Audit and Risk Management Committee

Agenda

 

 

Notice of Meeting:

An ordinary meeting of the Audit and Risk Management Committee will be held on:

 

Date:                                     Tuesday 3 October 2017

Time:                                    7:45am

Venue:                                 Committee Room 1, Level 2, Civic Offices,
53 Hereford Street, Christchurch

 

 

Membership

Chair

Deputy Chair

Members

Ms Sue Sheldon

Councillor Raf Manji

Councillor Vicki Buck

Councillor Phil Clearwater

Councillor Pauline Cotter

Mayor Lianne Dalziel

Councillor David East

Deputy Mayor Andrew Turner

Mr Mark Russell

Mr Michael Rondel

 

 

3 October 2017

 

 

 

Principal Advisor

Carol Bellette

General Manager Finance and Commercial

 

Margaret Henderson

Committee Advisor

941 8185

margaret.henderson@ccc.govt.nz

www.ccc.govt.nz

Note:  The reports contained within this agenda are for consideration and should not be construed as Council policy unless and until adopted.  If you require further information relating to any reports, please contact the person named on the report.
To view copies of Agendas and Minutes, visit:
https://www.ccc.govt.nz/the-council/meetings-agendas-and-minutes/

 


Audit and Risk Management Committee

03 October 2017

 

Audit and Risk Management Committee - Terms of Reference

 

 

 

 

Chair

Sue Sheldon (Independent)

Deputy Chair

Councillor Manji as the Chair of the Finance and Performance Committee

Membership

Mayor Dalziel and Deputy Mayor Turner

The Chair of the following committees:

§   Innovation and Sustainable Development Committee

§   Social and Community Development Committee

§   Infrastructure, Transport and Environment Committee

§   Regulatory Performance Committee

2 External Members

Quorum

Half of the members if the number of members (including vacancies) is even, or a majority of members if the number of members (including vacancies) is odd.

Meeting Cycle

To be separately considered

Reports To

Council

 

 

Purpose

To assist the Council to discharge its responsibility to exercise due care, diligence and skill in relation to the oversight of:

§    the robustness of the internal control framework;

§    the integrity and appropriateness of external reporting, and accountability arrangements within the organisation for these functions;

§    the robustness of risk management systems, process and practices;

§    internal and external audit;

§    accounting policy and practice;

§    compliance with applicable laws, regulations, standards and best practice guidelines for public entities; and

§    the establishment and maintenance of controls to safeguard the Council’s financial and non-financial assets.

The foundations on which this Committee operates, and as reflected in this Terms of Reference, includes: independence; clarity of purpose; competence; open and effective relationships and no surprises approach.

 

Procedure

In order to give effect to its advice the Committee should make recommendations to the Council and to Management.

The Committee should meet the internal and the external auditors without Management present as a standing agenda item at each meeting where external reporting is approved, and at other meetings if requested by any of the parties.

The external auditors, the internal audit manager and the co-sourced internal audit firm should meet outside of formal meetings as appropriate with the Committee Chair.

The Committee Chair will meet with relevant members of Management before each Committee meeting and at other times as required.

 

Responsibilities

Internal Control Framework

§    Consider the adequacy and effectiveness of internal controls and the internal control framework including overseeing privacy and cyber security.

§    Enquire as to the steps management has taken to embed a culture that is committed to probity and ethical behaviour.

§    Review the processes or systems in place to capture and effectively investigate fraud or material litigation should it be required.

§    Seek confirmation annually and as necessary from internal and external auditors, attending Councillors, and management, regarding the completeness, quality and appropriateness of financial and operational information that is provided to the Council.

Risk Management

§    Review and consider Management’s risk management framework in line with Council’s risk appetite, which includes policies and procedures to effectively identify, treat and monitor significant risks, and regular reporting to the Council.

§    Assist the Council to determine its appetite for risk.

§    Review the principal risks that are determined by Council and Management, and consider whether appropriate action is being taken by management to treat Council’s significant risks. Assess the effectiveness of, and monitor compliance with, the risk management framework.

§    Consider emerging significant risks and report these to Council where appropriate.

Internal Audit

§    Review and approve the annual internal audit plan, such plan to be based on the Council’s risk framework. Monitor performance against the plan at each regular quarterly meeting.

§    Monitor all internal audit reports and the adequacy of management’s response to internal audit recommendations.

§    Review six monthly fraud reporting and confirm fraud issues are disclosed to the external auditor.

§    Provide a functional reporting line for internal audit and ensure objectivity of internal audit.

§    Oversee and monitor the performance and independence of internal auditors, both internal and co-sourced. Review the range of services provided by the co-sourced partner and make recommendations to Council regarding the conduct of the internal audit function.

§    Monitor compliance with the delegations policy.

 

External Reporting and Accountability

§    Consider the appropriateness of the Council’s existing accounting policies and practices and approve any changes as appropriate.

§    Contribute to improve the quality, credibility and objectivity of the accounting processes, including financial reporting.

