Agenda of Risk and Assurance Committee - Wednesday, 8 November 2023

Notice is hereby given that an ordinary meeting of the Horowhenua District Risk and Assurance Committee will be held on:

Date:

Time:

Meeting Room:

Venue:

Wednesday 8 November 2023

1:00pm

Council Chambers
126-148 Oxford St
Levin

Risk and Assurance Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Cr Sam Jennings
Deputy Chairperson	Cr Paul Olsen
Members	Cr Alan Young
	Cr Clint Grimstone
	Cr Jonathan Procter
	Cr Piri-Hira Tukapua
	Mayor Bernie Wanden
	Jenny Livschitz	Independent Member
	Sarah Everton	Independent Member

Contact Telephone: 06 366 0999

Postal Address: Private Bag 4002, Levin 5540

Email: enquiries@horowhenua.govt.nz

Website: www.horowhenua.govt.nz

Full Agendas are available on Council’s website

www.horowhenua.govt.nz

Full Agendas are also available to be collected from:

Horowhenua District Council Service Centre, 126 Oxford Street, Levin

Te Awahou Nieuwe Stroom, Foxton,

Shannon Service Centre/Library, Plimmer Terrace, Shannon

and Te Takeretanga o Kura-hau-pō, Bath Street, Levin

Karakia

Whakataka te hau ki te uru

Whakataka te hau ki te tonga

Kia mākinakina ki uta

Kia mātaratara ki tai

E hī ake ana te atakura

He tio, he huka, he hau hū

Tīhei mauri ora!

Cease the winds from the west

Cease the winds from the south

Let the breeze blow over the land

Let the breeze blow over the ocean

Let the red-tipped dawn come with a sharpened air.

A touch of frost, a promise of a glorious day.

1 Apologies

2 Public Participation

Notification of a request to speak is required by 12 noon on the day before the meeting by phoning 06 366 0999 or emailing public.participation@horowhenua.govt.nz.

3 Late Items

To consider, and if thought fit, to pass a resolution to permit the Council to consider any further items which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded.

Such resolution is required to be made pursuant to Section 46A(7) of the Local Government Official Information and Meetings Act 1987, and the Chairperson must advise:

(i) The reason why the item was not on the Agenda, and

(ii) The reason why the discussion of this item cannot be delayed until a subsequent meeting.

4 Declarations of Interest

Members are reminded of their obligation to declare any conflicts of interest they might have in respect of the items on this Agenda.

5 Confirmation of Minutes

5.1 Meeting minutes Risk and Assurance Committee, 16 August 2023

5.2 Meeting minutes In Committee Meeting of Risk and Assurance Committee, 16 August 2023

Recommendations

That the meeting minutes of Risk and Assurance Committee, 16 August 2023 be accepted as a true and correct record.

That the meeting minutes In Committee Meeting of Risk and Assurance Committee, 16 August 2023 be accepted as a true and correct record.

Risk and Assurance Committee

08 November 2023

6.1 Audit Management Letter for 2022/23 Annual Report

File No.: 23/821

1. Purpose

1.1 This report is to present to the Risk and Assurance Committee the Audit management letter for the 2022/23 year, and to update the committee on the uncorrected misstatements.

2. Recommendation

2.1 That Report 23/821 Audit Management Letter for 2022/23 Annual Report be received.

2.2 That this matter or decision be recognised as not significant in terms of s76 of the Local Government Act 2002.

2.3 That the Risk and Assurance Committee notes the recommendation from Audit NZ in the management letter

3. Background/Previous Council Decisions

3.1 On 25 October 2023, Council adopted the draft 2022/23 Annual Report. At that time, the designed version of the summary and full Annual Report was still being finalised.

3.2 The audit management letter was not presented to the Council at the time due to audit having just completed their audit up to the date of the adoption meeting. Audit issued an unqualified opinion on the audited information, excluding the statement of service provision and this was presented to the Council on 25 October 2023 by Audit New Zealand.

3.3 Uncorrected misstatements were presented by Clint Ramoo – Audit Director of Audit NZ on 25 October 2023. These misstatements were considered immaterial and therefore not adjusted for as they would have delayed the adoption of the Annual Report. They are:

3.4 Explanation for uncorrected misstatements are shown below. These misstatements are considered immaterial and therefore not adjusted.

