1 Risk and Audit Update

PURPOSE

The purpose of this report is to update the Committee of Risk and Audit activities for monitoring and review purposes.

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr Tim Aitken

That, having considered all matters raised in the report, the report be noted.

Carried

6.2 Safety & Wellbeing Update

PURPOSE

The purpose of this Report is to update the Risk & Audit Committee on Council’s Safety and Wellbeing activities, as well as the reported incidents and near misses for Council staff for this quarter.

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr David Tennent

That, having considered all matters raised in the report, the report be noted.

Carried

7 Date of Next Meeting

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr David Tennent

THAT the next meeting of the Central Hawke's Bay District Council be held on 14 February 2019

Carried

8 Time of Closure

The Meeting closed at 11.39am.

The minutes of this meeting were confirmed at the Risk and Audit Committee Meeting held on 14 February 2019.

...................................................

CHAIRPERSON

Risk and Audit Committee Meeting Agenda 14 February 2019

6 Report Section

6.1 Risk and Audit Update

File Number: COU1-1408

Author: Bronda Smith, Group Manager, Corporate Support and Services

Authoriser: Monique Davidson, Chief Executive

Attachments: Nil

PURPOSE

The purpose of this report is to update the Committee of Risk and Audit activities for monitoring and review purposes.

Recommendation

That, having considered all matters raised in the report, the report be noted.

significance and engagement

This report is provided for information purposes only and has been assessed as being of some importance.

DISCUSSION

Risk Management Framework and Risk Registers

With the adoption of the Framework by Council, work has now commenced on the development of the Corporate Level Risk Registers where the corporate level risks of the overall Council are considered and reported to the Risk and Audit Committee.

A workshop to begin the establishment of the Corporate Risk is being held with the Risk and Audit Committee on 21 February 2019 following an initial assessment from the Executive Leadership Team.

Risk Registers are astablished and Risk Reporting Templates will be developed by 31 March 2019.

Internal Audit

Sensitive Expenditure Report

The Report to Management for the Internal Audit Sensitive Expenditure is being considered by the Risk and Audit committee as part of this meeting. Following this review the actions will be added to the Audit Action list and progress reported to the Committee on a quarterly basis.

Internal Audit Programme

The 3 Year Internal Audit Programme will also be reviewed at the beginning of 2019 with the Risk and Audit Committee to set the programme as all audits on the current programme have been completed.

Insurance Programme

As part of the Risk and Audit Committee work programme, a review of the insurance programme is planned to be conducted in the first 6 months of 2019. Officers are working to develop the Insurance Programme review in conjunction with the Risk Registers and Reporting as insurance is a part of managing risk.

The placement for the “Above Ground” insurance with JLT is due in June 2019. The five Hawke’s Bay Councils will begin the review of the values to insure in March and the type and amount of insurance to be place to be confirmed in May. It is likely that this will need to be placed prior to the completion of the review of the insurance programme.

Insurance Valuations

Following the placement of the Underground insurance last year, the underwriters have indicated that in the hardening insurance market they are reviewing their existing portfolio and are requiring more detail in the data provided, to understand the risk.

An initiative by Manawatu Wanganui LASS, which will include HBLASS Councils, is developing a consistent approach across our councils in determining asset valuations for our insurance purposes and then benchmarking each Council against the approach. The review and benchmarking will be undertaken by AON. It is expected this will be conducted in February and March with the results reported to the Risk and Finance Committee in April.

Financial and Resourcing Implications

Any financial and resourcing implications resulting from risk mitigation measures that are outside staff delegations will be reported and require approval from the Council before being incurred. No such implications have been identified to date.

Implications ASSESSMENT

This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:

· Council staff have delegated authority for any decisions made;

· Council staff have identified and assessed all reasonably practicable options for addressing the matter and considered the views and preferences of any interested or affected persons (including Māori), in proportion to the significance of the matter;

· Any decisions made will help meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses;

· Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

· Any decisions made are consistent with the Council's plans and policies; and

· No decisions have been made that would alter significantly the intended level of service provision for any significant activity undertaken by or on behalf of the Council, or would transfer the ownership or control of a strategic asset to or from the Council.

Recommendation

That, having considered all matters raised in the report, the report be noted.

Risk and Audit Committee Meeting Agenda 14 February 2019

6.2 Annual Report 2017/18 Audit Management Letter

File Number: COU1-1408

Author: Bronda Smith, Group Manager, Corporate Support and Services

Authoriser: Monique Davidson, Chief Executive

Attachments: 1. 2018 Report to Management ⇩

PURPOSE

The purpose of this report is to inform the Committee about the Audit Management Letter for the year ended 30 June 2018

Recommendation

That, having considered all matters raised in the report, the report be noted.

significance and engagement

This report is provided for information purposes only and has been assessed as being of some importance.

