Minutes of Finance Audit & Risk Sub-committee

1. Welcome/Apologies/Notices

The Chairman welcomed everyone to the meeting. There were no apologies, nor notices.

The absence of Mrs Liz Lambert was noted.

2. Conflict of Interest Declarations

There were no conflict of interest declarations.

3. Confirmation of Minutes of the Finance Audit & Risk Sub-committee Meeting Held on 18 May 2016

Resolution

Minutes of the Finance Audit & Risk Sub-committee held on Wednesday, 18 May 2016, a copy having been circulated prior to the meeting, were taken as read and confirmed as a true and correct record.

Wilson/Scott

CARRIED

4. Matters Arising from Minutes of the Finance Audit & Risk Sub-committee Meeting Held on 18 May 2016

There were no matters arising from the minutes.

Follow-ups from Previous Finance Audit & Risk Sub-committee Meetings

Cr Barker arrived at 10.02am

Mr Paul Drury outlined the actions carried out on the follow-ups from the previous meetings, including staff training on cyber security and awareness, and the transition of IT infrastructure to ‘the cloud’. There was discussion about potential pecuniary interest for councillors being grounds for withdrawal from debate, and the need to provide clear guidelines to incoming councillors.

FIN16/16

Resolution

That the Finance, Audit and Risk Sub-committee receives and notes the report “Follow-ups from Previous Finance Audit and Risk Sub-committee Meetings”.

Wilson/Barker

CARRIED

Annual Report Year Ending 30 June 2016

Mr Drury introduced the item, outlining the yearly process of Audit providing a report on issues that have arisen during the Audit for discussion with councillors. Discussions traversed:

· timing and scheduling of meetings to provide adequate scrutiny of the Annual Report and audit report of that by the sub-committee

· HBRIC annual report and implications of the DoC land swap decision, with Audit not having sufficient information at this time to provide an unqualified opinion for the Annual Report

· Legislative requirement that Annual Report must be adopted within four months of 30 June

· Responsibility and function of the sub-committee to recommend adoption of the Annual Report to Council

· Valuation of Council’s investment in HBRIC

· Napier Port response to request to realign their financial year to be the same as Council and HBRIC was that it is impractical to do that – contrary to what Audit’s opinion that this occur

· Fraud risk and policy including internal audit

· Risk Management and the risk register, including reporting to Council

The meeting adjourned at 10.45am and reconvened at 10.56am

· As soon as HBRIC issues re ‘impairment’ are resolved the Audit report will be provided to members of the FA&R sub-committee for consideration ahead of Council’s adoption

FIN17/16

Resolution

That the Finance Audit and Risk Sub-committee receives and notes the issues provided by Stephen Lucy, Director Audit NZ, for discussion on HBRC’s Annual Report for Year Ending 30 June 2016.

Wilson/Barker

CARRIED

Internal Audit Programme Proposed for 2016-17

The paper was taken as read, and discussion traversed:

· Audit of stakeholder relationship management considered low priority

· Copyright on PWC reports and Council ‘ownership’ of those reports they commission

· Rates resolution legal review prior to Council adoption and oversight of HBRC’s rate setting processes by independent reviewer

· Process of obtaining quotes for internal audits

· Tax Review has been provided for in budgets in accordance with a three yearly cycle

· Suggestion that next on the programme are Fraud Prevention, Tax Review and then once the Central Government investigation into the Havelock North event is completed, Event Response.

FIN18/16

Resolutions

1. That the Finance Audit and Risk Subcommittee receives and notes the Internal Audit Programme report and advises staff which areas of HBRC business require an internal audit review during the 2016-17 financial year.

2. The Finance Audit and Risk Subcommittee recommends that Council:

2.1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted Significance and Engagement Policy, and can make decisions on this issue without conferring directly with the community and persons likely to be affected by or to have an interest in the decision.

2.2. Agrees the internal audit programme for 2016-17 will include Fraud Prevention Detection Review, Event Response and a full Tax Review.

Benham/Scott

Against: Barker

CARRIED

HB LASS - Proposed Combined Approach to Internal Audits

The paper was taken as read.

FIN19/16

Resolutions

1. That the Finance, Audit and Risk Sub-committee receives and notes the “HB LASS Proposed Combined Approach to Internal Audits” report.