§    Consider and review the draft annual financial statements and any other financial reports that are to be publicly released, make recommendations to Management.

§    Consider the underlying quality of the external financial reporting, changes in accounting policy and practice, any significant accounting estimates and judgements, accounting implications of new and significant transactions, management practices and any significant disagreements between Management and the external auditors, the propriety of any related party transactions and compliance with applicable New Zealand and international accounting standards and legislative requirements.

§    Consider whether the external reporting is consistent with Committee members’ information and knowledge and whether it is adequate for stakeholder needs.

§    Recommend to Council the adoption of the Financial Statements and Reports and the Statement of Service Performance and the signing of the Letter of Representation to the Auditors by the Mayor and the Chief Executive.

§    Enquire of external auditors for any information that affects the quality and clarity of the Council’s financial statements, and assess whether appropriate action has been taken by management.

§    Request visibility of  appropriate management signoff on the financial reporting and on the adequacy of the systems of internal control; including certification from the Chief Executive, the Chief Financial Officer and the General Manager Corporate Services that risk management and internal control systems are operating effectively;

§    Consider and review the Long Term and Annual Plans before adoption by the Council.  Apply similar levels of enquiry, consideration, review and management sign off as are required above for external financial reporting.

§    Review and consider the Summary Financial Statements for consistency with the Annual Report.

External Audit

§    Annually review the independence and confirm the terms of the audit engagement with the external auditor appointed by the Office of the Auditor General. Including the adequacy of the nature and scope of the audit, and the timetable and fees.

§    Review all external audit reporting, discuss with the auditors and review action to be taken by management on significant issues and recommendations and report to Council as appropriate.

§    The external audit reporting should describe: Council’s internal control procedures relating to external financial reporting, findings from the most recent external audit and any steps taken to deal with such findings, all relationships between the Council and the external auditor, Critical accounting policies used by Council, alternative treatments of financial information within Generally Accepted Accounting Practice that have been discussed with Management, the ramifications of these treatments and the treatment preferred by the external auditor.

§    Ensure that the lead audit engagement and concurring audit directors are rotated in accordance with best practice and NZ Auditing Standards.

Compliance with Legislation, Standards and Best Practice Guidelines

§    Review the effectiveness of the system for monitoring the Council’s compliance with laws (including governance legislation, regulations and associated government policies), with Council’s own standards, and Best Practice Guidelines.

Appointment of Independent Members

§    Identify skills required for Independent Members of the Audit and Risk Management Committee.  Appointment panels will include the Mayor or Deputy Mayor, Chair of Finance & Performance Committee and Chair of Audit & Risk Management Committee. Council approval is required for all Independent Member appointments.

§    The term of the Independent members should be for three years.  (It is recommended that the term for independent members begins on 1 April following the Triennial elections and ends 31 March three years later.  Note the term being from April to March provides continuity for the committee over the initial months of a new Council.)

§    Independent members are eligible for re-appointment to a maximum of two terms. By exception the Council may approve a third term to ensure continuity of knowledge.

 

Long Term Plan Activities

Consider and review the Long Term and Annual Plans before adoption by the Council.  Apply similar levels of enquiry, consideration, review and management sign off as are required above for external financial reporting.

 


Audit and Risk Management Committee

03 October 2017

 

Part A        Matters Requiring a Council Decision

Part B         Reports for Information

Part C         Decisions Under Delegation

 

 

TABLE OF CONTENTS

 

C       1.       Apologies.......................................................................................................................... 7

B       2.       Declarations of Interest................................................................................................... 7

C       3.       Confirmation of Previous Minutes................................................................................. 7

B       4.       Public Forum.................................................................................................................... 7

B       5.       Deputations by Appointment........................................................................................ 7

B       6.       Presentation of Petitions................................................................................................ 7 

C       7.       Resolution to Exclude the Public................................................................................. 11  

 

 


Audit and Risk Management Committee

03 October 2017

 

 

1.   Apologies

At the close of the agenda no apologies had been received.

2.   Declarations of Interest

Members are reminded of the need to be vigilant and to stand aside from decision making when a conflict arises between their role as an elected representative and any private or other external interest they might have.

3.   Confirmation of Previous Minutes

That the minutes of the Audit and Risk Management Committee meeting held on Wednesday, 23 August 2017 be confirmed (refer page 8).

4.   Public Forum

There will be no public forum at this meeting

5.   Deputations by Appointment

There were no deputations by appointment at the time the agenda was prepared. 

6.   Petitions

There were no petitions received at the time the agenda was prepared.


