Agenda of Risk and Assurance Committee - Wednesday, 21 February 2024

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 21 February 2024

10:00 am

Council Chambers
126-148 Oxford St
Levin

Risk and Assurance Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Councillor Sam Jennings
Deputy Chairperson	Councillor Paul Olsen
Members	Councillor Clint Grimstone
	Councillor Jonathan Procter
	His Worship The Mayor Bernie Wanden
	Sarah Everton	Independent Member
	Jenny Livschitz	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, 8 November 2023

5.2 Meeting minutes In Committee Meeting of Risk and Assurance Committee, 8 November 2023

Recommendations

That the meeting minutes of the Risk and Assurance Committee, 8 November 2023 be accepted as a true and correct record.

That the In-Committee minutes of the Risk and Assurance Committee, 8 November 2023 be accepted as a true and correct record.

Risk and Assurance Committee

21 February 2024

6.1 Treasury Update - December 2023

File No.: 24/33

1. Purpose

1.1 To update the committee on the Bancorp Treasury Reporting Dashboard for the December 2023 quarter.

2. Recommendation

2.1 That Report 24/33 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 notes the Bancorp Treasury Reporting Dashboard for the December 2023 quarter.

3. Background and Issues for Consideration

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

3.2 Council had $181m of current external debt as at 31 December 2023, comprised of Commercial Paper (CP), Fixed Rates Bonds (FRBs) and Floating Rates Notes (FRNs), all sourced from the Local Government Funding Agency (LGFA). Currently % fixed term debt is 52% of our total debt ($94m) and floating debt is 48% ($87m). $15m of this debt is held on term deposit to repay debt that is maturing this financial year.

3.3 As part our liquidity strategy, Officers are also planning to enter into similar arrangements to pre-fund debt maturing in 2025.

3.4 Council’s net debt to total operating revenue as at 31 December 2023 is 217%. This is depicted in the following graph:

3.5 Officers are closely monitoring the net debt to operating income ratio, which is now forecast to be higher than the budgeted 196% due to the timing of capital grants and lower than budgeted asset sales. As part of setting the draft LTP a revised forecast of 204% for 2023/24 was agreed. It remains below the 250% limit.

3.6 The average cost of funds as at 31 December 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 in the quarter ending December 2023. However, by the end of December, the markets were pricing in the first OCR cut in May 2024 and for it to fall to 4% by May 2025.

Attachments

No.	Title	Page
a ⇩	Bancorp Horowhenua Dashboard as at 31 Dec 2023.	9

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

21 February 2024

File No.: 24/59

6.2 Civic Financial Services - Statement of Intent 2024

1. Purpose

1.1 To update elected members on the Civic Financial Services - Statement of Intent for 2024.

2. Recommendation

2.1 That Report 24/59 Civic Financial Services - Statement of Intent 2024 be received.

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

2.3 That the Committee notes the Civic Financial Services - Statement of Intent for 2024

3. Background and Issues for Consideration

3.1 Civic Financial Services Ltd (Civic) 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.

3.2 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.

3.3 Civic’s main source of income is from fees for providing superannuation administration for the local government sector through the SuperEasy KiwiSaver Superannuation Scheme and Local Government Superannuation Scheme. They also receive fees from providing administration, accounting and other services to the Local Authority Protection Programme, Riskpool, Civic Liability Pool and Civic Property Pool.

3.4 Civic will reduce the SuperEasy KiwiSaver Superannuation Scheme and Local Government Superannuation Scheme base administration fee from 0.35% per annum to 0.33% per annum from 1 April 2024.

3.5 There is currently one staff member enrolled in the SuperEasy scheme with Civic. We are currently looking at ways to promote the Civic schemes and their benefits to staff.

3.6 Attached is the Civic Financial Services Ltd Statement of Intent for the year to 31 December 2024.

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 ⇩	Civic Financial Services - Statement of Intent for 2024	19

Author(s)

Daniel Minty

Financial Services Manager

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

21 February 2024

6.3 Health, Safety and Wellbeing Quarterly Report - October to December 2023

File No.: 24/41

1. Purpose

1.1 To provide the Committee with health, safety and wellbeing information and insights from 1 October to 31 December 2023.

2. Recommendation

2.1 That Report 24/41 Health, Safety and Wellbeing Quarterly Report - October to December 2023 be received.

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

3. Discussion

As part of this report there are 3 documents attached, below is a description of each.

Health, Safety and Wellbeing (HSW) Dashboard

This report gives a broad overview of lead and lag reporting across all of Council. It is designed to give Elected Members and independent members of the Risk and Assurance Committee assurance that HSW is being well managed for all staff through worker engagement, risk management and leadership. The variety of the 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.

Health, Safety and Wellbeing (HSW) Action Plan 2023-2025

The HSW action plan is part of the organisation roadmap to enabling what matters and is an internal operational document. This document guides the organisation internally to continually improve our practice in HSW. To ensure worker engagement in the development of the action plan, we executed a series of meetings in May 2023, that included 186 staff attending and 924 individual items of feedback recorded. There was also a HSW compliance review completed. It involved many hours work to collate the information and produce an action plan that will enable the organization to drive towards our goal of continuous improvement.

