Unconfirmed

 

Minutes of a meeting of the Finance Audit & Risk Sub-committee

 

Date:                                    Wednesday 10 August 2022

Time:                                    1.00pm

Venue:

Council Chamber

Hawke's Bay Regional Council

159 Dalton Street

NAPIER

 

Present:                              Cr C Foss – Chair

Cr R Barker

Cr W Foley

Cr N Kirton

S Maloy – Independent member

Cr J Taylor

 

In Attendance:                 J Palmer – Chief Executive

K Brunton – Group Manager Policy & Regulation

C Dolley – Group Manager Asset Management

I Maxwell – Group Manager Integrated Catchments Management

S Young – Group Manager Corporate Services

J Bennet – Commercial Accountant

C Comber – Chief Financial Officer

T Chaplin – Senior Group Accountant

O Giraud-BurrellQuality & Assurance Advisor

H Marsden – Risk & Corporate Compliance Manager

A Siddles – Chief Information Officer

A Roets – Governance Advisor

 

 


1.         Welcome/Karakia /Apologies/Notices

The Chair, Craig Foss welcomed everyone and opened with a karakia.

Councillor Jacqueline Taylor advised that she needs to leave at 3pm.

 

2.         Conflict of Interest Declarations

There were no conflicts of interest declared.

 

3.         Confirmation of Minutes of the Finance Audit & Risk Sub-committee held on 4 May 2022

FIN180/22

Resolution

Minutes of the Finance Audit & Risk Sub-committee held on Wednesday, 4 May 2022, a copy having been circulated prior to the meeting, were taken as read and confirmed as a true and correct record.

Kirton/Maloy

CARRIED

 

4.

Follow-ups from previous meetings

 

The Chair welcomed newly appointed Group Manager Corporate Services Susie Young.

·    The fund management review will now commence in early 2023 in conjunction with HBRIC, particularly in relation to procurement criteria.

·    Stephanie Maloy met with the People & Capability Manager, Liana Monteith and is comfortable that management actions raised by the Talent Management internal audit are being appropriately addressed. The Chief Executive thanked Stephanie for her input and support to the P&C manager and team.

·    FARS will continue to be updated on progress with the Talent Management actions.

FIN181/22

Resolution

That the Finance, Audit and Risk Sub-committee receives and notes the Follow-ups from previous meetings.

Foss/Maloy

CARRIED

 

5.

Quarterly Treasury Report for the period 1 April - 30 June 2022

 

The CE, James Palmer introduced Chris Comber and Jess Bennet, Commercial Accountant. The item was taken as read and discussions noted:

·    Continued to see a decline in investment returns over the last quarter, however, the shortfall in investment funds won’t require any additional borrowing because operating expenditure has been lower than forecast due to delays in delivering capital projects.

·    Some volatility is to be expected, however, the performance of managed funds demonstrates that market recovery can occur in relatively short timeframes. If markets don’t recover, then Council will have to make tougher decisions to recover funds.

·    FY21-22 budgets were always expected to have a shortfall in both investment, rating and user charges income to meet Council’s operating expenditure and borrowing was always forecast to cover the shortfall.

·    Anticipating that year-end nett deficit will be less than forecast.

·    The Q4 Financial report will go to the 24 August Corporate and Strategic Committee meeting, including cashflows, revenue and expenditure (balance sheet) position and investment performance.

·    There is an opportunity to reconsider the investment strategy and SIPO to deliver on Council’s investment return expectations at the beginning of the new triennium based on good independent advice.

·    Significant movement of funds is based on Council decisions.

FIN182/22

Resolutions

That the Finance, Audit and Risk Sub-committee:

1.      Receives and notes the Quarterly Treasury Report for the period 1 April – 30 June 2022.

2.      Confirms that the performance of Council’s investment portfolio has been reported to the sub-committee’s satisfaction.

