MINUTES OF A meeting of the Finance Audit & Risk Sub-committee

Date:                          Tuesday 31 January 2017

Time:                          10.00am

Venue:

Council Chamber Hawke's Bay Regional Council 159 Dalton Street NAPIER

Present:                     N K Kirton - Chairman

P B Bailey

A J Dick

In Attendance:          A Newman – Chief Executive

P Drury – Group Manager Corporate Services

M Adye – Group Manager Asset Management

J Palmer – Group Manager Strategic Development

V Moule – Human Resources Manager

M Collings – Corporate Accountant

M des Landes – Management Accountant

S Lucy – Audit New Zealand

S Hay –– PWC - Audit Manager

C Matthew – PWC - Senior Associate

J Buttery – Governance Administration Assistant

1. Welcome/Apologies/Notices 

The Chairman welcomed everyone to the meeting, and it was noted that Councillor Barker was absent without apology.

2. Conflict of Interest Declarations

There were no conflict of interest declarations.

3.	Six Monthly Report on Risk Assessment Management
	Ms Melissa des Landes – Management Accountant responsible for the Risk Assessment Management process, explained that each Council Group met to discuss and identify risks thoroughly before giving each risk a score. Ms des Landes explained that each risk is uniquely numbered (#01) and when that risk is no longer identified, the number is archived and not used again.  Mr Mike Adye explained that “Quantate” is software which was selected to help to calculate the risks.  The software has been in use for several years during which each group was trained in its use with Ms des Landes as the coordinator. The Sub-committee then worked through each identified risk commenting specifically on: #07  Disruption to Business Continuity – It was agreed that after the presentation from the Port of Napier last week, this risk should be re-classified as high not moderate, as the analysis was completed before the Kaikoura earthquake. #06  Failure to establish and maintain relationships with key stakeholders. – It was suggested that this is also incorrectly rated as moderate.  Subsequent discussion identified that HBRC needs to develop better reporting of capability around environmental outcomes. #08 HBRIC Ltd –This item was perceived as being a high risk, however staff assured the committee that Council has strong controls in place. Cr Kirton expressed his view that the four main risks are Fresh water supply, CHB Wastewater, Ahuriri Estuary, Waihi Dam and the Wairoa River, and that there needs to be a framework to deliver clarity around those.  The risk framework needs to report actual risks to the organisation.
FIN25/17	Resolutions 1.    That the Finance, Audit and Risk Sub-committee: 1.1       Considers and receives the “HBRC Risk Assessment and Management Report”. 1.2       Advises staff of specific risks where it believes the current level of risk is unacceptable to Council, and requests that staff report back to the May Sub-committee meeting with options and associated resources required to modify the risk profile. 2. The Finance, Audit and Risk Sub-committee recommends that the Corporate and Strategic Committee: 2.1.     Agrees the decisions to be made are not significant under the criteria contained in Councils’ adopted Significance and Engagement Policy, and that Council can exercise its discretion and make decisions on this issue without conferring directly with the community. 2.2.     Recommends to Council that the HBRC Risk Assessment and Management process undergoes a comprehensive review to ensure major strategic risks to the public and environment are appropriately managed. Kirton/Dick CARRIED

5.	Health and Safety Update Report for the Period 1 June - 31 December 2016
	Mr Viv Moule spoke briefly to his report, stating his satisfaction with what local Councils have achieved together with the SiteWise adoption by local contractors.  The new legislation continues to cause angst among organisations, there is a lack of H&S qualified people and costs of implementation cannot yet be quantified.
FIN26/17	Resolution That the Finance, Audit and Risk Sub-committee receives and notes the “Health and Safety Update Report for the Period 1 June – 31 December 2016”. Bailey/Dick CARRIED

6.	Audit NZ Management Report for HBRC Annual Report tor Year Ending 30 June 2016
	Mr Stephen Lucy spoke to his final management letter explaining his rationale for Port of Napier having the same financial year end reporting date as the Council. There was some discussion around wisdom of pursuing this.
FIN27/17	Resolution That the Finance, Audit and Risk Sub-committee receives and notes the “Audit NZ Management Report for HBRC Annual Report for Year Ending 30 June 2016”. Bailey/Dick CARRIED

7.	2017 Sub-committee Work Programme
	Mr Paul Drury spoke to the proposed programme, adding an extra item for the May meeting –  a Finance Review.  A review of capital structure risks and opportunities and also an overview of business or activities in an ongoing audit review were suggested.
FIN28/17	Resolution That the Finance, Audit and Risk Sub-committee receives and notes the “2017 Sub-committee Work Programme” report and a review of HBRC’s capital structure including risk and opportunities be included with the work programme. Kirton/Dick CARRIED

9	Internal Audit Report
	This item was considered in open session not public excluded as per the agenda. Ms Sophie Hay and Ms Chantelle Matthew, spoke to the Fraud Prevention and Detection report from PWC.  They were very complimentary of the staff culture which meant that people would raise with managers if something untoward was suspected and people generally wanted to do the right thing, though more awareness of the actual policy would be good.  This was the first time that a specific fraud audit had been carried out and there has never been a need to hold a report register.
FIN29/17	Resolution The Finance, Audit and Risk Sub-committee recommends that the Corporate and Strategic Committee receives and implements the “Fraud Prevention Detection Review”. Bailey/Dick CARRIED

8.

Appointment of an Independent Member of the Finance, Audit & Risk Sub-Committee

FIN30/17

Resolution

That Council excludes the public from this section of the meeting, being Agenda Item 9 Appointment of an Independent Member of the Finance, Audit & Risk Sub-committee 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
Appointment of an Independent Member of the Finance, Audit & Risk Sub-committee	7(2)(a) 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 protect the privacy of natural persons.	The Council is specified, in the First Schedule to this Act, as a body to which the Act applies.

Bailey/Dick

CARRIED

The meeting went into public excluded session at 12.08pm and out of public excluded session at 12.22pm.

Closure:

There being no further business the Chairman declared the meeting closed at 12.22pm on Tuesday 31 January 2017.

Signed as a true and correct record.

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