A black text on a white background

AI-generated content may be incorrect.

Audit and Risk Management Committee

Agenda

Notice of Meeting Te Pānui o te Hui:

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

Date: Friday 4 April 2025

Time: 9.30 am

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

Membership Ngā Mema

Chairperson

Deputy Chairperson

Members

Mr Bruce Robertson

Councillor Jake McLellan

Councillor Tyrone Fields

Councillor Sam MacDonald

Councillor Tim Scandrett

Mrs Hilary Walton

Mr Michael Wilkes

28 March 2025

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

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 13	Aug 15	Annual Report Oct 7	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	· Office of the OAG: Key observations	· Kiwi Rail Update · Te Kaha Update			· Kiwi Rail Update
Annual Report	· Audit Management Report 2024	· External Reporting and Audit Programme for 2024/25 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

A black text on a white background

Description automatically generated

Audit and Risk Management Committee

Open Minutes

Date: Monday 10 February 2025

Time: 9.33am

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

Present

Chairperson

Deputy Chairperson

Members

Mr Bruce Robertson

Councillor Jake McLellan

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

Democracy 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/2025/00001

That the apology from Councillor MacDonald and Councillor Fields 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/2025/00002

That the minutes of the Audit and Risk Management Committee meeting held on Friday, 6 December 2024 be confirmed.

Mr Robertson/Councillor McLellan 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. Consideration of the Council's Draft Annual Plan 2025/26
	Committee Comment 1. The Committee noted that they must advise Council that in their opinion an appropriate process has been followed in the preparation of the information that provides the basis for the Draft Annual Plan 2025/26.
	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.
	Committee Resolved ARCM/2025/00003 Part C 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. 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. Mr Robertson/Mr Wilkes Carried

Committee Decided ARCM/2025/00004

Part A

That the Audit and Risk Management Committee recommends that the Council:

1. Be advised 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.

Mr Robertson/Mr Wilkes Carried

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

Committee Resolved ARCM/2025/00005

Part C

That Chantelle Gernetzky of Audit New Zealand remain after the public have been excluded for Items 8 to 14 of the public excluded agenda as they have knowledge that is relevant to those items and will assist the Council.

AND

That at 9.58am the resolution to exclude the public set out on pages 53 to 56 of the agenda be adopted.

Mr Robertson/Councillor Scandrett Carried

The public were re-admitted to the meeting at 11.44am.

Meeting concluded at 11.45am.

CONFIRMED THIS 4^th DAY OF ARPIL 2025

Bruce Robertson

Chairperson

7. Office of the Auditor-General Update: Key Observations and Considerations for Local Government
Reference Te Tohutoro:	25/609885
Responsible Officer(s) Te Pou Matua:	Chris Walthew – Group Financial Controller Stephanie Macdonald-Rose – Sector Manager, Local Government: Office of the Auditor General (Presenter)
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 The purpose of this report is to provide an update to the Committee from the Office of the Auditor General (OAG).

1.2 The report originates from Council receiving a summary update from the OAG.

1.3 This report should be read in conjunction with Attachment A – Report from OAG on LTP findings.

2. Officer Recommendations Ngā Tūtohu

That the Audit and Risk Management Committee:

1. Receives the information in the Office of the Auditor-General Update: Key Observations and Considerations for Local Government Report.

3. Background/Context Te Horopaki

3.1 This report provides an update from the OAG to the Committee. It includes observations from the OAG’s audits of councils’ 2024-34 long-term plans, the impact of water reform on councils’ long-term plans, and recent publications relevant to local government.

3.2 The report highlights that the 2024-34 long-term plans show that councils face significant financial and infrastructure challenges that they will need to carefully manage. These challenges include rising operating costs, the need to increase capital expenditure, and the pressure this puts on councils to increase rates and debt. The report also emphasises the importance of a strong strategic and agile approach to long-term planning and the need for councils to actively use their long-term plans to drive delivery and performance and provide accountability to their communities.

4. Considerations Ngā Whai Whakaaro

The Committee should note the following considerations:

4.1 Financial and Infrastructure Challenges: Councils are facing significant financial and infrastructure challenges, which impact both debt and rates. These factors create risks to councils’ long-term financial sustainability and their ability to respond to unforeseen events.

4.2 Delivery Risks: There are significant risks that councils will not be able to deliver all their planned investment, given the context of a tight labour market in the construction industry and associated cost inflation.

4.3 Uncertainties in Long-Term Plans: A significant number of audit reports included emphasis of matter paragraphs or qualified audit opinions, drawing attention to uncertainties in the respective councils’ long-term plans. These uncertainties include assumptions about central government funding, the delivery of capital programs, forecast cost-savings, forecasts for renewing three waters infrastructure, and risks associated with plans to defer three waters asset renewals.

