Audit and Risk Management Committee - Terms of Reference Ngā Ārahina Mahinga

Chair	Mr Bruce Robertson
Deputy Chair	Councillor McLellan
Membership	Councillor Fields Councillor MacDonald Councillor Scandrett External Members: Mrs Hilary Walton Mr Michael Wilkes
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	Quarterly and as required
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

Audit and Risk Management Committee Forward Work Programme 2025

2025	Feb 10	Apr 4	Jun 17	Aug 15	Annual Report Oct 6	Dec
Update Reports	· Risk and Assurance · Cyber Security Report · Parakiore Update	· Risk and Assurance · Procurement	· Risk and Assurance	· Risk and Assurance · Procurement · Cyber Security		· Risk and Assurance · Procurement · Health, Safety & Wellbeing
Other Reports	· Insurance Update	·	· Kiwi Rail Update · Te Kaha Update			· Kiwi Rail Update
Annual Report	· Audit Management Report 2024	· External Reporting and Audit Programme for 2022/23 Update	· External Reporting and Audit Programme Update · Audit NZ Management Letter for current year interim audit	· Update on critical judgments, estimates & assumptions · Financial Statements Update - Valuations	· Financial Statements and Annual Report	· Audit NZ Management Letter from prior year’s audit
Annual Plan	· Draft Annual Plan		· Final Annual Plan

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Audit and Risk Management Committee

Open Minutes

Date: Friday 6 December 2024

Time: 9.32am

Venue: Council Chambers, Level 2, Civic Offices,
53 Hereford Street, Christchurch

Present

Chairperson

Members

Mr Bruce Robertson

Councillor Sam MacDonald

Councillor Tim Scandrett

Mrs Hilary Walton

Mr Michael Wilkes

Principal Advisor

Helen White

General Counsel / Head of Legal & Democratic Services

Tel: 941 8999

helen.white@ccc.govt.nz

Meeting Advisor

Luke Smeele

Democratic Services Advisor

Tel: 941 6374

luke.smeele@ccc.govt.nz

Website: www.ccc.govt.nz

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 Ngā Whakapāha

Part C

Committee Resolved ARCM/2024/00029

That the apologies from Councillor Fields and Councillor McLellan for absence be accepted.

Mr Robertson/Councillor Scandrett Carried

2. Declarations of Interest Ngā Whakapuaki Aronga

Part B

There were no declarations of interest recorded.

3. Confirmation of Previous Minutes Te Whakaāe o te hui o mua

Part C

Committee Resolved ARCM/2024/00030

That the minutes of the Audit and Risk Management Committee meeting held on Thursday, 17 October 2024 be confirmed.

Mr Robertson/Mr Wilkes Carried

4. Public Forum Te Huinga Whānui

Part B

There were no public forum presentations.

5. Deputations by Appointment Ngā Huinga Whakaritenga

Part B

There were no deputations by appointment.

6. Presentation of Petitions Ngā Pākikitanga

Part B

There was no presentation of petitions.

7. Procurement & Contracts FY25 Q1

Committee Resolved ARCM/2024/00031

Officer Recommendation accepted without change

Part C

That the Audit and Risk Management Committee:

1. Receive the information in the Procurement & Contracts FY25 Q1 Report.

Mr Robertson/Councillor Scandrett Carried

8. Resolution to Exclude the Public Te whakataunga kaupare hunga tūmatanui

Committee Resolved ARCM/2024/00032

Part C

That Chantelle Gernetzky of Audit New Zealand remain after the public have been excluded for Items 9 to 12 in the public excluded agenda as they have knowledge that is relevant to those Items and will assist the Council.

AND

That at 9.44am the resolution to exclude the public set out on pages 19 to 21 of the agenda be adopted.

Mr Robertson/Councillor MacDonald Carried

The public were re-admitted to the meeting at 11.16am.

Meeting concluded at 11.17am.