Health and Safety Deep Dive – Animal Control

This allows a detailed understanding from a health and safety perspective of the type of risks the Animal Control team experience at work, and the control actions and mitigations that are in place to reduce harm occurring because of the risks.

Attachments

No.	Title	Page
a ⇩	HDC RAC - Health Safety and Wellbeing Dashboard Quarterly Report 1 October 2023 - 31 December 2023	29
b ⇩	RAC - Animal Control Health and Safety Deep Dive - February 2024	39
c ⇩	HSW Action Plan - RAC Meeting February 2024	49

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)

Tanya Glavas

Health & Safety Lead

Ashley Huria

Business Performance Manager

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

Risk and Assurance Committee

21 February 2024

File No.: 24/60

6.4 Sensitive Expenditure Report

1. Purpose

1.1 To provide the information required for the Committee to note Sensitive Expenditure of the Mayor, Elected Members and Chief Executive for compliance with Council’s Sensitive Expenditure Policy.

2. Recommendation

2.1 That Report 24/60 Sensitive Expenditure Report be received.

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

3. Background / Previous Council Decisions

3.1 Sensitive expenditure is any spending by an organisation that could be perceived to be giving private benefit to staff additional to the business benefit to the organisation.

3.2 This is the first report to the Risk and Assurance Committee on sensitive expenditure and is provided to give the committee assurance that sensitive expenditure is approved following the one-up principle and has supporting information justifying the purchase(s).

3.3 A revised Sensitive Expenditure policy was adopted by Council on 11 October 2023, incorporating recommendations from the Audit Management Letter from 2021-22 and from 2022-23.

3.4 The policy gives responsibility of the Mayor, Councillors and the Executive Leadership Team of being accountable for property and prudently spending the public money under their control including sensitive expenditure and internal controls that support this.

3.5 The Mayor, Councillors and the Executive Leadership Team are required to ensure transparency in both sensitive expenditure and remuneration systems, to avoid any trade-off between the two. Items of expenditure that may not be justified under the principles of the sensitive expenditure policy should not be included as part of an employee’s remuneration for the purposes of avoiding scrutiny against sensitive expenditure principles.

3.6 In the Audit Management Letter for the 2021-22 Annual Report it was recommended that sensitive expenditure is approved on a one-up basis. In the Audit Management Letter for the 2022-23 Annual Report it was recommended that:

· Council reviews its policies and procedures for sensitive expenditure and communicate these changes and expectations in respect of sensitive expenditure;

· Improve documentation in respect of sensitive expenditure justification and approval processes; and

· Enhance the monitoring and reporting of sensitive expenditure to improve visibility and maintain transparency.

4. Discussion

4.1 The tables below outlines the sensitive expenditure for the Chief Executive, Mayor and Elected Members from 1 July 2023 to 31 December 2023 and outlines whether the spending was compliant with the Policy.

4.2 Chief Executive’s Sensitive Expenditure Summary for 1 July 2023 to 31 December 2023

Expenditure	Amount (excl. GST)	Compliant with Policy
Entertainment	$0.00	n/a
Travel & Accommodation	$2,083.76	Yes
Conferences	$170.00	Yes
Total	$2,253.76

4.3 Mayor’s Sensitive Expenditure Summary for 1 July 2023 to 31 December 2023

Expenditure	Amount (excl. GST)	Compliant with Policy
Entertainment	$104.35	Yes
Travel & Accommodation	$832.18	Yes
Conferences	$170.00	Yes
Total	$1,106.53

4.4 Elected Members’ Sensitive Expenditure Summary for 1 July 2023 to 31 December 2023

Expenditure	Amount (excl. GST)	Compliant with Policy
Entertainment	$0.00	n/a
Travel & Accommodation	$3,186.79	Yes
Conferences	$3,459.48	Yes
Total	$6,646.27

4.5 Some sensitive expenditures have been retrospectively approved, in accordance with the Sensitive Expenditure policy.

5. Attachments

There are no appendices for this report

Author(s)

Meagan Binnie

Financial Accountant

Pei Shan Gan

Financial Controller

Approved by

Jacinta Straker

Group Manager Organisation Performance

Monique Davidson

Chief Executive Officer

6.5 Risk and Assurance Committee Work Programme

File No.: 24/56

1. Purpose

1.1 The purpose of this report is to provide the Risk and Assurance Committee with an outline of a Draft Work Programme. Please note that the draft programme for 2024/25 will be provided at the 15 May 2024 meeting.

2. Recommendation

2.1 That Report 24/56 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

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

Attachments

No.	Title	Page
a ⇩	Risk and Assurance Committee Work Programme	63

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

21 February 2024

6.6 Continuous Improvement and Audit Actions Monitoring Report

File No.: 24/37

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 24/37 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 final 2022/23 Audit Management letter in Attachment A.

2.4 That the Risk & Assurance Committee notes the Risk & Assurance Committee resolution and actions monitoring report in Attachment B.

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 through external and internal audit work and for actions accepted by the Chair.

3.2 Much like the Committee Work Programme, the Resolution Monitoring Report is a standing item, and reported through at each committee meeting.

