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Notice is hereby given that a Meeting of the Activities Performance Audit Committee will be held on:

 

Date:                      

Time:

Meeting Room:

Venue:

 

Wednesday, 18 May 2016

1pm

Council Chambers
15 Forth Street, Invercargill

 

Activities Performance Audit Committee Agenda

 

OPEN

 

 

MEMBERSHIP

 

Chairperson

Lyall Bailey

 

 

Mayor Gary Tong

 

Councillors

Stuart Baird

 

 

Brian Dillon

 

 

Rodney Dobson

 

 

John Douglas

 

 

Paul Duffy

 

 

Bruce Ford

 

 

George Harpur

 

 

Julie Keast

 

 

Ebel Kremer

 

 

Gavin Macpherson

 

 

Neil Paterson

 

 

IN ATTENDANCE

 

Chief Executive

Steve Ruru

 

Committee Advisor

Alyson Hamilton

 

 

 

Contact Telephone: 0800 732 732

Postal Address: PO Box 903, Invercargill 9840

Email: emailsdc@southlanddc.govt.nz

Website: www.southlanddc.govt.nz

 

Full agendas are available on Council’s Website

www.southlanddc.govt.nz

 

 

 


Terms of Reference for the Activities Performance Audit Committee

 

This committee is a committee of Southland District Council and has responsibility to:

 

·                     Monitor and review Council’s performance against the 10 Year Plan

 

·                     Examine, review and recommend changes relating to Council’s Levels of Services.

 

·                     Monitor and review Council’s financial ability to deliver its plans,

 

·                     Monitor and review Council’s risk management policy,  systems and reporting measures

 

·                     Monitor the return on all Council’s investments

 

·                     Monitor and track Council contracts and compliance with contractual specifications

 

·                     Review and recommend policies on rating, loans, funding and purchasing.

 

·                     Review and recommend policy on and to monitor the performance of any Council Controlled Trading Organisations and Council Controlled Organisations

 

·                     Review arrangements for the annual external audit

 

·                     Review and recommend to Council the completed financial statements be approved

 

·                     Approve contracts for work, services or supplies in excess of $200,000.


Activities Performance Audit Committee

18 May 2016

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TABLE OF CONTENTS

ITEM                                                                                                                                   PAGE

Procedural

1          Apologies                                                                                                                        4

2          Leave of absence                                                                                                           4

3          Conflict of Interest                                                                                                         4

4          Public Forum                                                                                                                  4

5          Extraordinary/Urgent Items                                                                                          4

6          Confirmation of Minutes                                                                                               4

Reports

7.1       Financial Report for the period ended 31 March 2016                                            13   

Public Excluded

Procedural motion to exclude the public                                                                              47

C8.1    Curio Bay - Recommending Contract Award                                                          47  

 


 

1          Apologies

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

 

2          Leave of absence

 

At the close of the agenda no requests for leave of absence had been received.

 

3          Conflict of Interest

 

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

 

4          Public Forum

Notification to speak is required by 5pm at least two days before the meeting. Further information is available on www.southlanddc.govt.nz or phoning 0800 732 732.

 

5          Extraordinary/Urgent Items

To consider, and if thought fit, to pass a resolution to permit the committee 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.

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a)       that item may be discussed at that meeting if-

(i)         that item is a minor matter relating to the general business of the local authority; and

(ii)        the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b)       no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

 

6          Confirmation of Minutes

6.1         Meeting minutes of Activities Performance Audit Committee, 27 April 2016


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Activities Performance Audit Committee

 

OPEN MINUTES

 

 

 

Minutes of a meeting of Activities Performance Audit Committee held in the Council Chambers, 15 Forth Street, Invercargill on Wednesday, 27 April 2016 at 10.30am.

 

present

 

Chairperson

Lyall Bailey

 

Councillors

Stuart Baird

 

 

Brian Dillon

 

 

Rodney Dobson

 

 

John Douglas

 

 

Bruce Ford

 

 

George Harpur

 

 

Julie Keast

 

 

Ebel Kremer

 

 

Gavin Macpherson

 

 

Neil Paterson

 

 

IN ATTENDANCE

 

Services and Assets Ian Marshall, Group Manager Policy and Community Rex Capil, Group Manager Environment and Community, Bruce Halligan, Chief Financial Officer Anne Robson, Management Accountant Susan McNamara, Manager Communications Louise Pagan, Team Leader, Governance Chris Dolan and Committee Advisor Alyson Hamilton.

 

 

 

 

 

 


1          Apologies

 

       Apologies have been received from Mayor Tong and Cr Duffy.

 

Moved Cr Harpur, seconded Cr Keast and resolved:

That the apologies from Mayor Tong and Cr Duffy be accepted.

 

2          Leave of absence

 

There were no requests for leave of absence received.