CONFIRMED THIS 10^th DAY OF FEBRUAY 2025

Bruce Robertson

Chairperson

7. Consideration of the Council's Draft Annual Plan 2025/26
Reference Te Tohutoro:	24/2209871
Responsible Officer(s) Te Pou Matua:	Peter Ryan, Head of Corporate Planning & Performance Peter.Ryan@ccc.govt.nz
Accountable ELT Member Pouwhakarae:	Bede Carran, General Manager Finance, Risk & Performance / Chief Financial Officer

1. Purpose and Origin of the Report Te Pūtake Pūrongo

1.1 Under their Terms of Reference, Audit and Risk Management Committee considers and reviews the Long Term and Annual Plans before adoption by the Council.

1.2 The purpose of this report is to enable the Audit and Risk Management Committee to review the process for preparation of the Draft Annual Plan 2025/26.

1.3 The Council is required to prepare and adopt a Draft Annual Plan for each financial year (s.95(1)) Local Government Act 2002). The purpose of the plan is to:

1.3.1 contain the proposed annual budget and funding impact statement for 2025/26;

1.3.2 identify any variation from the financial statements and funding impact statement in the Council’s Long Term Plan for 2025/26;

1.3.3 provide integrated decision-making and co-ordination of the Council’s resources; and

1.3.4 contribute to the accountability of the Council to the community.

1.4 The decisions in this report are not of high significance in relation to the Christchurch City Council’s Significance and Engagement Policy. This is largely as it reports on the process for development of the Annual Plan. It is important to distinguish between a review of the process for development of the Draft Annual Plan and the Draft Annual Plan itself. The Council’s Draft Annual Plan 2025/26 is of high significance as it contains information that varies to some degree from the information contained in the Long Term Plan 2024-34 (LTP) for that year. Individually, these changes may not be regarded as being significant or material, collectively they are considered significant and as such Council will consult on its Draft Annual Plan.

2. Officer Recommendations Ngā Tūtohu

That the Audit and Risk Management Committee:

1. Receives the information in the Consideration of the Council's Draft Annual Plan 2025/26 Report.

2. Notes that it has reviewed the general checklists and sign-offs by management, including Significant Forecasting Assumptions, in respect of the information that provides the basis for the Draft Annual Plan 2025/26.

3. Advises the Council that in the Committee’s opinion, an appropriate process has been followed in the preparation of the information that provides the basis for the Draft Annual Plan 2025/26.

4. Notes that the Draft Annual Plan 2025/26 will be released when it is published in the Council Agenda for its meeting commencing 12 February 2025.

3. Background/Context Te Horopaki

3.1 The purpose of this report is to enable the Audit and Risk Management Committee to review the process for preparation of the Draft Annual Plan 2025/26.

3.2 The LTP was approved by Council in June 2024. That approval followed a comprehensive process that reviewed operational expenditure, levels of service and the capital programme in a highly detailed way.

3.3 The purpose of the Draft Annual Plan 2025/26 is to identify any changes that need to be made to the LTP to keep it current. The draft Annual Plan has been developed from the information contained in the LTP for the 2025/26 financial year, as well as recent guidance from the Mayor and Councillors.

3.4 As the draft Annual Plan evolved between August 2024 and December 2024, council staff held a series of workshops with the Mayor and Councillors to obtain overall guidance on what to include in the Draft Annual Plan and to update specific details with current information. The workshops included open (public and live-streamed) and public-excluded briefings on the following dates: 27 August, 24 September, 1 October, 15 October, 22 October, 29 October, 5 November, 12 November, 19 November, and 26 November 2024.

3.5 This approach (public and live-streamed briefings) followed feedback from similar public briefings held as part of the previous LTP development, and provides Councillors an opportunity to discuss Annual Plan choices and priorities in a public, non-decision-making setting. In addition, it provided opportunities for Councillors to discuss their expectations for matters such as rates increases and level of debt. The draft Annual Plan contains no significant changes to levels of service.

3.6 During these workshops, discussions and questions were considered relating to many factors relevant to the Annual Plan, including:

3.6.1 The scope of the Annual Plan 2025/26.

3.6.2 Actions that were carried over from the LTP that were to be considered as part of the Annual Plan 2025/26.

3.6.3 The structure of the Capital Programme, particularly relating to the major infrastructure areas of Transport, Three Waters, and Parks.

3.6.4 New financial information that came to hand during the development process, including:

· Changes to revenue.

· Increased staff costs.

· Changes to insurance costs.

· An insurance settlement resulting from the Wastewater Treatment Plant fire.