2. The Finance, Audit and Risk Sub-committee recommends that Council:

2.1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted Significance and Engagement Policy, and that Council can exercise its discretion under Sections 79(1)(a) and 82(3) of the Local Government Act 2002 and make decisions on this issue without conferring directly with the community.

2.2. Subject to sufficient support from Hawke’s Bay councils, participates in a joint request for proposal for internal audit services from external providers.

Barker/Benham

CARRIED

Infrastructure Insurance

The paper was taken as read, with discussion covering:

· Rock groyne river mouth protection structures

· No biological risk cover, i.e. sawfly

· Earthquake cover for two events per insurance year only

· Excess and impacts on price for cover, with lower excess resulting in substantially higher premiums

· Dams, Building Act requirements for those, maintenance programmes and inspections.

FIN20/16

Resolutions

1. That the Finance, Audit and Risk Sub-committee receives and notes the “Infrastructure Insurance” report.

2. The Finance, Audit and Risk Sub-committee recommends that Council:

2.1. Agrees that the decisions to be made are not significant under the criteria contained in Council’s adopted Significance and Engagement Policy, and that Council can exercise its discretion and make decisions on this issue without conferring directly with the community or persons likely to have an interest in the decision.

2.2. Delegates authority to the Interim Chief Executive to enter into an agreement for insuring HBRC infrastructure assets commencing upon expiry of the current policy, for a period of up to 2 years.

Scott/Barker

CARRIED

10.

Business Continuance Plan

Mr Paul Drury introduced the item, before Jolene Townshend and Lisa Pearse responded to queries, including:

· Alternative accommodation should Dalton Street building not being able to be used for HBRC activities

· Potential weakness of the plan being that people/staff don’t know what’s in the plan and what to do should there be a major event which will be actively mitigated against through staff training

· In each event, the response will be different and what happens in terms of people/staff contacts, welfare will require decisions of the Executive Team in accordance with the level of damage or impact

· Suggestion that there needs to be a “plan” in relation to staff contact and welfare in a major event

· Efforts have been made for staffing/resource issues to be embedded throughout the BCP

· The BCP is a ‘live’ document which will be reviewed and updated or improved through staff exercises, yearly reviews and then audited every 5 years

FIN21/16

Resolutions

1. That the Finance, Audit & Risk Subcommittee receives and notes the updated “Business Continuance Plan”.

2. The Finance, Audit and Risk Sub-committee recommends that Council:

2.2. Endorses the Hawke’s Bay Regional Council Business Continuance Plan.

Wilson/Scott

CARRIED

11.

2016-17 Sub-Committee Work Programme

The report on the work programme for the Committee over the next year was taken as read.

FIN22/16

Resolution

That the Finance, Audit and Risk Sub-committee receives and notes the “Sub-committee Work Programme” report.

Scott/Wilson

CARRIED

12.

Confirmation of the Public Excluded Minutes of the Finance, Audit & Risk Sub-committee Meeting Held on 18 May 2016

FIN23/16

Resolutions

1. That the Council excludes the public from this section of the meeting being Confirmation of Public Excluded Minutes Agenda Item 12 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 Audit Report – Cyber Security

7(2)(b)(i) 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 ensure a trade secret is not disclosed

7(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.

Proposed Council Insurance Programme for 2016-17

7(2)(i) 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 enable the local authority holding the information to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)

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

2. That Mr Stephen Lucy remains in attendance for this item.

Wilson/Scott

CARRIED

13. Confirmation of Public Excluded Minutes of the Finance Audit & Risk Sub-Committee Meeting Held on 18 May 2016

Public Excluded minutes of the Finance Audit & Risk Sub-committee meeting held on Wednesday, 18 May 2016, a copy having been circulated prior to the meeting, were taken as read and confirmed as a true and correct record.

Wilson/Scott

CARRIED

14. Matters Arising from Public Excluded Minutes of the Finance Audit & Risk Sub-committee Meeting Held on 18 May 2016

There were no matters arising from the minutes.

Resolution

FIN24/16 That the meeting moves out of Public Excluded session.

Hewitt/Wilson

CARRIED

The meeting went into public excluded session at 11.55am and out of public excluded session at 11.59am

Closure:

There being no further business the Chairman declared the meeting closed at 12.00pm on Tuesday 20 September 2016.

Signed as a true and correct record.

DATE: ................................................ CHAIRMAN: ...............................................