Audit and
Risk Committee
Notice of Meeting
A meeting of the Audit and Risk Committee
will be held in the Council Chamber, 26 Gordon Street, Dannevirke on Tuesday 15 February 2022 commencing at 2.00pm.
Bryan
Nicholson
Chief
Executive
Agenda
1. Present
2. Apologies
3. Confirmation
of Minutes 3
Recommendation
That the minutes of the Audit and
Risk Committee meeting held on 19 October 2021 (as circulated) be confirmed as
a true and accurate record of the meeting.
4. Matters
Arising from the Minutes not otherwise dealt with in the Agenda
5. Reports
5.1 Adoption
of the 2020/2021 Annual Report and Annual Report Summary 7
6. Closure
Audit and Risk Committee
Minutes of a meeting of the Audit and Risk
Committee held in the Council Chamber, 26 Gordon Street, Dannevirke on Tuesday 19 October 2021 commencing at 1.00pm.
1. Present
Mr K Ross
(Chairperson), Her Worship the Mayor - Mrs T H Collis, Crs
E L Peeti-Webber (Deputy Mayor), A K Franklin,
S A Hull, C J Isaacson (from item 6.2),
P A Johns, K A Sutherland, R A Treder and
S M Wards.
In
Attendance
Mr B Nicholson - Chief
Executive
Mr R Taylor - Manager
- Democracy Services
Mr R Suppiah - Group
Manager - Corporate
Ms S Lowe - Group
Manager - People and Capability
Mr C Chapman - Group
Manager - Infrastructure
Mr P Wimsett - Manager
Strategy and Climate Change
Ms S Smith - Health
and Safety Coordinator
Mrs S Walshe - Senior
Financial Accountant
2. Apologies
|
2.1
|
That
an apology is received from Cr Carole Isaacson for lateness to the meeting.
Franklin/Hull Carried
|
3. Notification
of Items Not on the Agenda
|
3.1
|
Updates are
requested on the following matters:
- Dannevirke impounded water supply repairs
- Earthquake-prone buildings notification letters to
property owners
|
4. Confirmation
of Minutes
|
4.1
|
That the minutes of the Audit and
Risk Committee meeting held on 17 August 2021 (as circulated) be confirmed as
a true and accurate record of the meeting.
Ross/Wards Carried
|
5. Any Matters Arising from the Minutes not
otherwise dealt with in the Agenda
6. Reports
|
6.1
|
Health and Safety
|
|
|
6.1.1
|
That
the report from the Health and Safety Coordinator dated 12 October 2021
concerning health and safety (as circulated) be received, and
That
the Audit and Risk Committee note the following with regard to the focus on
health and safety matters and this update:
·
Council’s health and safety
representatives will be attending the regional health and safety
representatives forum 2021 in Palmerston North held on 17 November 2021.
·
Safe365 health, safety and wellbeing
software is being rolled out to all Council staff by the end of November
2021.
·
New health and safety representatives
have been assigned to the membership of the health and safety committee.
·
Council’s health and safety
response plans continue to be reviewed and updated regarding Covid-19 to
reflect the changing requirements of Government’s direction in respect
of the pandemic.
·
The SiteWise contractor management
system is being implemented for use by contractors engaged by Council.
·
A wellness programme for Council staff
is under way, with initiatives for 2022 to be invited for the next staff
wellness calendar.
·
Details from the incident register are
provided for this reporting period.
Ross/Johns Carried
|
|
|
6.1.2
|
Cr Carole Isaacson entered the meeting at
2.50pm.
|
|
|
6.2
|
Risk Management
|
|
6.2.1
|
That
the report from the Group Manager - People and Capability dated 12 October
2021 concerning risk management (as circulated) be received, and
That
the Audit and Risk Committee note the following update on the management of
strategic risks at Council:
- Options for risk management software are
being investigated.
- A recruitment process is under way to appoint
a Risk and Assurance Advisor.
- The review and update of the risk management
framework has been delayed pending the appointment of a staff member to
undertake the above position.
- The risk regarding Government’s future
of local government review and three waters reform have been reviewed
and signed off.
- The emergency management team is
prepared to respond in the event of a Covid-19 localised outbreak and
the potential for a drought this summer.
Ross/Isaacson Carried
|
|
6.2.2
|
That
the Mayor and Chief Executive be requested to develop a process for Council
to consider the Government’s future of local government review interim
report regarding that matter.
Ross/Hull Carried
|
|
6.2.3
|
That an
approach be made to Local Government New Zealand requesting them to provide a
simplified two to three pages summary of the key points from the
Government’s future of local government review interim report to
provide guidance to councils in considering that matter.