· Changes to central government funding for infrastructure and cycleways.

· New central government levies to fund the changes resulting from repeal of the Three Waters legislation.

· Increased operational costs for several activities.

· Changes in the BERL inflation forecasts.

3.6.5 The likely quantum of rates rises for 2025/26.

3.6.6 Previous decisions by Council during the LTP and in previous years that had significantly increased rates for the 2025/26 year.

3.6.7 Potential financial methods (levers) for reducing rates increases.

3.6.8 The funding strategy for renewals.

3.6.9 Properties proposed for disposal.

3.7 During the development and workshop process, the Q+A Tool that was developed during the LTP was used to collate and respond to Councillor questions on the development of the Annual Plan. The tool is another mechanism that Councillors can utilise to contribute to the development of the Annual Plan.

3.7.1 Some 24 queries/questions were received from Councillors on the Annual Plan. All of these queries have been resolved/closed.

3.7.2 In comparison, during the period of the LTP development, several hundred questions were received from Councillors and responded to by staff.

3.8 A further Council meeting was held on 10 December 2024 to obtain clear direction on what to include in the Draft Annual Plan. At the 10 December meeting, the Council considered and made decisions on content to include in the Draft Annual Plan, including:

3.8.1 Rates increase of 8.93%, comprising 8.48% as per year 2 of the 2024-34 Long-Term Plan, a further 0.28% being Central Government imposed costs for water services regulators, and increased capacity to support amendments to the District Plan at a cost of $1.125 million p.a.

3.8.2 The use of $6 million of subvention receipts to reduce rates increases; and

3.8.3 The use of $6 million of forecast current year (2024/25) operating surplus to reduce rates increases ($3.35 million) and reduce debt ($2.65 million).

3.8.4 Acknowledgement of a breach of the balanced budget financial prudence benchmark for 2025/26 (and 2026/27, as indicated in the LTP).

3.8.5 Inclusion of additional rating of $5/10/15 million (plus inflation) over the next three years to enable the balanced budget prudence benchmark to be met by 2027/28. While the LTP showed the 2026/27 benchmark as not met, latest modelling shows that without this increase the next four years are at risk. The additional rates will be applied to funding asset renewals in lieu of borrowing to reduce interest and debt repayment costs. It should be noted that the benchmark is one of a number of regulatory measures that indicates financial prudence.

3.9 Council also decided that the following topics would be explored further/consulted upon as part of the Draft Annual Plan 2025/26 consultation process:

· Cathedral Targeted Rate - Given the situation with the Cathedral reconstruction, the draft Plan proposes pausing the collection of the remaining three years of the Cathedral targeted rate (a fixed charge of $6.52 per annum). The existing ringfenced funds held will continue to earn interest in the interim. As previously advised, the community should be consulted about this proposed change.

· Postponing the completion of the Wheels to Wings cycleway in favour of implementing selected portions of the project.

3.10 Having received this specific direction from Councillors, staff proceeded to build the report and attachments for the Draft Annual Plan 2025/26. The process for preparing this information has been the subject of a detailed series of management sign offs – including signoffs by members of the Executive Leadership Team - that demonstrate compliance with the Council’s statutory, financial, and legal obligations. The management process and significant assumptions checklists and sign-off schedules are attached to this report (refer Attachments A and B).

3.11 Current drafts of Council’s Annual Plan adoption documents are in Attachment C (to be under separate cover and public-excluded until the Draft Annual Plan 2025/26 agenda to Council is released).

3.12 Staff do not anticipate any significant or material changes between the release of the ARMC agenda and attachments for this meeting of 10 February and the release of the Council Annual Plan agenda for their meeting of 12 February 2025.

3.13 Council will meet to consider and adopt the Draft Annual Plan on 12 February 2025, to be followed by community consultation. The Consultation Document is the primary mechanism for this and will reflect the decisions made on 12 February.

3.14 Consultation will include the traditional submissions process as well as feedback generated on social media. There will also be the opportunity for members of the community to present directly to Councillors. More information on the consultation process and timings is included in the Council report.

4. Considerations Ngā Whai Whakaaro

4.1 The Council is required to prepare and adopt a Draft Annual Plan for each financial year (s.95(1)) Local Government Act 2002).