1) This is a projected error that relates to unreversed purchase orders for which the supplier/creditor has already been paid.

2) Relates to the inclusion of staff related costs in the cost of consent reviews in Councils records and not part of the revaluation report.

3) This relates to the misclassification of receivables.

3.5 The management letter will not be available for the agenda but will be tabled and presented at the meeting.

4. Issues for Consideration

4.1 The audit management letter will be tabled and presented at the meeting by our Audit Director – Clint Ramoo from Audit New Zealand.

4.2 Any new items raised in the audit management letter will be added to the monitoring report and presented to the Committee regularly.

Attachments

There are no attachments for this report.

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their benefits and costs, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

Signatories

Author(s)

Meagan Binnie

Financial Accountant

Pei Shan Gan

Financial Controller

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

08 November 2023

6.2 Treasury Update

File No.: 23/607

1. Purpose

1.1 To update Elected members on the following Treasury matters:

1. Bancorp Treasury Reporting Dashboard for the September 2023 quarter.

2. Local Government Funding Agency (LGFA) Annual Meeting (AM) on 23 November 2023.

3. Civic Financial Services Ltd Half-Yearly Accounts to 30 June 2023.

1.2 To seek approval from Council to nominate Council Officers to vote on behalf of Council officers at the Annual Meeting of the Local Government Funding Agency.

2. Recommendation

2.1 That Report 23/607 Treasury Update be received.

2.2 That this matter or decision be recognised as not significant in terms of s76 of the Local Government Act 2002.

2.3 That the Committee receives the Bancorp Treasury Reporting Dashboard for the September 2023 quarter.

2.4 That the Committee notes the Local Government Funding Agency Annual Meeting will be held on 23 November 2023 in Wellington.

2.5 That the Committee notes the recommendations of the LGFA Shareholders Council, and nominates Pei Shan Gan or Daniel Minty to vote on behalf of Council at the annual meeting.

2.6 That the Committee receives the Civic Financial Services Ltd Half-Yearly Accounts to 30 June 2023.

2.7 That the Committee notes the winding up status of the Riskpool and potential future liability resulting from the liability claim.

3. Background and Issues for Consideration

1. Bancorp Treasury Reporting Dashboard for the September 2023 quarter

This quarterly Treasury Reporting Dashboard is produced by Council’s treasury advisors, Bancorp Treasury Services Limited, for the benefit of Executive Leadership Team, Council and the Risk and Assurance Committee.

Council had $173m of current external debt as at 30 September 2023, comprised of Commercial Paper (CP), Fixed Rates Bonds (FRBs) and Floating Rates Notes (FRNs), all sourced from the Local Government Funding Agency (LGFA). Current % of debt fixed is 54% ($94m) and current % of debt floating is 46% ($79m).

It is important to note that $15m of this debt is held on term deposit to repay debt that is maturing this financial year.

Council’s net debt to total operating revenue as at 30 September 2023 is 204%. This is depicted in the following graph:

Officers are closely monitoring the increasing net debt to operating income ratio and will be having the discussion with Council in the very near future with regards to Council’s financial strategy as part of the Long term planning exercise.

The average cost of funds as at 30 September 2023 was 4.56%, which was up from 4.49% in June 2023. Core inflation continues to be high, tight labour markets, and wage inflation continue to impact the developed economies, which has seen several central banks continue to hike interest rates.

2. Local Government Funding Agency (LGFA) Annual Meeting 2023

The LGFA is a Council-controlled organisation (CCO), owned by the Government and 30 local authorities. Horowhenua District Council has an ownership stake of 0.4% as at 30 June 2023.

The LGFA was established to provide councils with improved access to cost-effective long-term debt. It is a registered financial institution regulated by the Reserve Bank. Total loans made to local government are approximately $16.31 billion (June 2023). Together, Auckland, Wellington and Christchurch City Councils have approximately 40% of the LGFA’s issued debt, with the remainder shared between the other councils.