4.4 Impact of Water Reform: The impact of water reform on councils’ long-term plans depends on which water services delivery model a council selects and whether a council chooses to transfer its water assets. Councils that have already adopted their long-term plans might need to amend these plans if the chosen model in the Water Services Delivery Plan is significantly different from what was in the adopted long-term plan.

4.5 Integrity in Public Organisations: The OAG has released the second edition of its integrity framework, which includes guidance and actions to consider for implementing integrity in practice. The framework is supported by a guide to help organisations think about how to effectively monitor organisational integrity.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	Report from OAG on LTP findings	25/609887	17

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

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Author

Chris Walthew - Group Financial Controller

Approved By

Russell Holden - Head of Finance

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

8. Procurement & Contracts FY25 Q2
Reference Te Tohutoro:	25/441974
Responsible Officer(s) Te Pou Matua:
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 To provide the Committee with assurance that Council’s procurement is being conducted in accordance with its obligations as a Local Authority pursuant to the Local Government Act 2002 (LGA) and the Controller and Auditor-General’s Procurement Guidance for Public Entities (June 2008) (part 2, paragraph 2.3) (OAG Guidelines).

2. Officer Recommendations Ngā Tūtohu

That the Audit and Risk Management Committee:

1. Receives the information in the Procurement & Contracts FY25 Q2 Report.

3. Background/Context Te Horopaki

3.1 The LGA requires Council to:

· conduct its business in an open, transparent, and democratically accountable manner" (LGA: s14(1)(a)(i));

· give effect to its identified priorities and desired outcomes in an efficient and effective manner" (LGA: s14(1)(a)(ii));

· undertake any commercial transactions in accordance with sound business practices" (LGA: s14(1)(f)); and

· ensure prudent stewardship and the efficient and effective use of its resources (LGA: s14(1)(g)).

3.2 The OAG Guidelines provide guidance on good practice that public entities should use to procure goods and services. The guidelines also set out principles that Council should apply which include:

· Value for money: Public entities should use resources effectively, economically, and without waste, with due regard for the total costs and benefits of an arrangement, and its contribution to the outcomes the entity is trying to achieve.

· Openness: Public entities should be transparent in their administration of funds, both to support accountability and to promote clarity and shared understanding of respective roles and obligations between entities.

· Fairness: Public entities have a general public law obligation to act fairly and reasonably. Public entities must be, and must be seen to be, impartial in their decision-making.

3.3 The Principles of the Government Procurement Rules – 4th Edition 2019 apply to all government agencies and provide government’s overarching values. The LGA applies as a direct obligation, on Council. The OAG Guidelines apply as best practice i.e. Council must have a sound basis for not following them.

3.4 The procurement framework Council formally adopted incorporates the LGA obligations along with best practice public sector procurement. Applying the rules and framework ensures that Council fulfils its LGA obligations and best practice is followed.

3.5 The Principles are outlined as follows (these are incorporated into our rules):

3.5.1 Plan and manage for great results

3.5.2 Be fair to all suppliers

3.5.3 Get the right supplier

3.5.4 Get the best deal for everyone

3.5.5 Play by the rules

3.6 Council's 2018 Procurement Policy also contains the following additional and relevant strategic procurement principles:

3.6.1 Open and effective competition

3.6.2 Ethical behaviour and fair dealing.

3.7 The Procurement and Contracts Unit has levels of service relating to managing risk associated with our obligations regarding procurement practice. The Quarterly Audit and Risk Management Committee Report describes how these levels of service are being met to provide an understanding of the Council’s exposure to procurement related risk. The report also provides an understanding of the scale of activity.

4. Long Term Plan Activity Reports

4.1 This report presents information in two broad categories. First is reporting against levels of service for Procurement and Contracts. The second is to provide an update on other Council procurement compliance information. Both are seen as providing information for the Committee to assess compliance with Council’s framework and rules.

4.2 When reporting against the levels of service for Procurement and Contracts this information is presented with two broad themes. First, is the appropriate use of public funds to evidence value of money, and the second is compliance with Council’s procurement policies and rules.

Appropriate use of public funds

4.3 LTP24: 13.1.21.1 Procurement and Contract Management is managed as a shared service delivery as follows:

· Performance. Opex: 5% Cost Avoidance and/or 2% Cost Reduction.

· Capex: 10% Cost Avoidance and/or 5% Cost Reduction.

