Agenda of Risk and Audit Committee Meeting

Risk and Audit Committee Meeting Agenda 28 March 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, 14 February 2019 AT at the conclusion of the Finance and Planning Meeting

PRESENT: Cr Tim Aitken

Mayor Alex Walker

Cr Gerard Minehan

Cr Brent Muggeridge

Cr David Tennent

IN ATTENDANCE: Joshua Lloyd (Group Manager, Community Infrastructure and Development)

Monique Davidson (CEO)

Bronda Smith (Group Manager, Corporate Support and Services)

Doug Tate (Group Manager, Customer and Community Partnerships)

Nicola Bousfield (People and Capability Manager)

Leigh Collecutt (Governance and Support Officer)

1 Apologies

2 Declarations of Conflicts of Interest

None

3 Standing Orders

Committee Resolution

Moved: Mayor Alex Walker

Seconded: Cr Gerard Minehan

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

AND 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: Mayor Alex Walker

That the minutes of the Risk and Audit Committee Meeting held on 29 November 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 David Tennent

Seconded: Mayor Alex Walker

THAT Council has read the reports associated with items 6.1 to 7.1 and 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.

Amendment

Moved: Cr David Tennent

Seconded: Mayor Alex Walker

That Item 5 – Local Government Act Compliance – Planning, Decision Making and Accountability is removed from all Risk and Audit Committee Meeting Agendas going forward..

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: Mayor Alex Walker

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

Carried

· Within the Risk and Audit update, the following items were discussed:

Risk Management Framework

Internal Audit

Insurance Programme

Insurance Valuations

· Cr Tennent asked whether there would be an opportunity to review the assets that the Council has insured. It was confirmed that the insurance programme review would enable review of assets on the basis of how critical they are.

6.2 Annual Report 2017/18 Audit Management Letter

PURPOSE

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

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr David Tennent

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

Carried

· Cr Aitken asked about which body required Council to be insured with an A+ rated insurer.

It was confirmed that this was set by Council through the Treasury and Liability Investments Policy.

6.3 Riskpool Call for 1 July 2019

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.

Committee Resolution

Moved: Mayor Alex Walker

Seconded: Cr Gerard Minehan

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

Carried

· Cr Aitken raised concern about the deficit of $7.4 million showing in Riskpool’s accounts. Officers will table the Chairman’s report at a future Risk and Audit Committee Meeting.

· There was discussion amongst officers and members about the fact that because it is from a mutual fund that Council has an obligation to pay the call. Mayor Walker also mentioned the need to

· There was further discussion around the reasons for Riskpool needing the call. These included issues around deficiencies in building standards.

6.4 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 employees and strategic contracted partners.

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr Brent Muggeridge

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

Carried

· Cr Annand asked whether the statistics in the report include safety issues identified on Council properties, particularly playgrounds. It was confirmed that the figures do include this information.

RESOLUTION TO EXCLUDE THE PUBLIC

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Mayor Alex Walker

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

Carried

Committee Resolution

Moved: Cr Gerard Minehan

Seconded: Cr Brent Muggeridge

That Council moves out of Closed Council into Open Council.

Carried

7 Date of Next Meeting

Committee Resolution

Moved: Mayor Alex Walker

Seconded: Cr Gerard Minehan

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

Carried

8 Time of Closure

The Meeting closed at 11.09am.

The minutes of this meeting were confirmed at the Risk and Audit Committee Meeting held on 28 March 2019.

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

CHAIRPERSON

5 Report Section

5.1 Risk and Audit Update

File Number: COU1-1408

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

Authoriser: Monique Davidson, Chief Executive

Attachments: 1. Audit Action List as at 18 March 2019 ⇩

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 establish the Corporate Risk was held with the Risk and Audit Committee on 21 February 2019 with Ross Franklin, Morrison Low, following an initial assessment from the Executive Leadership Team. Following the workshop, the Corporate Risk Register has continued to be developed with officers completing the detailed work of the risk controls and treatments required.

The Risk Register and Reporting are being considered as part of this Risk and Audit Committee Meeting.

INTERNAL AUDIT

Internal Audit Programme

The 3 Year Internal Audit Programme will be reviewed prior to the start of the next financial year with the Risk and Audit Committee to set the programme as all audits on the current programme have been completed.

Audit Action List Update

The Audit Action List has been updated to include the Sensitive Expenditure Audit actions and the Annual Report 30 June 2018 actions and is attached.

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 following the adoption of 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 is being undertaken by AON. A meeting with CHBDC has been conducted to feed into the benchmarking process. The results reported to the Risk and Audit Committee in April/May.

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 28 March 2019

5.2 Adoption of the Governance Risk Register and Risk Reporting

File Number: COU1-1408

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

Authoriser: Monique Davidson, Chief Executive

Attachments: 1. CHBDC Goverance Risk Register ⇩

2. Risk Reporting Format ⇩

PURPOSE

The purpose of this report is to consider and adopt the Corporate Risk Register and Risk Reporting to the Risk and Audit Committee

RECOMMENDATION for consideration

That having considered all matters raised in the report:

a) The Governance Risk Register and Risk Reporting be adopted.


compliance
Significance	This matter is assessed as being of some importance
Options	This report identifies and assesses the following reasonably practicable options for addressing the matter: 1. The Governance Risk Register and Risk Reporting be adopted. 2. The Governance Risk Register and Risk Reporting not be adopted and officers are given guidance of the changes required.
Affected persons	The persons who are affected by or interested in this matter are the Officers, Elected Members and the wider community of Central Hawkes Bay.
Recommendation	This report recommends option 1 for addressing the matter.
Long-Term Plan / Annual Plan Implications	None
Significant Policy and Plan Inconsistencies	None

BACKGROUND

Risk Management is recognised as an integral part of good management practice and is an important aspect of internal controls within the Council.