 

3          Conflict of Interest

 

There were no conflicts of interest declared.

 

4          Public Forum

 

Moved Cr Dobson, seconded Cr Dillon and resolved:

That the Activities Performance Audit Committee go into public forum to allow members of the public speaking rights..

 

Southland Warm Homes Trust (SWHT)

 

Messrs Greg Buzzard and Neil Boniface updated the meeting on the Southland Warm Homes Trust.

 

Mr Boniface advised the meeting that the Trust was established in 2008 with the Council being an original funder.

 

Mr Boniface outlined the objectives of the Trust and the criteria required to obtain 100% funding toward home insulation.

 

Mr Boniface advised the Trustees include Neil Boniface (Chair), Jim Hargest, Carl Findlater (Southland Electric Power Supply Consumer Trust) and Anne Gover (Gore District Council).

 

Mr Boniface explained a project team was formed to monitor the activities of the Trust which included Messrs Ian Marshall and Rex Capil as representatives from Southland District Council.

 

Mr Buzzard informed of the various funding groups contributing toward the Trust and advised the service provider is Awarua Synergy.

 

The meeting was informed of the number of homes insulated to date and confirmed that due to the changes to Residential Tenancies Act a requirement is that insulation and smoke alarms are compulsory in all dwellings.

 

Mr Buzzard reported that in regards to continual Government funding to the Trust currently sits at the Cabinet table with a pre-budget announcement being made shortly to advise of on-going support. In the event of this support being discontinued Mr Buzzard was concerned that other funders may discontinue their support as well.

 

Mr Buzzard confirmed that residents in the Southland District area are receiving their share of the allocated funding.

 

Members pointed out that the Council contribution toward this project is $35,000 for a three year period which ends in 2015/2016 year.

 

It was noted no submission has been received from the Trust for further funding for the 2016/2017 financial year.

 

At the conclusion of the presentation the Chairman expressed appreciation to Messrs Boniface and Buzzard for their attendance at the meeting.

 

Moved Cr Dobson, seconded Cr Dillon and resolved:

That the Activities Performance Audit Committee moves out of public forum and returns to the formal meeting.

 

5          Extraordinary/Urgent Items

 

There were no Extraordinary/Urgent items.

 

6          Confirmation of Minutes

 

Resolution

Moved Cr Dobson, seconded Cr Ford  and resolved:

Confirms the minutes of Activities Performance Audit Committee, held on 6 April 2016.

 

Reports

 

7.1

Library Services - Service Delivery Review

Record No:         R/16/3/4146

 

Report by Bruce Halligan, Group Manager Environmental Services, regarding the Library Services – Service Delivery Review, was tabled.

Mr Halligan, Group Manager, Environmental Services, Lynda Hodge, Manager, District Library, Roslyn Gray, Libraries Team Leader, Trudie Hurst, Group Manager, Customer Support were in attendance for this item.

Mr Halligan introduced Nicki Moen, Principal of Nicki Moen and Associates, an external libraries consultant based in Christchurch who has had extensive input into the preparation of this report.

 

Mr Halligan advised the service delivery review has been undertaken for the Southland District Council library services in accordance with section 17A of the Local Government Act 2002.

2        Mr Halligan informed Section 17A of the Local Government Act 2002 requires all councils to review the delivery of services by mid-2017.

 

3        Mr Halligan explained having regard to this, Southland District Council has undertaken a review of the delivery of its library services.

 

Mr Halligan added this being the first formal structured review of library services since the creation of the Southland District Council in 1989 (although incremental changes and improvements to the service have been made during this time).

 

4        Mrs Moen advised in regards to the report content it offers five options for the governance and delivery of library services and recommends a preferred option that is  to retain operations with partial outsourcing.

 

Mrs Moen explained this option is a development of the status quo and seeks to maximise efficiency of the operations through outsourcing certain functions to get economics of scale and to enable reinvestment of any savings into developing new or improving existing services.

 

Mrs Hodge advised the twenty four recommendations outlined in the report covered a range of strategic, policy, operational and suggestions for changes from which an action plan in relation to each of the recommendations will be developed.

 

Mrs Hodge explained no specific comment is provided at this stage on the extent to which each of these recommendations may or may not be implemented, however these recommendations will provide a useful focus for future service delivery improvements.

 

Members questioned staff on a number of topics including;

 

    training processes for senior citizens on digitisation; the response was this is currently being undertaken in the libraries.

 

    are the younger generation using libraries as opposed to e-books; the response was the statistics of children reading books has not decreased due to digitisation.

 

    operating expenditure is currently at 45.1% per capita should this be increased; the response was Southland is operating relatively efficiently given the higher number of libraries and its geographic spread.