4.4 31 financial benefits were captured from the procurement activities that have a financial impact in FY25 Q2. Procurement activities that have a financial impact include sourcing projects, renewals, price adjustments and variations with a financial impact.

4.4.1 Below is a summary of the captured financial benefits for FY25 Q2.

· CAPEX cost reduction $14.80m (24%)

· CAPEX cost avoidance $529.40k (10%)

· OPEX cost reduction $770.16k (19.25%)

· OPEX cost avoidance $61.29k (5.63%)

4.4.2 The savings are calculated as per the below:

· A cost reduction is when the final agreed amount is lower than the estimate.

· A cost avoidance is when the final agreed amount is lower than the offered amount.

4.5 LTP24: 13.1.21.2 Procurement and Contract Management is managed as a shared service delivery as follows:

· 90% of sourcing activity and contract management activity to achieve sustainable outcomes annually.

4.5.2 95 sustainable benefits reported through 120 procurement activities completed in FY25 Q2 for a percentage return of 79%.

Compliance with Council’s procurement framework and rules

4.6 LTP24: 13.1.22.1 Procurement and Contract Management is managed as a shared service delivery as follows:

4.6.1 95% of all procurement activity more than $100k (excl. GST) put to market through Proposal (RFP) or a Request for Tender (RFT).

4.6.2 100% of all the procurement activity over $100k in FY25 Q2 followed the Council Procurement Framework and was put to market through an RFP or an RFT. There were 33 contracts awarded with an expected value of over $100k in FY25 Q2.

4.7 LTP24: 13.1.22.3 Procurement and Contract Management is managed as a shared service delivery – Conformance as follows:

· 100% of Procurement & Contract recommended Departures have valid procurement plans/strategies and risk assessment.

4.7.2 There were 16 departures approved in FY 2025 Q2 with a total value of $6.33m. 100% of all Departures approved had a valid procurement plan and a risk assessment. There is 100% compliance on this activity.

4.8 The rationale for not going to market is justified based on the Office of the Auditor General Procurement Guidance for Public Entities.

5. Other Council Procurement Compliance Information

5.1 The measures below are reported to provide indicators of good and improving practice within Council in respect of its transactions.

Off-Contract Spend

5.2 Off-Contract spend is at 7.90% trending downward from a high of 15.12% 18 months ago. Staff expect to see a continued management of off-contract spend, as the Procurement and Contract Unit together with Finance are currently carrying out multiple in-person trainings across all Council Units.

Purchase Orders raised after Invoice

5.3 Purchase Orders raised after Invoice is at 3.54% trending downward from a high of 22.57% 18 months ago. Staff expect to see a continued management of Purchase Orders raised after Invoice due to the SAP Improvement Programme.

5.4 Best practice Procurement at Council

5.4.1 Risks

· Procurement & Contracts, Digital and Finance are continuing to work on impacts due to the removal of custom contract management fields in SAP. This impacts on staff’s ability to plan sourcing activity for expiring contracts.

5.4.2 Mitigation

· Currently the old and new SAP systems are being used in parallel to get the necessary contract management information.

Commercial and contract mechanisms

5.5 Refer attachment A in public excluded.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a	Commercial and Contract Mechanisms (Under Separate Cover) - Confidential	25/612629

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

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Author	Luke Stevens - Head of Procurement & Contracts
Approved By	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
8.	Procurement & Contracts FY25 Q2
	Attachment a - Commercial and Contract Mechanisms	s7(2)(h)	Commercial Activities	The requirement to protect commercially sensitive information on the Council's procurement and contract tendering process outweighs the public interest in this information.	30 June 2025 Following the next subsequent ARMC meeting
10.	Public Excluded Audit and Risk Management Committee Minutes - 10 February 2025			Refer to the previous public excluded reason in the agendas for these meetings.
11.	External Reporting and Audit Programme for 2024/25	s7(2)(a), s7(2)(c)(i)	Protection of Privacy of Natural Persons, Protection of Source of Information	The content of this report contains sensitive information relating to future audit fees. Disclosing the information in this report could compromise the supply of further information and it is in the public interest that this information continues to be supplied.	28 November 2025 The publication of the Annual Report on the 28 November 2025. The information will be released in full or in part as appropriate upon review by the Head of Finance to confirm when it is no longer deemed to require public exclusion.
12.	Risk and Assurance Quarterly Report	s7(2)(e)	Prevention of Material Loss	Disclosure of the Council's organisational weakness and its approach to remedial actions could result in service disruptions which outweighs the public interest.	3 November 2025 Upon review and approval from Head of Risk and Assurance and GM Finance, Risk and Performance / CFO