DISCUSSION

An audit of the financial statements of the Council was completed for the year ended 30 June 2018 by Ernst Young. An audit is undertaken every year on the financial statements and working papers of the Council.

Audit issued an unmodified audit opinion dated 18 October 2018 which ultimately means they were satisfied that the financial statements and statement of service performance fairly reflected the activity for th year and the financial position at the end of the year.

On completion of the audit, an audit report is produced to highlight any issues identified during the audit and suggested improvements.

The Management Letter to Council from Ernst Young for the year ended 30 June 2018 has been received and is attached as Attachment 1.

Below is the summary table of the Issues identified during the Annual Report audit.

Managers comments regarding the Issues identified and the actions required are included within the report.

Also included in the report is the follow up for the issues raised within the Management Letter for the Annual Report 2016/17 Management Letter. All of the actions that are able to be verified have been completed. There are two outstanding moderate items that will be actioned as part of the valuation of Council property assets as at 30 June 2019.

Financial and Resourcing Implications

Any financial and resourcing implications resulting from the Management Letter that are outside staff delegations will be reported and require approval from the Council before being incurred. No such implications have been identified to date.

Implications ASSESSMENT

This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:

· Council staff have delegated authority for any decisions made;

· Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

· Any decisions made are consistent with the Council's plans and policies; and

Recommendation

That, having considered all matters raised in the report, the report be noted.

Risk and Audit Committee Meeting Agenda 14 February 2019

6.3 Riskpool Call for 1 July 2019

File Number: COU1-1408

Author: Bronda Smith, Group Manager, Corporate Support and Services

Authoriser: Monique Davidson, Chief Executive

Attachments: Nil

PURPOSE

The purpose of the report is to inform the Committee about the advice received from the Board of Riskpool that they are making a call on Council for a shortfall in the mutual pool’s funds.

Recommendation

That, having considered all matters raised in the report, the report be noted.

significance and engagement

This report is provided for information purposes only and has been assessed as being of some importance.

DISCUSSION

RiskPool was a mutual liability fund owned by its member Councils giving cover previously provided by commercial liability insurers. It provided Public Liability and Professional Indemnity cover for its members from 1997 to 2017

It operated on the basis that all members made an annual contribution, part of which was used to purchase reinsurance and this along with the fund provided cover for claims made against members. The Trust Deed provided that if in any year claims exceed reinsurance resources and member’s contributions the Board may make a call on the members of the fund for that particular year.

The following table outlines the premiums paid and the calls made during the time the council was a member of Riskpool:

Membership Year	Premium	Call
14/15 year	25,853
13/14 year	25,853
12/13 year	25,100
Jul-12		47,971
11/12 year	22,000
Jul-11		47,971
10/11 year	20,000
Jul-10		47,971
Sep-09		22,388
09/10 year	21,000
08/09 year	30,000
07/08 year	42,000
06/07 year	39,984
05/06 year	39,009
04/05 year	38,057

When a local authority withdraws from the fund the liability to respond to subsequent calls remains for the years that it was a member. Council last participated in the fund in 2014/15.

Attached as Attachment 1 is a letter received from Riskpool dated 12 October 2018 outlining the need to make another call on its members. The first since 2012.

Riskpool is now in a “runoff” phase with the decision made last year that new covers from Riskpool would not be offered from 1 July 2017. It was acknowledged by the Riskpool Board that it was a difficult decision to make, but support from the sector had dropped, particularly from the larger Councils. Without support from the sector Riskpool could not offer the competitively priced cover it had been able to offer in the past.

Members were advised last year in the Chairman’s report in the 2018 Annual Report that further additional contributions from members (calls) would be required.

As at 30 June 2018, Riskpool’s accounts show a deficit of $7.4 million. The deteriorating claims experience in 2017‐18 means that Riskpool needs to make at least one interim call before a final call is made on wind up. The call will be $6 million payable on 1 July 2019, split $3 million each to fund years 7 (2003/04) and 10 (2006/07).

The amount of this call for Central Hawke’s Bay District Council will be $30,624 payable on or before 1 July 2019. The invoice will be received in May 2019. It should be noted that this is an unbudgeted expense.

Another and hopefully final call from Riskpool is likely in 2022 or 2023. It is expected that the amount of that call will be less than this one.

Financial and Resourcing Implications

There is a financial implication in this report in that the call amount has not been budgeted. An assessment will be made by Officers about the appropriate funding of the call.

Implications ASSESSMENT

This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:

· Council staff have delegated authority for any decisions made;

· Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

· Any decisions made are consistent with the Council's plans and policies; and

Recommendation

That, having considered all matters raised in the report, the report be noted.