4.2 This report supports the Council’s Long Term Plan 2024-34:

4.2.1 Activity: Performance Management and Reporting

· Level of Service: 13.1.1 Implement the Long Term Plan and Annual Plan programme plan – ensure that critical path milestone due dates in programme plans are met.

4.3 This report is consistent with Council’s Plans and Policies.

4.4 This report affects all wards and Community Board areas.

4.5 There is no legal context, issue or implication relevant to this decision, other than that which has been considered as part of the regular Annual Plan management process and sign-offs.

4.6 Risks have been identified and managed through the general checklists and sign-offs by management, including significant forecasting assumptions.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	Significant Forecasting Assumptions for the Annual Plan 2025/26	25/179890	18
b ⇩	Management Process Sign-offs for the Annual Plan 2025/26	25/179892	39
c	Draft Annual Plan 2025/26 Report 12 February 2025 (this attachment is to be public-excluded until after the publication of the Council Draft Annual Plan 2025/26 agenda) (Under Separate Cover) - Confidential	24/2254465

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Authors

Tim Ward - Senior Corporate Planning & Performance Analyst

Boyd Kedzlie - Senior Corporate Planning & Performance Analyst

Approved By

Peter Ryan - Head of Corporate Planning & Performance

Bede Carran - General Manager Finance, Risk & Performance / Chief Financial Officer

ITEM NO.	GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED	SECTION	SUBCLAUSE AND REASON UNDER THE ACT	PUBLIC INTEREST CONSIDERATION	Potential Release Review Date and Conditions
7.	Consideration of the Council's Draft Annual Plan 2025/26
	Attachment c - Draft Annual Plan 2025/26 Report 12 February 2025 (this attachment is to be public-excluded until after the publication of the Council Draft Annual Plan 2025/26 agenda)	s7(2)(b)(ii)	Prejudice Commercial Position	The information in the current draft version of the Council's Annual Plan remains subject to change. Premature release of this information could prejudice those people and entities that may be affected by any changes made which would not be in the public interest.	12 February 2025 The Draft Annual Plan will be published in the Council Agenda for its meeting commencing 12 February 2025.
9.	Public Excluded Audit and Risk Management Committee Minutes - 6 December 2024			Refer to the previous public excluded reason in the agendas for these meetings.
10.	Cyber Security Report	s7(2)(c)(i)	Protection of Source of Information	Disclosure of our approach to cyber security will increase the risk of Council being a target, resulting in potential service disruptions and / or information breaches that will not be in the public interest.	30 March 2026 This report may only be released if the Chief Executive Officer has determined that there are no longer any reasons under the Local Government Official Information and Meeting Act to withhold the information.
11.	Insurance update	s7(2)(b)(ii), s7(2)(h), s7(2)(i)	Prejudice Commercial Position, Commercial Activities, Conduct Negotiations	Council's insurance strategy must remain confidential in order to protect our position when undertaking annual policy renewals. Release of this information would put Council at a disadvantage when seeking insurance cover at a reasonable cost And will not be in the public interest.	30 June 2027 This report may be released after the end of the 2026/27 cover year, however specific details around financials and terms must remain confidential.
12.	Parakiore	s7(2)(i)	Conduct Negotiations	The report contains specific information pertaining to ongoing negotiations between Council and external parties and putting the information in the public domain could compromise the negotiations and will not be in the public interest.	31 December 2026 With the approval of the Chief Executive at the conclusion of the defect liability period for Parakiore Recreation and Sports Centre
13.	Risk and Assurance Quarterly Update	s7(2)(a), s7(2)(e)	Protection of Privacy of Natural Persons, Prevention of Material Loss	Disclosure of the Council’s approach to remedial actions could result in service disruptions and or / the breach the privacy of natural persons which outweighs the public interest.	1 August 2025 Once the remedial actions have been implemented and appropriate redactions have been made which protect the privacy of individuals.
14.	Audit Management Report 2024	s7(2)(c)(i)	Protection of Source of Information	Disclosing the information in this report will unreasonably expose information on the Christchurch City Council’s internal systems and could compromise the supply of similar information and it is in the public interest that this information continues to be supplied.	10 February 2026 After the conclusion of the review of CCC internal systems.