Hull/Johns
Carried
|
|
6.3
|
2020/2021 Annual Report Audit Timeline
|
|
|
6.3.1
|
That
the report from the Senior Financial Accountant dated 12 October 2021
concerning the 2020/2021 Annual Report audit timeline (as circulated) be
received, and
That
the Audit and Risk Committee note the timeline for completing the audit
places challenges in completing this process prior to the end of the year
when Council closes, and given these circumstances supports management’s
recommendation to adopt the 2020/2021 Annual Report at the first Council
meeting in January 2022 to enable the necessary work to be undertaken and
accepts this intention falls outside the statutory timeframe.
Ross/Sutherland Carried
|
|
|
6.3.2
|
An Audit and Risk Committee meeting will
be held on 18 January 2022 at 1.00pm to receive the 2020/2021 Annual Report
prior to it being adopted.
|
|
7.
Notified Items Not on the Agenda
|
7.1
|
Dannevirke Impounded Water Supply
Repairs
|
|
7.1.1
|
Group Manager
- Infrastructure Chris Chapman will present an update on progress with
undertaking Dannevirke impounded water supply repairs at tomorrow’s
Works Liaison Committee workshop briefing session.
|
|
7.2
|
Earthquake-prone Buildings
Notification Letters to Property Owners
|
|
7.2.1
|
Chief
Executive Bryan Nicholson will follow up and provide a timeline for
progressing sending the earthquake-prone buildings notification letters to
property owners regarding actions Council require them to take in respect of
that matter.
|
There being no
further business the Chairperson thanked those present for their attendance and
contributions, and declared the meeting closed at 4.10pm.
____________________________
Chairperson
|
Date
|
:
|
8 February 2022
|
|
To
|
:
|
Chairperson and Committee Members
Audit and
Risk Committee
|
|
From
|
:
|
Sarah Walshe
Team Leader
Financial Services
|
|
Subject
|
:
|
Adoption
of the 2020/2021 Annual Report and Annual Report Summary
|
|
Item No
|
:
|
5.1
|
|
1. Recommendation
1.1 That
the report from the Team Leader Financial Services dated 8 February 2022
concerning the adoption of the 2020/2021 Annual Report and Annual Report
Summary (as circulated) be received, and
1.2 That
the Audit and Risk Committee recommend to the Council that the 2020/2021
Annual Report is adopted in accordance with Section 98 of the Local
Government Act 2002 subject to the correction of any typographical errors or
changes which may be required.
|
Executive Summary
2. Reason
for the Report
2.1 The reason for this report is for Council to receive and adopt the
audited 2020/2021 Annual Report in accordance with Section 98 of the Local
Government Act 2002. The 12-month financial report was presented to Audit
& Risk Committee on 18th August, and an updated copy of this
report was presented to Council on 8th September. This report
highlights any subsequent changes that have been made to the 12-month financial
report presented to Council on 8th September. The attached Annual
Report is the final version recommended for adoption subject to the correction
of any typographical errors or changes which may be required.
3. Background
3.1 The Annual Report aims to achieve the following:
· To compare the actual performance of the Council in the year against
the service levels as set out in the long term plan and the annual plan; and
· To promote the local authority’s accountability to the
community for the decisions made throughout the year by Council.
The preparation
and auditing of the Annual Report is an intensive process involving significant
effort of Council staff, Audit New Zealand, and concludes with Council adopting
the report by resolution usually within four months after the end of the
financial year. However, this year recognising the challenges faced by local
authorities the statutory deadline was extended to 31 December 2021. This year
there was also the added challenges for our auditors with an auditor shortage
and consequential effects of Covid-19 including lockdowns which consequently
meant that Council was not able to meet this timeframe and is in breach for the
2020/2021 annual report adoption. The diagram below shows the key steps in
producing the Annual Report:
3.2 As
can be seen in the diagram above, Council have reached the step of awaiting
audit clearance and the adoption of the Annual Report, with the final steps
remaining being the publication of the Summary Annual Report which also needs
to go through an audit process.
4. Changes to the 12-month Financial
Performance Report Submitted to Audit & Risk Committee in August 2021
4.1 Minor changes have since been made to the Annual Report following
Audit New Zealand’s review. These are as stated below:
4.2 Page
99, Public Conveniences Performance Measure “Percentage of customer
requests responded to within 48 hours” narration was updated to correctly
reflect the number of complaints being 64, not the 69 previously mentioned.
This correction has not resulted in any changes to the achievement of this
measure.