 

 

 

Resolution

Moved Cr Paterson, seconded Cr Dillon  and resolved:

That the Activities Performance Audit Committee:

a)         Receives the report titled “Library Services - Service Delivery Review ” dated 8 April 2016.

b)         Determines that this matter or decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

c)         Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

d)         Notes that officers will report back with the actions proposed to be taken in response to each of the recommendations outlined in the review.

 

7.2

Financial Report for the period ended 29 February 2016

Record No:         R/16/4/5458

 

Report by Federico Alurralde, Management Accountant, regarding the financial report for the period ended 29 February 2016, was tabled.

 

Ms McNamara, and Federico Alurralde, Management Accountants were in attendance for this item.

 

Ms Robson, Chief Financial Officer, introduced Mr Alurralde to the meeting.

 

It was pointed out to the Committee 67% of the financial year is compete and that no significant issues have been identified that raise any concerns for Council.

 

Ms McNamara then spoke on matters relating to the income, operating expenditure, capital expenditure, forestry revenue, roading and transport, chief executive’s account and the balance sheet.

 

Ms McNamara commented that the Curio Bay sewerage project is still in progress and quotes are being received on the costs to construct and initial contact has been made with DOC and the Trust seeking a contribution to the operating costs.

 

Ms McNamara informed Council has 5m invested in four term deposits ranging from four to six months maturities.  The next term deposit will mature in mid-April.

 

In regard to the term deposits Cr Bailey queried the interest rate received.

 

Ms McNamara confirmed the interest rate received is 2.00%.

 

 

Resolution

Moved Cr Keast, seconded Cr Harpur  and resolved:

That the Activities Performance Audit Committee:

a)         Receives the report titled “Financial Report for the period ended 29 February 2016” dated 20 April 2016.

 

7.3

Audit Arrangements Letter for the Year Ended 30 June 2016

Record No:         R/16/1/1108

 

Report by Mrs Sheree Marrah, Finance Manager, providing an overall summary of the audit arrangements letter for the Annual Report for the year ended 30 June 2016.

 

Mrs Marrah, Finance Manager, spoke to this item.

 

          Mrs Marrah advised Audit New Zealand requires Council to confirm the audit arrangements for the 2015/2016 Annual Report of Council.  As usual, this is done by way of an audit arrangements letter.

 

Mrs Marrah explained once Council has confirmed its acceptance of the proposed arrangements, the letter is required to be signed by the Mayor and returned to Audit New Zealand.

 

Mrs Marrah informed her report provides a summary of the letter for the Committee’s information.

 

 

 

Resolution

Moved Cr Kremer, seconded Cr Dillon  and resolved:

That the Activities Performance Audit Committee:

a)         Receives the report titled “Audit Arrangements Letter for the Year Ended 30 June 2016” dated 8 April 2016.

b)         Determines that this matter or decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

c)         Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

d)        Accepts the audit arrangements as set out in the letter presented to the Committee.

e)         Authorises the Mayor to sign the audit arrangements letter for the year ended 30 June 2016 on Council’s behalf.

 

 

The meeting concluded at 11.25am.             CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Activities Performance Audit Committee HELD ON 27 APRIL 2016.

 

 

 

DATE:...................................................................

 

 

 

CHAIRPERSON:...................................................

 

 


Activities Performance Audit Committee

18 May 2016

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Financial Report for the period ended 31 March 2016

Record No:        R/16/4/6207

Author:                 Federico Alurralde, Management Accountant

Approved by:       Anne Robson, Chief Financial Officer

 

  Decision                             Recommendation                        Information

 

  

 

Background

1.         This report outlines the financial results to 31 March 2016.  At 31 March 2016, 75% of the financial year is complete.

2.         Within the report, no significant issues have been identified that raise any concerns for Council relating to the end of year financial position.

Overview

3.         The financial commentary centres on the attached summary sheet which draws the totals from each of the key groups together.  Commentary provided focuses on the year to date (YTD) results. 

4.         More detailed variance explanations for each group can be found in the attached detailed commentary report. 

5.         As part of the monthly review, Finance staff check the phasing/timing of the budgets with the budget manager and revise where appropriate.  Where specific phasing of the budgets has not occurred, one twelfth of budgeted cost is the default to establish the monthly budget.  

6.         The financial tables include the forecasting data discussed at the Council’s April meeting.  In summary:

·              The monthly and annual budget columns are the phased full year projection. 

·              The FY Budget is the LTP budget for the year.

·              The FY Projection is the forecasted year end result.

7.         Staff will continue to refine the format of this report, with additional features being added to enhance the financial information given.  Any feedback or suggestions on further amendments that could be made to this report are welcome.