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

3.4 The draft 2022/23 Audit management letter that was tabled and presented to the committee on 8 November 2023 has since been finalised. It is attached in Attachment A.

4. Issues for Consideration

4.1 New items raised as part of the 2022/23 Audit Management Letter (Attachment A) have been added to this report. Below is a list of the nine new items in the monitoring report. The full report is attached with explanations. It has also been updated status and officer comments.

Recommendation	Priority
Sensitive expenditure policies and procedures (Interim)	Necessary
Robustness of month-end financial reporting process (Interim)	Necessary
Record keeping and evidence of approvals (Interim)	Necessary
Controls be strengthened over the review of public documents especially those incorporating Council decisions to avoid any ambiguity	Urgent
Ensure that there is complete information for all asset classes.	Urgent
Enhance the data reliability and quality assurance process over service performance reporting	Urgent
Introduce a centralised asset management database	Necessary
Introduce processes to clear the Purchase order clearing account in a timely manner.	Necessary
Establish a separate GL account for contract retentions	Beneficial

4.2 One item was archived from the monitoring report due to it being implemented and reviewed by Audit NZ. It related to Credit card usage.

4.3 The monitoring report has been updated to reflect both audit and management responses according to the reviewed of the 2022/23 Audit Management Letter completed as part of the 2023/24 annual report audit. Some previous recommendations were incorporated into new recommendations by Audit NZ and the monitoring report has been updated accordingly. These previous recommendations are:

Recommendation	Due date	Status	Officer Comment
Ensuring all assets within an asset class are revalued
1. A process/reconciliation should be implemented to ensure that all assets within an asset class are revalued.	30/06/2023		2. This was incorporated into recommendation under “Valuation of land and building and infrastructure assets”

Infrastructure, land and buildings valuations
Ensure there is a clear reconciliation between the revalued assets back to the valuation information. Develop a clear process to document adjustments to the valuation information and reassess the useful lives of infrastructure assets on a regular basis to ensure lives are in line with asset condition.	30/06/2024	This was incorporated into recommendation under “Valuation of land and building and infrastructure assets”
Payroll masterfile review
· Changes to the payroll masterfile be regularly reviewed against the supporting documentation for appropriateness through the running and review of a Masterfile change report. · Consideration be given to giving the reviewer “read-only” access to the payroll masterfile to ensure the review is independent.	30/06/2023	This was incorporated into recommendation under “Record keeping and evidence of approvals”
Performance measures process for complaints
· Review the effectiveness of the current reporting and systems to accurately capture the underlying data and to ensure the data is complete. Systems and processes should be formally documented, and regular training provided to all staff involved. · Perform a regular, weekly or even daily, quality review of data entered into the Customer Request Management system (CRM) for complaints, service requests and response times to ensure it is complete, accurate and supportable. Reviews should also focus on following up unclosed jobs, ensuring all data fields are updated, and review of unusual response times. We would expect that these reviews are formally evidenced by way of a date and signature. · Ensure data fields include information to clearly show why data has been amended or re-categorised with a clear audit trail of any changes made and who authorised them. · Document any calls that are excluded as Department of Internal Affairs (DIA) service requests or complaints. This may require additional fields to be added to the existing CRM if this information is not already captured. · Continue to review DIA guidance to ensure that the data being captured and reported, meets the mandatory reporting requirements. We expect that there will be further clarification around these measures as they become embedded into the annual reporting. · Establish a system to check contractor times recorded, are accurate instead of relying solely on the time that the contractor/staff noted. This is important to ensure accurate monitoring of contractor performance against the District Council’s key performance targets. · Use the data from the CRM to monitor the District Council’s performance, on a regular basis, to ensure corrective action can be taken as needed.	28/02/2024	This was incorporated into recommendation under “Data reliability and quality assurance process over service performance reporting”
Service performance: Evidencing monthly review of CRM requests
Evidence review of the CRM requests at month-end with a dated signature.	28/02/2024	This was incorporated into recommendation under “Data reliability and quality assurance process over service performance reporting”
Classification of records in the CRM system
We recommend that a monthly review of the CRM is implemented in order to mitigate the risk of overstating the reported results.	28/02/2024	This was incorporated into recommendation under “Data reliability and quality assurance process over service performance reporting”

4.4 There are 22 open recommendations from the Audit Management letter for the year ended 30 June 2023. 4 of these are classed as “Urgent”, 1 “Beneficial” and the rest as “Necessary”.

· 6 new recommendations in 2022/23 final audit

· 3 new recommendations in 2022/23 interim audit

· 13 previous recommendations

4.5 12 out of 19 of the recommendations resulting from the GST Compliance evaluation by PwC have been implemented and completed. They are detailed in Attachment B.

4.6 17 out of 18 of the recommendations resulting from the PAYE Compliance evaluation by PwC have been implemented and completed. They are detailed in Attachment B.

4.7 The completed items will be removed from the monitoring report.

Attachments

No.	Title	Page
a ⇩	HDC Audit Management Letter - Final 2023	70
b ⇩	Risk & Assurance Committee monitoring report	100

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