4.3 Page 131, Roading Performance Measure “The change from the
previous financial year in the number of fatalities and serious injury crashes
on the local road network expressed as a number” explanation was updated
to provide more information for the end user of the annual report. This
correction has not resulted in any changes to the achievement of this measure.
4.4 Page 131, Roading Performance Measure “The 85th
percentile roughness on sealed roads” explanation was updated to provide
more information for the end user of the annual report. This correction has not
resulted in any changes to the achievement of this measure.
4.5 Page 131, Roading Performance Measure “The 95th
percentile roughness on sealed roads” explanation was updated to provide
more information for the end user of the annual report. This correction has not
resulted in any changes to the achievement of this measure.
4.6 Page
140, Solid Waste Performance Measure “Tonnage of recycled materials
processed by Council” explanation was updated to
provide more information for the end user of the annual report. This correction
has not resulted in any changes to the achievement of this measure.
4.7 Page 151, Wastewater Performance Measure “total number of
recorded complaints” actual result was updated to 11.4 from 10.4 as well
as explanation updated to reflect the correct results. This correction has not
resulted in any changes to the achievement of this measure.
4.8 Page 157, Water Supplies Performance Measure “The percentage
of real water loss from the Council’s networked reticulation schemes
based on the minimum night flow (MNF) analysis” result was calculated and
reported on which was previously awaiting calculation. This correction has
resulted in the measure not being met.
4.9 Comprehensive
Revenue and Expense Variances
|
|
2020/21
|
2020/21
Actual
|
Variance
|
Note
|
|
Draft
|
Audited
|
|
|
000’s
|
000’s
|
000’s
|
|
Total Operating Revenue
|
53,554
|
53,839
|
285
|
|
|
Rates
|
24,019
|
23,838
|
(181)
|
4.9.1
|
|
Grants and Subsidies
|
24,788
|
24,790
|
2
|
|
|
Fees & Charges
|
3,547
|
3,460
|
(87)
|
4.9.2
|
|
Other Revenue
|
760
|
861
|
101
|
4.9.3
|
|
|
|
|
|
|
|
Total Operating Expenditure
|
41,982
|
43,201
|
1,219
|
|
|
Other Operating Expenses
|
21,178
|
21,449
|
271
|
4.9.1
4.9.4
|
|
Depreciation & Amortisation
|
14,743
|
15,182
|
439
|
4.9.5
|
|
Personnel Costs
|
6,346
|
6,867
|
521
|
4.9.6
|
|
|
|
|
|
|
|
Operating Surplus/(Deficit)
|
11,572
|
10,188
|
(1,384)
|
|
|
Other Asset Gain/(Losses)
|
(9)
|
360
|
369
|
4.9.7
|
|
Surplus/(Deficit) for the period
|
11,572
|
10,547
|
(1,025)
|
|
|
|
|
|
|
|
Table 1: Comprehensive Revenue
and Expense Statement
4.9.1 Reclass rates
transactions to rates revenue. These include internal rates charged to Tararua
District Council, remissions, and discounts provided.
4.9.2 Rates
penalties were incorrectly recognised in both rates revenue and fees and
charges. It was eliminated from the fees and charges line.
4.9.3 Domain board reconciliation completed, and revenue recognised.
4.9.4 Domain board
reconciliation completed, and expenditure recognised and a correction made to
inventory consumption.
4.9.5 Depreciation
on completion of the assets capitalised process.
4.9.6 Correctly
classifying Tararua Alliance personnel costs to employee costs. Council records
these staff costs as either a capital or an operational expense during the
financial year. However, under the financial standards Council is required to
have the operational component transferred from operations to personnel costs.
4.9.7 Gain on
investment property recognised when revaluation was completed.