 

8.         Results at a glance, compared to budget year to date. Budget year to date is the phased forecast budget.

 

INCOME YTD

 

OPERATING EXPENDITURE YTD

Actual

Budget

 

Actual

Budget

$48.2M

$49.1M

 

 

$36.6M

$37.5M

 

Variance

$0.9M

2%

 

Variance

$0.9M

2%

NET SURPLUS YTD

 

CAPITAL EXPENDITURE YTD

Actual

Budget

 

Actual

Budget

$11.6M

$11.6M

 

 

$9.9M

$10.4M

 

Variance

$0M

0%

 

Variance

$0.5M

5%

 

Income

9.         Overall for the YTD, income is 2% ($0.9M) under budget ($48.2M actual v $49.1M budget).

10.       Services and Assets income is under budget by $614K due to a number of items.

11.       The largest being forestry revenue which is currently $453K under budget due to the timing of harvesting activities which have commenced in February, both forestry sites are tracking as expected with 29% of the harvesting completed by the end of March (11,000 actual tonnes of 38,000 tonnes budgeted).  Additionally, as explained in previous months, due to a change in accounting methodology, forestry income is expected to be approximately $1.2M higher than budget at year end.  Previously sales income was recorded net of harvesting costs, under the new methodology sales income and harvesting costs are now recorded separately. This change will also result in total forestry expenditure being over budget by approximately $1.2M at year end (please note that this has not been reflected in the “Projection” column of the attached reports, this issue will be corrected in the April financial report).

12.       As a result of less expenditure being incurred to date in the Area Engineers and Engineering Consultants business units internal revenue required to balance these business units are also less than budgeted ($47K).  This is the result of vacancies throughout the year and is expected to remain below budget at year end.

13.       Work scheme revenue is $116K under budget as a result of less work being completed overall due to having one less supervisor.  This is partially offset by a reduction in staff costs and material purchases.  At year end the business unit is anticipated to be in a deficit.
The extent of this deficit will depend on whether approval for probation funding of an estimated $32K per annum is secured. If it is the deficit is likely to be $12K.  However, staff anticipate that this deficit can be made up next year once the supervisor position is filled. 

Operating Expenditure

14.       Overall for the YTD, operating expenditure is 2% ($0.9M) under budget ($36.6M actual vs $37.5M budget).

15.       Environment and Community expenditure gone up slightly on March but still $387K under budget.  This is mainly in the regulatory areas of Building Regulation ($103K),
Resource Consent Processing ($41K) and Resource Planning ($83K).  Current market conditions has resulted in less building and resource consent activity resulting in lower than budgeted income and expenditure in these areas.  The District Plan mediation processes have been delayed at the direction of the Environment Court due to the status of Environment Southland’s Regional Policy Statement.  Until the Regional Policy Statement is progressed the amount of expenditure on the District Plan during this year is uncertain. Overall it is expected that the business units will be in deficit at year end.  Deficit at year end $296K will be funded from the district operating reserve.

16.       The Chief Executive group is currently under budget by $194K.  Around the Mountains Cycle Trail is $61K under budget as a result of an updated forecast for the Consent cost.  The Chief Executive is currently under budget $146k mainly related to professional services/consultants costs.  Costs incurred in relation to the Around the Mountains Cycle Trail review will be paid from this budget.

17.       Council and Councillors is $367K over budget.  This is a timing issue and is due to quarterly accrual for Venture ($442K) displaying in March with the phased budget for this amount appearing in April.  Payment of the quarterly instalment is made in advance of the quarter.

18.       Financial Services and Information Management are under budget $137K YTD due to vacancies within the departments.  It is projected that the business units will remain under budget at year end $192K.  This saving will be used to fund the cost of any overspend at year end in the Chief Executive group.

Capital Expenditure

19.       Overall for the YTD, capital expenditure is 5% ($0.5M) under budget ($9.9M actual vs $10.4M budget).

20.       The Chief Executive capital expenditure is over budget due to the Around the Mountains Cycle Trail.  Minimal additional expenditure is due to the end of the financial year.

 

21.       Information Management capital expenditure is under budget $167K due to less capital work being undertaken to date.  Included in the budget are costs associated with the core systems review and digitisation project.  Work has been planned for the digitisation project in the second half of this financial year.  There has been $115K spent to date on both projects with a forecasted year end budget of $310K.  The balance of these projects will be carried forward into the 2016/2017 year with Council’s approval.

 

22.       Services and Assets capital expenditure is under budget year to date, $400K due to less capital work being undertaken to date beyond the purchase of Hansen software. 
The Curio Bay sewerage project is still in progress, latest estimations suggest a cost of $155K will be incurred in this year instead of the original $970K, the difference of 815K will be carried forward to 2016/2017 financial year.  The actual cost will be less than the budgeted cost overall.  It is planned to report back to Council at this meeting. 
Public convenience upgrades in Winton (Ivy Russell Reserve) and Dipton are under action with units to be delivered onsite in late May.  Colac Bay toilets at Surfies Corner and Athol have been completed, with Waikaia upgrades being built as part of the museum rebuild.