Audit and Risk Management Committee

03 October 2017

 

 

 

Audit and Risk Management Committee

Open Minutes

 

 

Date:                                     Wednesday 23 August 2017

Time:                                    8.30am

Venue:                                 Committee Room 1, Level 2, Civic Offices,
53 Hereford Street, Christchurch

 

 

Present

Chair

Deputy Chair

Members

Ms Sue Sheldon

Councillor Raf Manji

Councillor Vicki Buck

Mayor Lianne Dalziel

Deputy Mayor Andrew Turner

Councillor Phil Clearwater

Councillor Pauline Cotter

Mr Michael Rondel

 

 

18 August 2017

 

 

 

Principal Advisor

Carol Bellette

General Manager Finance and Commercial

 

Margaret Henderson

Committee Advisor

941 8185

margaret.henderson@ccc.govt.nz

www.ccc.govt.nz

To view copies of Agendas and Minutes, visit:
www.ccc.govt.nz/Council/meetingminutes/agendas/index

 


Part A        Matters Requiring a Council Decision

Part B         Reports for Information

Part C         Decisions Under Delegation

 

 

 

The agenda was dealt with in the following order.

1.   Apologies

Part C

 

 

Committee Resolved ARCM/2017/00005

That the apologies for absence from Councillor East and Mr Russell, be accepted.

Deputy Mayor/Mayor                                                                                                                                               Carried

 

2.   Declarations of Interest

Part B

There were no declarations of interest recorded.

 

3.   Confirmation of Previous Minutes

Part C

Committee Resolved ARCM/2017/00006

That the minutes of the Audit and Risk Management Committee meeting held on Friday, 12 May 2017, be confirmed.

Councillor Cotter/Mr Rondel                                                                                                                                  Carried

 

4.   Deputations by Appointment

Part B

There were no deputations by appointment.

5.   Presentation of Petitions

Part B

There was no presentation of petitions.

 

6.   Audit New Zealand - Audit Proposal Letter

 

Staff Recommendations

That the Audit and Risk Management Committee recommend to Council that it:

1.         Approve the content of the draft audit proposal letter received from Audit New Zealand.

2.         Approve the Mayor signing the final audit proposal letter once received from Audit New Zealand.

 

Committee Decided ARCM/2017/00007

The staff recommendation was adopted without change.

Part A

That the Council:

1.         Approve the content of the draft audit proposal letter received from Audit New Zealand.

2.         Approve the Mayor signing the final audit proposal letter once received from Audit New Zealand.

Councillor Cotter/Deputy Mayor                                                                                                                          Carried

 

7     Resolution to Exclude the Public

 

Committee Resolved ARCM/2017/00008

Part C

That David Seath of Deloitte and Andy Burns and Andrew Timlin of Audit New Zealand, remain after the public have been excluded for Item 10 and items 13 and 14 respectively of the public excluded agenda as they have knowledge that is relevant to those items and will assist the Committee.

AND

That at 8.42am the resolution to exclude the public set out on pages 22 to 24 of the agenda be adopted.

Chair Sheldon/Councillor Cotter                                                                                                                              Carried

 

The public were re-admitted to the meeting at 12.11pm.

   

Meeting concluded at 12.11pm.

 

CONFIRMED THIS 3RD DAY OF OCTOBER 2017

Sue Sheldon

Chair

 

 


Audit and Risk Management Committee

03 October 2017

 

 

7.    Resolution to Exclude the Public

Section 48, Local Government Official Information and Meetings Act 1987.

 

I move that the public be excluded from the following parts of the proceedings of this meeting, namely items listed overleaf.

 

Reason for passing this resolution: good reason to withhold exists under section 7.

Specific grounds under section 48(1) for the passing of this resolution: Section 48(1)(a)

 

Note

 

Section 48(4) of the Local Government Official Information and Meetings Act 1987 provides as follows:

 

“(4)     Every resolution to exclude the public shall be put at a time when the meeting is open to the public, and the text of that resolution (or copies thereof):

 

             (a)       Shall be available to any member of the public who is present; and

             (b)       Shall form part of the minutes of the local authority.”

 

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by Section 6 or Section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public are as follows:


Audit and Risk Management Committee

03 October 2017

 

 

 

ITEM NO.

GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED

SECTION

SUBCLAUSE AND REASON UNDER THE ACT

PLAIN ENGLISH REASON

WHEN REPORTS CAN BE RELEASED

8

Public Excluded Audit and Risk Management Committee Minutes - 23 August 2017

 

 

Refer to the previous public excluded reason in the agendas for these meetings.

 

9

Annual Report - Update on key assumptions and accounting decisions from meeting of 23 August 2017

s7(2)(b)(ii)

Prejudice Commercial Position

The annual report is still draft and subject to final audit sign off

The annual report will become public after the Audit and Risk Management Committee agree to recommend that Council adopt the annual report

10

Report from Audit New Zealand

s7(2)(b)(ii)

Prejudice Commercial Position

This report provides additional information supporting the Auditors' opinion which will be issued when the annual report is adopted.

With the approval of Audit New Zealand

11

2017 Annual Report

s7(2)(b)(ii)

Prejudice Commercial Position

To allow the Committee to consider the issues contained in the Annual Report prior to it being passed to Council for adoption

Following approval by the Audit and Risk Management Committee that it recommend that the Annual Report be adopted by Council