The LGFA Annual meeting for 2023 will be held on 23 November 2023 and will consider the following items:

· To receive the financial statements for the year ended 30 June 2023

· LGFA Board Composition including director nominations

· LGFA Shareholders’ Council Composition

· To consider Directors Remuneration from 1 July 2023

Attachment A is the Local Government Agency Limited ‘Notice of Annual Meeting’, which includes Explanatory Notes.

As part of their role, the LGFA Shareholders’ Council provides recommendations to member Councils on all matters. Attachment B contains their detailed recommendations for the 2023 Annual Meeting which are:

· That the financial statements and auditors report for the year ending 30 June 2023 are received and the related resolution approved

· That Philip Cory-Wright is re-elected for a further term and David Rae is elected as independent director for a three-year term.

· That both Western Bay of Plenty District Council and Tauranga City Council are re-elected to the Shareholder’s Council

· That Annual Fees are set with effect from 1 July 2023 as follows:

i. Independent Chair $124,000, up from $108,000

ii. Director with Audit and Risk Chair role $78,000, up from $67,000

iii. Director with Audit and Risk Committee membership $73,000, up from $63,000

iv. Other directors $70,000 up from $60,000.

Council has historically followed the recommendations of the Shareholders’ Council on voting matters and Officers recommend to do so again.

3. Civic Financial Services Ltd (Civic) Half-Yearly Accounts to 30 June 2023

Civic Financial Services Ltd is a Local Government owned financial services company that provides superannuation services to 76 councils and has funds under management of over $537 million as at the end June 2023. Horowhenua District Council has a 0.98% shareholding in the company.

In addition to administering Riskpool, Civic Liability Pool and the LAPP Fund, Civic administers the Local Government Superannuation Scheme (Employer Scheme) and SuperEasy, KiwiSaver Superannuation Scheme which are offered to local government on an exclusive basis.

Attachment C contains Civic Financial Services Ltd’s Half-Yearly Accounts to 30 June 2023.

Riskpool: Update on Winding up

On 7 June 2023 Civic/Riskpool wrote to member Councils with an update on Riskpool’s appeal to the Supreme Court regarding a liability claim concerning both weathertight and non-weathertight defects, where a member has sought to be covered for its liability for the non-weathertight defects.

On 1 August 2023, the Supreme Court issued its decision in which it has dismissed Riskpool’s appeal. This means the likelihood of further legal action and uncertainty on the validity and scale of claims. A disclosure statement as shown below was made in Council’s 2022/23 Annual Report which was audited and adopted by the Council on 25 October 2023. Member Councils will be updated as information comes to hand and updates will be provided to the Committee.

“Horowhenua District Council was previously a member of the New Zealand Mutual Liability Riskpool scheme (‘Riskpool’). The Scheme is in wind down, however the Council has an ongoing obligation to contribute to the scheme should a call be made in respect of any historical claims (to the extent those claims are not covered by reinsurance), and to fund the ongoing operation of the scheme. The likelihood of any call in respect of historical claims diminishes with each year as limitation periods expire. However, as a result of the Supreme Court decision on 1 August 2023 in Napier City Council v Local Government Mutual Funds Trustee Limited, it has been clarified that Riskpool has a liability for that member’s claim in relation to non-weathertight defects (in a mixed claim involving both weathertight and non-weathertight defects). Riskpool has advised that it is working through the implications of the Supreme Court decision. At this point any potential liability is unable to be quantified”

Attachments

No.	Title	Page
a ⇩	Bancorp Horowhenua Dashboard as at 30 Sept 23	13
b ⇩	Notice of LGFA Annual Meeting November 2023	21
c ⇩	LGFA Shareholders Recommendations letter 2023	26
d ⇩	Civic Financial Services Ltd Half-Yearly Accounts to 30 June 2023	30

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their benefits and costs, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

Signatories

Author(s)

Daniel Minty

Financial Services Manager

Pei Shan Gan

Financial Controller

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

08 November 2023

File No.: 23/796

6.3 Health, Safety and Wellbeing Quarterly Report - November 2023

1. Purpose

1.1 To provide the Committee with health, safety and wellbeing information and insight from 1 August to 30 September 2023

2. Recommendation

2.1 That Report 23/796 Health, Safety and Wellbeing Quarterly Report - November 2023 be received.

2.2 That this matter or decision is recognised as not significant in terms of S76 of the Local Government Act.

3. Issues for consideration

3.1 The Health, Safety and Wellbeing (HSW) Dashboard report gives a broad overview of lead and lag reporting across all of Council. It is designed to give Elected Members assurance that HSW is being managed for all staff through worker engagement, risk management and leadership. The variety of reporting captures multiple aspects of data available to Council and allows the story of HSW across the three month reporting period to be told. Any issues highlighted in the dashboard will be discussed as part of the presentation of the report.