Roading and Transport

23.       The seasonality of the capital works programme directly affects the level of income received from NZTA along with any changes to the programmed works.  Overall roading costs were less than what was budgeted resulting in NZTA also paying actual cost less than budgeted.

24.       Operational expenditure is in line with the long term plan budget and the NZTA approved budget for 2015/16 even though weather events over winter put a strain on the budgets over early days of the year.  Any further adverse weather events could affect the final outcome of the current financial year.

25.       The Roading and Transport team have forecasted that capital expenditure will be under budget at the end of the year.  This variance is principally due to the Southern Scenic Route extension and the Mararoa Bridge projects being deferred to the 2016/2017 financial year ($2.48M).  This is offset by additional rehabilitation projects, changes in scope and market prices $321K.

Balance Sheet

26.       Council’s financial position as at 31 March 2016 is detailed below and is only for the activities of Council.  The balance sheet as at 30 June 2015 represents the audited balance sheet for activities of Council and includes SIESA and Venture Southland.

27.       At 31 March 2016, Council had $10M invested in five term deposits ranging from three to four month maturities.   The next term deposit will mature in mid-April.  

The details at 31 March 2016 are:

Amount

Where Invested

Interest Rate

Term of Investment

Date of Expiry

$5,000,000

ANZ

3.04%

92 days

10 Jun 2016

$1,000,000

ASB

3.25%

122 days

13 Apr 2016

$1,000,000

BNZ

3.30%

121 days

18 May 2016

$1,000,000

BNZ

3.50%

183 days

20 Apr 2016

$2,000,000

Westpac

3.39%

119 days

10 Jun 2016

28.       Funds on call are the result of Council rates received at the end of March and held to ensure there is enough cash available to meet commitments as they fall due. 

Balance at 31 March

Where Invested

Interest Rate

$814,045

BNZ

1.25 %

$800,000

Westpac

1.75%

29.       External borrowings have still not been required, with internal funds being used to meet obligations for the year to date.  The borrowings shown in current liabilities is the outstanding amount of assets funded by finance leases for computer equipment.

 

 

Recommendation

That the Activities Performance Audit Committee:

a)         Receives the report titled “Financial Report for the period ended 31 March 2016” dated 10 May 2016.

 

Attachments

a         Summary Report View

b         Detailed Commentary View    

 


Activities Performance Audit Committee

18 May 2016

 

Key Financial Indicators

 

Indicator

Target*

Actual

Variance

Compliance

External Funding:

Non rateable income/Total income

> 39%

32%

-7%

x

Working Capital:

Current Assets/Current Liabilities

>1.09

2.01

0.92

a

Debt Ratio:**

Total Liabilities/Total Assets

<0.73%

0.71%

-0.02%

a

Debt To Equity Ratio:

Total Debt/Total Equity

<0.01%

0.00%

-0.01%

a

 

*       All target indicators have been calculated using the 2015/25 10 Year Plan figures. 

**     Excludes internal loans.

 

Financial Ratios Calculations:

Non Rateable Income

Total Income

External Funding:

 

 

This ratio indicates the percentage of revenue received outside of rates.  The higher the proportion of revenue that the Council has from these sources the less reliance it has on rates income to fund its costs.

 

Current Assets

Current Liabilities

Working Capital:  

 

 

 

This ratio indicates the amount by which short-term assets exceed short term obligations.  The higher the ratio the more comfortable the Council can fund its short term liabilities.

 

Total Liabilities

Total Assets

Debt Ratio:           

 

 

This ratio indicates the capacity of which the Council can borrow funds.  This ratio is generally used by lending institutions to assess entities financial leverage.  Generally the lower the ratio the more capacity to borrow. 

 

Debt to Equity Ratio:

Total Debt

Total Equity

 

It indicates what proportion of equity and debt the Council is using to finance its assets.


 


Activities Performance Audit Committee

18 May 2016

 



Activities Performance Audit Committee

18 May 2016

 


Activities Performance Audit Committee

18 May 2016

 

CHIEF EXECUTIVE COMMENTARY

 

For the year-to-date, income is over budget by 2% ($29K).  Expenditure is under budget by 9% ($194K).  The year-to-date position is $223K over budget.

 

Chief Executive

 

Income in this business unit is 14% ($69K) over budget, due to higher rates penalties income ($47K) and unbudgeted directors fees ($16K).  Expenditure is 23% ($146K) under budget due to consultant costs ($141K) under budget with additional costs expected to be incurred later in the financial year. Additionally legal costs ($14K) and project consultant costs ($9K) are under budget. This is offset by higher membership fees ($15K) due to higher annual SOLGM fees and an unbudgeted joining fee for the Local Government Operational Effectiveness Survey.