Foss/Taylor

CARRIED

The Chair proposed that items 6 and 7 are dealt with together.

6.

Asset Management group review

 

Chris Dolley introduced the item and gave a presentation outlining the previous management reviews and findings. Discussions highlighting:

·    Various reviews have been undertaken to ensure Council improves on both service delivery and processes/frameworks

·    A gap in the visibility of the various Asset Management improvement actions has occurred and a master Improvement Register is being developed to track the execution of agreed actions and surface those as part of Council’s 

·    The Executive Team have undertaken various reviews and functions to ensure Council is delivering on its expectations with respect to the 2021-2031 Long Term Plan

·    Recognising that the internal audit programme has grown in recent times with audits in financial processes and now looking into services and functions

·    Proposed that a more structured work programme (operational review) for the next 3 years be presented in the new triennium

·    AM are managing assets to the value of $215m and constantly responding to contemporary challenges such as climate change, frequent floods and coastal inundation and good infrastructure plans needs to be in place at all times

·    AM Schemes must achieve integrated land uses such as enhanced ecology, water quality outcomes and meet contemporary iwi and wider community aspirations

·    There have been an incremental increase in level of community resilience against flood risks

·    Capital expenditure recognised as an area of concern

·    A Summary and key findings from process insights and reviews undertaken over the last 4 years included:

Process Insights – Framework (processes) key findings:

o  Asset Management core documents exist, but not well integrated

o  Staff’s view of Framework optimistic compared to objective evidence

Process Insights – SCADA key findings:

o  Not all sites are integrated withing the existing SCADA SYSTEM

o  Key equipment is at end of life cycle and needs to be replaced

o  Two separate SCADA systems i.e. no single user interface

o  General lack of standards, planning and system ownership

o  Heavy reliance on external contracts (limited internal knowledge)

o  Data Historian difficult to access

Process Insights – S17a Review Works Group key findings:

o  Duplicate of financial processes

o  Reporting to be better integrated into HBRC

o  Risk appetite process can be improved

·    Information System investment of $4m in technology provided easier access to information and system integration is now fully integrated with the Council’s financial system

·    Long Term Plan priority areas include strengthening the Asset Management framework, climate change, water quality and regional parks.

·    It is recommended that the Asset Management internal audit planned for 2022-2023 be deferred to allow time for the identified improvements from previous reviews to be implemented.

FIN183/22

Resolution

That the Finance, Audit and Risk Sub-committee receives and notes the Asset Management Group review staff report.

Foley/Taylor

CARRIED

 

7.

2022-2023 Enterprise Internal Audit plan

 

Helen Marsden introduced the item and noted:

·    FARS meeting in May approved 2 internal audits for the FY23 - Data Analytics and Organisational Change Consolidation and Prioritisation.

·    Following discussions with the CE and Group Manager Asset Management, it was agreed that the Asset Management Framework audit be deferred to 2023-2024.

·    Council’s Health & Safety Management framework was benchmarked to a standard which is no longer fit for purpose, therefor a review is recommended, to align to a new external standard recognised by WorkSafe.

·    Asset Management service delivery improvements will be integrated into the corrective actions dashboard in future.

FIN184/22

Resolutions

That the Finance, Audit and Risk Sub-committee:

1.      Receives and considers the 2022-23 Enterprise Internal Audit Plan staff report

2.      Confirms the internal audit plan for the 2022-2023 financial year, will include:

2.1.       Data analytics (as resolved 4 May 2022)

2.2.       Organisational change consolidation and prioritisation (as resolved 4 May 2022)

2.3.       Health & Safety management framework.

3.        Receives a regular Asset Management service delivery improvements report to maintain visibility of the various Asset Management improvement actions.

Foss/Maloy

CARRIED

 

8.

Data Analytics Audit report

 

Chris Comber introduced the item, the fifth consecutive Data Analytics audit review.  Discussions traversed:

·    No major concerns were identified.