Statement of Financial Position Variances
|
|
2020/21
|
2020/21
Actual
|
Variance
|
Note
|
|
Draft
|
Audited
|
|
|
000’s
|
000’s
|
000’s
|
|
Total Current assets
|
18,143
|
18,029
|
(114)
|
|
|
Cash & Cash Equivalents
|
11,430
|
9,659
|
(1,771)
|
4.10.1
4.10.2
|
|
Debtors and Other Receivables
|
5,023
|
4,522
|
(501)
|
4.10.3
|
|
Other Financial Assets
|
1,350
|
3,126
|
1,776
|
4.10.1
4.10.2
|
|
|
|
|
|
|
|
Total Non-Current assets
|
1,007,017
|
1,006,853
|
(164)
|
|
|
Investment Property
|
1,559
|
1,525
|
(34)
|
4.10.4
|
|
Intangible Assets
|
1,535
|
1,998
|
463
|
4.10.5
|
|
PPE - Operational
|
51,689
|
49,597
|
(2,092)
|
4.10.5
|
|
PPE - Infrastructure
|
943,676
|
945,092
|
1,416
|
4.10.5
|
|
|
|
|
|
|
|
Total Current Liabilities
|
9,121
|
9,063
|
(58)
|
|
|
Payables & Deferred Revenues
|
5,908
|
5,643
|
(265)
|
4.10.3
|
|
Borrowings - current
|
3,000
|
2,000
|
(1,000)
|
4.10.6
|
|
Derivative Financial Instrument
|
-
|
408
|
408
|
4.10.7
|
|
|
|
|
|
|
|
Total Non-Current Liabilities
|
42,881
|
43,321
|
440
|
|
|
Borrowings – non current
|
39,696
|
42,000
|
2,304
|
4.10.6
|
|
Derivative Financial Instrument
|
2,274
|
562
|
(1,712)
|
4.10.6
4.10.7
|
|
|
|
|
|
|
|
Equity
|
973,158
|
972,498
|
(660)
|
|
|
Accumulated Funds
|
357,925
|
354,629
|
(3,296)
|
4.10.8
4.10.9
4.10.10
|
|
Asset Revaluation Reserve
|
581,354
|
581,639
|
285
|
4.10.9
|
|
Special Funded Reserves
|
33,828
|
36,179
|
2,351
|
4.10.10
|
Table 2: Statement of Financial
Position
4.9.8 Reclassifying
cash from other financial assets to cash and cash equivalent. Other
financial assets include cash on deposit due to mature in more than 90 days.
4.9.9 Recognition of
Domain Board cash and cash equivalents.
4.9.10 Reclassification from
accounts payable to accounts receivable, and adjustment made for impairment of
accounts receivables as part of the annual report process.
4.9.11 Adjustment made to for
the fair value gain/(loss) on valuation of investment property.
4.9.12 Completion of the asset
capitalisation process, inclusive of invoices being correctly classified as
operational expenditure where applicable, and reclassification of work in
progress between operational assets and infrastructure assets.
4.9.13 Correctly recognising the
current portion of borrowings as part of the annual report process.
4.9.14 Correctly recognising the
current portion of derivative financial instruments (Swaps).
4.9.15 Recognising the change to
the surplus for the period transferred to accumulated funds (for the above
changes).
4.9.16 Adjustments made for the
valuation of investment property and assets held for sale.
4.9.17 Adjustments were made to
recognise transfers to and applications of funding from the special funded
reserves during the year.
5. Additional
Notes Added to the Annual Report
5.1 An
additional note has been added to the Annual Report this year, note 39 Breach
of Statutory Deadline. This note provides context to the reasons for Council
not meeting the statutory deadline.
5.2 Council
has also included this information on page 73, under the Statement of
compliance and responsibility section
6. Audit
Opinion
6.1 The Audit Director will present their Draft Audit Opinion at the
meeting (copy of proposed opinion will be circulated once available).
6.2 The
auditors are in the final stages of completing their work currently through
undertaking their internal review process. They have indicated they will issue
Council a modified audit opinion.
6.3 Same
as Council received last year this resulted from interpretation of when to
record CRM’s as a complaint for the water and wastewater measures being
the mandatory water measures required by Department of Internal Affairs.
Staff
and the after-hours service record the first call to an event only as a
complaint, with after-hours only logging an information request for subsequent
calls, and Council’s internal customer services only recording subsequent
notifications if requested by the customer.
The audit team have indicated that every
call must be logged as a complaint (e.g., if ten people call to notify Council
of one leaking pipe, then staff should record ten complaints against drinking
water pressure or flow). In addition, only the first call should be measured
for response times to the event (e.g., water leak). This process has since been
implemented at Council in the 2021/2022 financial year
6.4 The
qualification on this issue will mean Council will have a modified Audit Report
for the next three years until the issue is fully cleared (both current and
comparative results).
7. Management
Report
7.1 Council
will be presented with the management report from Audit New Zealand once it has
been compiled and reviewed by management for comments.
8. Draft
Summary Annual Report
8.1 The
Summary Annual Report must represent, fairly and consistently, the information
regarding the major matters dealt within the Annual Report.
8.2 A
Summary Annual Report must be made publicly available within one month after
the date the full Annual Report has been adopted.
8.3 The
information contained in the Summary Annual Report must include an
auditor’s report on the matters required by Section 99 of the Local
Government Act 2002
Attachments
Nil.