 

Civil Defence

 

Income and expenditure are on budget. 

 

Human Resources

 

Income is 12% ($53K) under budget.  Expenditure year-to-date is 6% ($25K) under budget due to reduced expenditure on training costs ($17K) and OSH expenses ($14K).  This is offset by overspends on consultants ($4K).  As this activity is internally funded, the reduced expenditure impacts directly on income. 

 

Around the Mountains Cycle Trail

 

Income is 8% ($14K) under budget with lower funding received to date than expected. Operating expenditure is over budget by 11% ($61K). Hearing consent costs ($462K) have been moved to this business unit for easy identification. Operating Expenditure is now forecast to be $728K at year end as a result of additional hearing consent costs. These costs will be moved back to capital expenditure at year end. Capital expenditure is over budget by 37% ($318K) with capital expenditure for 15/16 not expected to increase for the remainder of the year due to delays on work on Stage 2.

 

Rural Fire Control

 

Income and expenditure are on budget. 

 

Shared Services Forum

 

Income is on budget. Expenditure year-to-date is over budget by 93% ($38K) due to higher consultant costs ($32K) in relation to the Southland Regional Development Strategy and costs to produce the Regional Strategy Booklet ($5K).  Council’s share of additional costs for the Southland Regional Development Strategy is intended to be funded by rates collected for Community Outcomes (previously Our Way Southland).

 

Stewart Island Visitor Levy

 

Income is 28% ($28K) over budget.  Expenditure is currently on budget with grants expected to be allocated in May.

 

 


Activities Performance Audit Committee

18 May 2016

 

 



Activities Performance Audit Committee

18 May 2016

 

Council and Councillors’ Commentary

For the year-to-date, income is ($7K) under budget. Expenditure is 12% ($367K) over budget.  The year-to-date position is $375K under budget.

 

Council and Councillors

 

Income is on budget. Expenditure is $20K under budget. This is due to Youth Council costs ($5K) as a result of timing on youth council activities, cultural acquisitions ($3K), catering costs ($8K) and course and conference costs ($5K). This is offset by Councillor’s salary costs ($9K).

 

Council Contributions/Grants

 

Income is on budget.  Expenditure is currently under budget 14% ($50K) due to the timing of miscellaneous grants.

 

Council Elections

 

Income is on budget. Expenditure is 188% ($14K) over budget due to the outsourcing of the electoral officer position. This is likely to result in lower election costs next financial year.

 

Council Water and Sewerage Loans

 

Income is on budget.  Expenditure is on budget for the year-to-date. 

 

International Relations Committee

 

Income is on budget. Expenditure is $7K under budget with minimal activity year to date. 

 

Museum

 

Income is 2% ($8K) under budget with a $15K grant from CTOS no longer expected to be received. Expenditure is under budget 3% ($11K) as a result of Vehicle Operation Lease costs ($7K) due to the vehicle not yet being replaced as anticipated. Additionally, Travel and Accommodation expense is ($2K) below budget.

 

Regulatory - Non-Recoverable

 

Income is on budget. Expenditure is currently 18% ($12K) under budget.

 

Venture Southland

 

Income is on budget.  Expenditure is currently $452K over budget due to the timing on grant contributions. This will correct in April with annual costs forecast to be $14K over budget at year end. 

 

 


Activities Performance Audit Committee

18 May 2016

 


Activities Performance Audit Committee

18 May 2016

 

OTHER ACTIVITIES COMMENTARY

 

Allocations Committee

 

Income is 31% ($50K) over budget due to an unbudgeted donation relating to the Men of the Trees Fund ($28K), the unbudgeted repayment of a loan made by the Community Initiatives Fund ($10K) and the timing of grant income received. Expenditure is ($10K) over budget with unbudgeted grants being distributed from the Men of the Trees fund ($27K), this is offset by the timing on grants made by the Allocations Committee with the next allocations meeting scheduled in May.

 

Operating Investments

 

Currently, the majority of Council’s reserves are internally loaned by Council or its local communities for major projects.  Council has set the interest rate to be charged on these loans as part of its 10 Year Plan process and interest is being charged on a monthly basis on all internal loans drawn down at 30 June 2015.


Activities Performance Audit Committee

18 May 2016

 

 



Activities Performance Audit Committee

18 May 2016

 

ENVIRONMENT AND COMMUNITY COMMENTARY

Overall March 2016 monthly income for the Environment and Community Group was almost exactly at projected budget at $538K actual versus $539K projected budget. 