·    Corrective actions have been taken where needed.

·    Continued training on processes for the new financial system is ongoing.

FIN185/22

Resolution

That the Finance, Audit and Risk Sub-committee receives and considers the Data Analytics audit report staff report.

Foss/Foley

CARRIED

 

9.

2021-2022 Enterprise Internal Audit Plan status update

 

Helen Marsden introduced the item, which was taken as read.

FIN186/22

Resolutions

That the Finance, Audit and Risk Sub-committee:

1.      Receives and considers the 2021-22 enterprise Internal Audit plan status update staff report.

2.      Reports to the Corporate and Strategic Committee, the Sub-committee’s satisfaction that the 2021-22 Enterprise Internal Audit plan has been completed.

Foss/Foley

CARRIED

 

10.

Audit Plan for the 2021-2022 Annual Report

 

Chris Comber provided a status update on the timing for the audit of Council’s 2021-2022 Annual report and noted that staff are comfortable with the timing of the audit process as proposed.

FIN187/22

Resolution

That the Finance, Audit and Risk Sub-committee receives and considers the Audit Plan for the 2021-2022 Annual Report.

Foley/Maloy

CARRIED

 

11.

Internal Assurance corrective actions update

FIN188/22

Resolution

That the Finance, Audit and Risk Sub-committee excludes the public from this section of the meeting, being Agenda Item 11 Internal Assurance corrective actions update with the general subject of the item to be considered while the public is excluded; the reasons for passing the resolution and the specific grounds under Section 48 (1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution being:

General subject of the item to be considered

Reason for passing this resolution

Grounds under section 48(1) for the passing of the resolution

Internal Assurance corrective actions update

7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees, and persons from improper pressure or harassment.

s7(2)(e) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to avoid prejudice to measures that prevent or mitigate loss to members of the public.

s7(2)(j) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.

The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Foss/Maloy

CARRIED

 

12.

Six-Monthly Enterprise risk report

FIN189/22

Resolution

That the Finance, Audit and Risk Sub-committee excludes the public from this section of the meeting, being Agenda Item 12 Six-monthly Enterprise Risk Report with the general subject of the item to be considered while the public is excluded. The reasons for passing the resolution 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:

 

General subject of the item to be considered

Reason for passing this resolution

Grounds under section 48(1) for the passing of the resolution

Six-monthly Enterprise Risk Report

7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees, and persons from improper pressure or harassment.

s7(2)(e) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to avoid prejudice to measures that prevent or mitigate loss to members of the public.

s7(2)(j) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.

The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Foss/Maloy

CARRIED

 

13.

Confirmation of 4 May 2022 Public Excluded minutes

FIN190/22

Resolution

That the Finance, Audit and Risk Sub-committee excludes the public from this section of the meeting, being Agenda Item 13 Confirmation of 4 May 2022 Public Excluded minutes with the general subject of the item to be considered while the public is excluded. The reasons for passing the resolution 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:

General subject of the item to be considered

Reason for passing this resolution

Grounds under section 48(1) for the passing of the resolution

Corrective Actions dashboard - Cyber security

s7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees, and persons from improper pressure or harassment

s7(2)(j) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage

s7(2)(e) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to avoid prejudice to measures that prevent or mitigate loss to members of the public

The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Cyber incident reports

s7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees, and persons from improper pressure or harassment

s7(2)(j) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage

s7(2)(e) That the public conduct of this agenda item would be likely to result in the disclosure of information where the withholding of the information is necessary to avoid prejudice to measures that prevent or mitigate loss to members of the public

The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

 

Kirton/Foss

CARRIED

 

The meeting went into public excluded session at 2.59pm and out of public excluded session at 3.13pm.

 

Closure:

There being no further business the Chairman declared the meeting closed at 3.13pm on Wednesday, 10 August 2022.

 

Signed as a true and correct record.

 

Date: ................................................                            Chair: ...............................................