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their advantages and disadvantages, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

4. Attachments

No.	Title	Page
a ⇩	HDC Risk and Assurance Committee HSW Dashboard - 8 November 2023	37

Author(s)

Tanya Glavas

Health & Safety Lead

Approved by

Ashley Huria

Business Performance Manager

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

08 November 2023

6.4 Continuous Improvement and Audit Actions Monitoring Report

File No.: 23/810

1. Purpose

1.1 To report to the Risk and Assurance Committee on progress of the action items from previous resolutions.

2. Recommendation

2.1 That Report 23/810 Continuous Improvement and Audit Actions Monitoring Report be received.

2.2 That this matter or decision be recognised as not significant in terms of s76 of the Local Government Act 2002.

2.3 That the Risk & Assurance Committee notes the Risk & Assurance Committee resolution and actions monitoring report.

3. Background/Previous Council Decisions

3.1 This paper reports on actions generated from Committee resolutions, and any requests noted through the minutes, or requested for action accepted by the Chair.

3.2 This paper is provided for information. Much like the Committee Work Programme, the Resolution Monitoring Report will be standing item, and reported through at each committee meeting.

3.3 The monitoring actions have been carried over from the Finance, Audit and Risk Committee from the previous Triennium.

3.4 The additional items coming out of the 2022/23 Audit Management Letter will be added to this report.

4. Issues for Consideration

4.1 Council officers have noted the progress of each action in the column “Officer Comment”.

4.2 Where due dates are amended, this is noted in the Officer Comment.

4.3 Where progress had not eventuated as scheduled for some actions, these are also noted.

4.4 Completed monitoring actions had not been removed since the last report and will continue to show until the Committee agrees for them to be removed.

Attachments

No.	Title	Page
a ⇩	Risk & Assurance Committee Monitoring Report	45

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their benefits and costs, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

Signatories

Author(s)

Pei Shan Gan

Financial Controller

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

08 November 2023

6.5 Risk and Assurance Committee Work Programme

File No.: 23/820

1. Purpose

The purpose of this report is to provide the Risk and Assurance Committee with an outline of a Draft Work Programme.

2. Recommendation

2.1 That Report 23/820 Risk and Assurance Committee Work Programme be received.

2.2 That this matter or decision be recognised as not significant in terms of s76 of the Local Government Act 2002.

2.3 That the Risk and Assurance Committee notes the Finance, Audit and Risk Committee Work Programme.

3. Issues for Consideration

The Risk and Assurance Committee work programme is attached for consideration.

Attachments

No.	Title	Page
a ⇩	Risk and Assurance Committee Work Programme 2023/24	74

Confirmation of statutory compliance

In accordance with section 76 of the Local Government Act 2002, this report is approved as:

a. containing sufficient information about the options and their benefits and costs, bearing in mind the significance of the decisions; and,

b. is based on adequate knowledge about, and adequate consideration of, the views and preferences of affected and interested parties bearing in mind the significance of the decision.

Signatories

Author(s)

Ashley Huria

Business Performance Manager

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

08 November 2023

Exclusion of the Public : Local Government Official Information and Meetings Act 1987

The following motion is submitted for consideration:

That the public be excluded from the following part(s) of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

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, as follows:

C1 Health and Safety Recommendations

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

C2 Risk Management Status Quarterly Report - November 2023

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(e) - The withholding of the information is necessary to avoid prejudice to measures that prevent or mitigate material loss to members of the public.

The report refers to matters of cyber sercurity measures, knowledge of which could compromise the security of Council IT systems.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.