 

Key features of this month’s income were that District Library and Building Regulations income were ahead of projected budget by 9% ($9K) and 7% ($8K) respectively. Building consent activity was stronger in March than February. Conversely, Health Licensing was 88% ($9K) below budget, reflecting reduced income from the contract with Gore District Council, which is now performing many activities in house.

 

Overall March 2016 monthly expenditure for the Environment and Community Group was 6% ($30K) in excess of projected budget at $554K actual v $523K budget.

 

Most departments were below budget expenditure-wise, reflecting a close focus on spending, which is important in the current economic climate.

 

However, the key reason for the significant overexpenditure was in the Resource Consent Processing area. This was due to the significant legal costs incurred in involvement with the Around the Mountains cycleway hearing, where the Council is the respondent as consent authority.

 

Overall Group YTD Summary as at end of March 2016 of 2015/2016 financial year:

 

Overall Group YTD Income at the end of March 2016 for the 2015/2016 financial year is 1% ($48K) below full year budget projection, at $5.25M actual versus $5.29M budget.

 

It is anticipated that if the current trend regarding levels of incoming development-related work continues, then overall Group income could be approximately $300,000-$350,000 below the original 2015/2016 Annual Plan budget at year end.  As previously discussed at APAC some resourcing changes are being made to reflect these economic conditions. 

 

Overall Group YTD Expenditure at the end of March 2016 of the 2015/2016 financial year is 8% ($387K) below full year projected budget at $4.5M actual versus $4.88M budget.

 

While Group income has been less than budgeted reflecting current generally subdued development activity levels within the District; expenditure is also significantly under budget.

Management staff within the group are closely monitoring incoming work as well as expenditure, and associated resourcing requirements.  With the winter months generally being quieter than summer for incoming building and resource consents, it is unlikely that these trends will significantly alter before year-end.

 

Further unbudgeted costs are continuing to be incurred by SDC as regulatory authority (as distinct from SDC as consent holder/applicant) relating to the Around the Mountains Cycleway Environment Court hearing which commenced in mid-February.  SDC has a statutory duty to assist the Court in this process as the regulatory RMA consent authority, and hence additional costs will be incurred when this hearing reconvenes in mid May 2016. 


Activities Performance Audit Committee

18 May 2016

 

 


Activities Performance Audit Committee

18 May 2016

 

FINANCIAL SERVICES COMMENTARY

 

Income is 12% ($147K) under budget. As this activity is internally funded the reduced expenditure impacts directly on income. 

 

Expenditure is 8% ($97K) under the forecast adjusted budget for the year-to-date.  This is primarily due to the following:

•           Staff costs ($32K) are expected to realign towards year end as a result of recent appointments and returning staff.

•           Valuation roll maintenance costs ($10K).

•           Consultant costs ($12K).

•           Legal costs ($9K).

•           Debt collection costs ($6K).

•           Visa/MasterCard Charges ($9K).

•           Printing costs ($11K).

 

Annual expenditure is forecast to be $146K below the LTP budget primarily due to:

 

•           Staff costs ($75K) as a result of maternity leave and a vacant position.

•           Valuation Roll Maintenance costs ($45K) due to lower costs from LINZ and QV.

•           Debt collection costs ($20K) as a result of lower debt collection activity during the year.


Activities Performance Audit Committee

18 May 2016

 


Activities Performance Audit Committee

18 May 2016

 

INFORMATION MANAGEMENT COMMENTARY

 

Income is 2% ($56K) under budget for the year-to-date.  Overall expenditure is 2% ($40K) under budget.  The year-to-date position is $16K under budget.

 

Information Management

 

Income is 1% ($12K) under budget predominantly due to lower internal computer hire income ($29K). This is offset by higher income from Internal Photocopying ($10K). Expenditure is 1% ($8K) under budget. Telephone costs are under budget for calls ($18K) and rentals ($5K). Photocopier User Charges ($32K) are below budget. Software Licence fees are ($12K) over budget and anticipated to be $50K higher at year end than the LTP Budget. Consultants fees are currently ($33K) overspent with an external Systems Engineer covering a vacancy. Consulting costs are forecast to be $150K over the LTP budget at year end. This will be offset by underspends in staff costs ($130K).

 

Knowledge Management

 

Income is 4% ($25K) under budget. Expenditure is 3% ($21K) under budget, due to timing on staff costs ($26K) which are expected to realign with the year-end forecast and consultant costs ($12K). This is offset by postage costs ($13K). As this activity is internally funded the decreased expenditure impacts directly on income.

 

Property and Spatial Services

 

Income is under budget 6% ($19K). Expenditure is under budget 4% ($10K) with underspends on Photography costs (18K) due to timing, Software licence fees ($4K) and training costs ($2K). This is offset by overspends on consultant costs ($22K). As this activity is internally funded the decreased expenditure impacts directly on income. 