Central Hawke’s Bay District Council (CHBDC) is committed to the effective management of risk and recognises that risk is present in everything we do. For risk management to be effective it must be integrated into Council’s governance, business operations, projects, policies, processes and decision-making as part of everyone’s Business as Usual (BAU).

The successful management of risk is essential to enable Central Hawke’s Bay District Council to support the Central Hawke’s Bay region by making informed decisions and fulfilling its objectives.

The Terms of Reference for the Risk & Audit Committee state that, on behalf of Council, it will:

• “review whether management has in place a current, comprehensive and effective risk management framework and associated procedures for effective identification and management of Council’s significant risks;

• consider whether appropriate action is being taken by Management to mitigate Council’s significant risks.”

Part of the Risk and Audit’s Committee’s work programme for 2018 included the development of a Risk Framework. This work began in April 2018 and a number of workshops were held with the Committee to review an appropriate framework that reflects desires of Council to manage risk effectively and takes the impacts of the risks into account on a number of key areas across Council. The Risk Framework was adopted by the Council in October 2018.

With the adoption of the Framework, work commenced on the development of the Governance Level Risk Register where the Governance level risks of the overall Council are considered and reported to the Risk and Audit Committee.

A workshop to establish the Governance Risk Register was held with the Risk and Audit Committee on 21 February 2019 with Ross Franklin, Morrison Low, following an initial assessment from the Executive Leadership Team. Following the workshop, the Governance Risk Register has continued to be developed with officers completing the detailed work of the risk controls and treatments required.

SIGNIFICANCE AND ENGAGEMENT

In accordance with the Council's Significance and Engagement Policy, this matter has been assessed as of some importance as Risk Management is recognised as an integral part of good management practice and is an important aspect of internal controls within the Council.

OPTIONS

The following analysis applies to all options

a) Financial and Resourcing Implications

There are no financial or resourcing implications identified from this report. The development and management of the Risk Register and Reporting is expected to be covered with existing budgets.

b) Risk Analysis

Risk Management is recognised as an integral part of good management practice and is an important aspect of internal controls within the Council. The development of the Risk Register is expected to allow Council to better manage its Risks and therefore reduce the overall risk for Council.

c) Alignment to Project Thrive and Community Outcomes

All options align with Project Thrive and will allow us to achieve our key community outcomes.

d) Statutory Responsibilities

There are no statutory responsibilities for the Council to develop a Risk Framework and Registers however it has been recognised by the Office of the Auditor General as best practice

e) Consistency with Policies and Plans

This report is consistent with all policies and plans

f) Participation by Māori

This issue is not identified as requiring specific engagement with Maori

g) Community Views and Preferences

Embedding the framework will provide benefits for the wider Central Hawke’s Bay community. Given the administrative nature of the framework and risk registers, consultation has not been undertaken with the community.

h) Advantages and Disadvantages

Adopting the Risk Register and Risk Reporting will demonstrate the Council’s commitment to implementing a sound risk management culture within the organisation.

Option 1 The Governance Risk Register and Risk Reporting be adopted.

Option 2 The Governance Risk Register and Risk Reporting not be adopted and officers are given guidance of the changes required

Recommended Option

That the Governance Risk Register and Risk Reporting be adopted.

NEXT STEPS

Following the adoption of the Risk Register, officers will work with the Committee on the regular reporting of the risks and will also introduce the register to staff. It will then be used in the establishment of the Operational Risk Registers.

RECOMMENDATION for consideration

That having considered all matters raised in the report:

a) The Governance Risk Register and Risk Reporting be adopted.

5.3 Safety & Wellbeing Update

File Number: COUI - 1408

Author: Nicola Bousfield, People and Capability Manager

Authoriser: Monique Davidson, Chief Executive

Attachments: Nil

PURPOSE

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.

UPDATE

Contractors Safety Reporting 1 February – 15 March 2019

Higgins:

· 10x Employee observations 

· 1x Incident

· 10x Safety Walks/Audits

 Downer:

· Nil reported incidents

RSV - Compliance Reporting (Incidents are Hazard/Risk related)

· 11x Insignificant 

· 17x Minor 

·  3x Moderate 

Smart Environmental (January - February 2019)

· Risk Registers completed for Waipukurau, Waipawa, Porongahau & Takapau RTS 

· 2 x Incidents

· Risk reported

Council Safety Reporting 1 Feb – 15 March 2019

· 3x Accidents

· 2x vehicles minor 

· 1x Employee minor

· 1x At Risk Behaviour

Safety & Wellbeing Committee

The Committee called for nominations for new members across the organisation. The new committee will be in place for the March meeting and members will be put through Health & Safety Representative training for their new roles.

Safety & Wellbeing Initiatives 2019

· Flu vaccinations (or Buccaline) for Employees and Councillors is planned for April 2019.

· Wellbeing workshops that were implemented late 2018 are planned again for 2019 provided by the Employee Assistance Program. The workshops for 2019 will focus on ‘work/life balance’ and ‘finance matters.’

Contractor safety pre-qualifications

The November Safety & Wellbeing update reported six newly identified contractors outstanding to become pre-qualified. One remaining contractor (not currently engaged by Council) is in the process of becoming pre-qualified with assistance from the Safety & Wellbeing Lead and the respective contract manager.

Contractor Audits

The i-Auditor roll-out is under way, now enabling all contract managers to undertake their own audits of the contract/contractor. The number of audits required per year will be determined by the level of risk involved with the contract. Training in the use of the i-Auditor App is being rolled out by the Safety & Wellbeing Lead.

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.