Risk and Audit Committee Meeting Agenda 14 February 2019

6.4 Safety & Wellbeing Update

File Number: COU1 - 1408

Author: Nicola Bousfield, People and Capability Manager

Authoriser: Monique Davidson, Chief Executive

Attachments: Nil

PURPOSE

The purpose of this report is to update the Risk & Audit Committee on Council’s Safety and Wellbeing activities, as well as the reported incidents and near misses for Council employees and strategic contracted partners.

Recommendation

That, having considered all matters raised in the report, the report be noted.

significance and engagement

This report is provided for information purposes only and has been assessed as being of some importance.

Updates

Contractors Safety Reporting 14 Nov 2018 – 1 February 2019

Higgins:

· 3x incidents (all vehicle related incidents, no physical injury)

· 10x Safety Walks/Audits

· 10x Employee observations

Downer:

· Nil reported incidents

RSV

· 5x minor Hazard/Near Miss reports

Smart Environmental

· Will be included in reporting from February

Council Safety Reporting 14 Nov 18 – 1 Feb 2019

· 2x Threatening Behaviour

· 4x Accidents

· 1x Near Miss

· 1x Property Damage

· 1x Incident

Safety & Wellbeing Committee

The first Safety & Wellbeing Committee meeting for 2019 was held on 30 January. The purpose of the committee is to enable the Council and its worker representatives to meet regularly and work cooperatively to improve work health and safety.

The agenda included refreshing the format of the meetings for 2019 and broadening the scope of the meetings to include all of Council’s strategic partners.

The Committee plans to call for nominations for new members, who will be put through Health & Safety Representative training. Although not required to under the Health & Safety at Work Act, the establishment of Health & Safety Representative roles within the organisation is considered best practice and training will be provided to the successful nominees.

Safety & Wellbeing Committee Initiatives 2019

The Safety & Wellbeing Committee ran workshops in November to hear from employees their thoughts and ideas ahead of planning the Wellbeing initiatives for employees in 2019.

Two key initiatives were identified following the feedback in the workshops. Firstly, the committee heard from employees their desire to volunteer time to community organisations and have Council support in doing so. Recognising this, the Committee proposed the introduction of Community Service Leave which allows employees to take 20 hours (pro-rata) per annum. This initiative was presented to the Executive Leadership Team and circulated to the organisation for further feedback and approved in January. Community Service Leave is available for employees who wish to give their time back to the community during work hours, whether it be collecting donations for the Pink Ribbon Street Appeal, or volunteering at their child’s sports day.

The second initiative developed from the workshops is a program of wellbeing activities and opportunities which will be offered to employees for 2019. The committee is currently working on putting the programme together which will be then communicated back to the organisation.

Wellbeing Workshops

The final Wellbeing Workshop for 2018 was held in December, presented by EAP Services on Fatigue and Sleep.

Contractor Safety Pre-Qualifications

The November Safety & Wellbeing update reported six newly identified contractors outstanding to become pre-qualified. Three of the original six were determined as not currently undertaking work by Council and as such, not required to become pre-qualified. The remaining three contractors are in the process of becoming pre-qualified with assistance from the Safety & Wellbeing Lead and the respective contract managers.

Contractor Audits

The 3 Waters Project Engineer undertook a site audit at the Porritt Place works area in December utilising the i-Auditor app with positive feedback. The app will be rolled out to all contract managers and training provided with view that regular audits will be undertaken by them throughout the year.

Asbestos Liaison Protocol Hawke’s Bay

The protocol has now been signed by the 5 Councils, Hawke’s Bay DHB and WorkSafe Chief Executives and is now live. The purpose of the Protocol is to increase public confidence in asbestos incident management by setting out processes for effective liaison between government agencies in response to asbestos-related enquiries and incidents in the Hawkes Bay area. All employees who may handle queries or calls about asbestos handling will be taken through the protocol to ensure calls are managed by correct processes.

Financial and Resourcing Implications

There are no financial or resourcing implications from this report.

Implications ASSESSMENT

This report confirms that the matter concerned has no particular implications and has been dealt with in accordance with the Local Government Act 2002. Specifically:

· Council staff have delegated authority for any decisions made;

· Unless stated above, any decisions made can be addressed through current funding under the Long-Term Plan and Annual Plan;

· Any decisions made are consistent with the Council's plans and policies; and

Recommendation

That, having considered all matters raised in the report, the report be noted.

Risk and Audit Committee Meeting Agenda 14 February 2019

7 Public Excluded

RESOLUTION TO EXCLUDE THE PUBLIC

Recommendation

That the public be excluded from the following parts of the proceedings of this meeting.

The general subject matter 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 of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Ground(s) under section 48 for the passing of this resolution
7.1 - Internal Audit Update	s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons	s48(1)(a)(i) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7

8 Date of Next Meeting

Recommendation

THAT the next meeting of the Risk and Audit Committee be held on 28 March 2019.

9 Time of Closure