 

 


Activities Performance Audit Committee

18 May 2016

 


Activities Performance Audit Committee

18 May 2016

 

POLICY AND COMMUNITY COMMENTARY

Income for the year-to-date is 4% ($60K) under budget.  Expenditure for the year-to-date is 8% ($115K) under budget. 

 

Community Outcomes

 

Income is on budget.  Expenditure is under budget by $34K.  Part of this budget has been identified to fund the Southland Regional Development Strategy.

 

Corporate Planning

 

Income is 9% ($54K) under budget.  Expenditure is 8% ($48K) under budget due to lower staff costs ($20K), internal overheads ($17K), district survey costs ($11K), legal costs ($3K) and consultant costs ($8K).

 

Secretarial Services

 

Income is 23% ($45K) over budget.  Expenditure is 25% ($48K) over budget. Staff costs ($35K) are currently over budget with no allowance being made for the executive assistant Mayor/Community Futures Group Position in the February forecast, additionally advertising costs ($12K) are over budget. As this activity is internally funded the increased expenditure impacts directly on income.

 

Strategy/Communication

 

Income is 8% ($51K) under budget.  Expenditure is underspent by 12% ($81K) due to communication costs ($24K), maintenance costs ($9K), newspaper advertising costs ($9), software licence costs ($5K) and Waimumu Field days ($11K). This is offset by radio advertising costs ($7K). As this activity is internally funded the reduced expenditure impacts directly on income.

 

 


Activities Performance Audit Committee

18 May 2016

 

  


Activities Performance Audit Committee

18 May 2016

 

STRATEGIC TRANSPORT

 

Overall Financial Performance

 

Transport has a continued focus on delivering value for money, operating expenditure is tracking at 98% of year to date budget with capital expenditure 24% below budget.

 

Overheads

 

Overall year to date expenditure on overheads is in line with the year to date budget this is expected to continue for the full year.

 

Maintenance

 

Overall maintenance expenditure is tracking 2% under budget year to date.  Drainage expenditure is expected to increase on the forecasted amount for both the Waimea and Central Alliance contracts.  Unsealed road expenditure is tracking over forecast with a grader required in the Catlins every fortnight due to the volume of traffic. Any increases will be offset with reductions in other categories across each contract. It is expected that maintenance and operations will closely align to the full year budget.

 

Capital Expenditure

 

The Southern Scenic Route Seal Extension and Mararoa Bridge replacement have been shifted to the 2016/17 financial year with the Mararoa Bridge currently not receiving any funding under the NZTA criteria (Low strategic fit).  The effect of these projects shifts will cause capital expenditure to be significantly under budget at year end.

 

Other renewal projects will come in under budget primarily due to the lower than budgeted tender bids for reseals and the bitumen index.

 

 

Key

 

Largely on Track

 

Monitoring

 

Action Required

 

 

Financial Tracking vs Plans

YTD

Forecast

Annual Plan

NZTA Approved

75%

73.39%

73.13%

71.44%

 

 

Financial Tracking vs Plans

YTD

Forecast

Annual Plan

NZTA Approved

75%

90%

80%

70%

 

 --------------------------------------------------------------------------------------------------------------------------

 

Please note that the budgeted numbers for 15/16 have not been apportioned, therefore a number of the variances are as a result of timing issues.

 


 


Activities Performance Audit Committee

18 May 2016

 


 

 

 


Activities Performance Audit Committee

18 May 2016

 

SERVICES AND ASSETS (Excluding Roading) COMMENTARY

 

Overall Financial Performance

 

Individual managers have commented on their areas of responsibility.  There are not any significant concerns.

 

Key Highlights

 

•           Works Scheme will struggle to break even this year due to a lack of personnel resources to supervise potential workers.

•           Forestry harvesting at Dipton is underway and is expected to be in line with forecast at year end.

•           The Community Engineers team continues to do what they have always done as the Area Engineers unit.  The transition to Community Engineers has not really taken effect yet. 

•           Roading operating expenditure is tracking in line with budget for the year to date and expected to be close to the annual budget at year end.  Capital expenditure is below budget for the year to date with the Southern Scenic Route Seal Extension and Mararoa Bridge replacement being shifted to the 2016/17 financial year.  This will result in capital expenditure being significantly below budget at year end.

•           District Reserves (Recreational) are underspent mainly due to progress with the
Curio Bay wastewater project.  The detailed planning and procurement is well advanced but the major spend will not happen until the physical work is underway.
At this stage it is estimated $155K will be spent in the current year.

•        Other departments are generally on budget. 

 


Activities Performance Audit Committee

18 May 2016

sdclogo

 

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

 

Recommendation

 

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 are as follows:

 

C8.1    Curio Bay - Recommending Contract Award

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

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

Curio Bay - Recommending Contract Award

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

 

That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists.