sdclogo

 

 

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

 

Date:                      

Time:

Meeting Room:

Venue:

 

Wednesday, 6 September 2017

8.30am

Council Chambers
15 Forth Street
Invercargill

 

Finance and Audit Committee Agenda

 

OPEN

 

 

MEMBERSHIP

 

Chairperson

Ebel Kremer

 

 

Mayor Gary Tong

 

Councillors

John Douglas

 

 

Paul Duffy

 

External Member

Bruce Robertson

 

 

IN ATTENDANCE

 

Chief Financial Officer

Anne Robson

 

Committee Advisor

Fiona Dunlop

 

 

 

 

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 – Finance and Audit Committee

 

The Finance and Audit Committee is responsible for:

·                 Ensuring that Council has appropriate financial, risk management and internal control systems in place that provide:

-      An overview of the financial performance of the organisation.

-      Effective management of potential opportunities and adverse effects.

-      Reasonable assurance as to the integrity and reliability of Council’s financial and non-financial reporting. 

·                 Exercising active oversight of information technology systems. 

·                 Exercising active oversight of “Council’s health and safety policies, processes, compliance, results and frameworks”

·                 Relationships with External, Internal Auditors, Banking Institutions and Insurance brokers.

 

The Finance and Audit Committee will monitor and assess the following:

·                 The financial and non-financial performance of Council against budgeted and forecasted outcomes

·                 Consideration of forecasted changes to financial outcomes

·                 Council’s compliance with legislative requirements

·                 Council’s risk management framework

·                 Council’s Control framework

·                 Council’s compliance with its treasury responsibilities.

 

The Finance and Audit Committee shall have the following delegated powers and be accountable to Council for the exercising of these powers and will operate within:

·                 policies, plans, standards or guidelines that have been established and approved by Council;

·                 the overall priorities of Council;

·                 the needs of the local communities; and

·                 the approved budgets for the activity.

 

The Finance and Audit Committee will have responsibility and delegated authority in the following areas:

 

Financial and Performance Monitoring

(a)          Monitoring financial performance to budgets;

(b)          Monitoring service level performance to key performance indicators.

 

Internal Control Framework

(a)          Reviewing whether Council’s approach to maintaining an effective internal control framework is sound and effective;

(b)          Reviewing whether Council has taken steps to embed a culture that is committed to probity and ethical behaviour;

(c)          Reviewing whether there are appropriate systems, processes and controls in place to prevent, detect and effectively investigate fraud.

 

Internal Reporting

(a)          To consider the processes for ensuring the completeness and quality of financial and operational information being provided to the Council;

(b)          To seek advice periodically from internal and external auditors regarding the completeness and quality of financial and operational information that is provided to the Council.

 


 

External Reporting and Accountability

(a)          Agreeing the appropriateness of the Council’s existing accounting policies and principles and any proposed change;

(b)          Enquiring of internal and external auditors for any information that affects the quality and clarity of the Council’s financial statements and statements of service performance, and assess whether appropriate action has been taken by management in response to the above;

(c)          Satisfying itself that the financial statements and statements of service performance are supported by appropriate management signoff on the statements and on the adequacy of the systems of internal control (ie, letters of representation), and recommend signing of the financial statements by the Chief Executive/Mayor and adoption of the Annual Report, Annual Plans, Long Term Plans;

 

Risk Management

(a)          Reviewing whether Council has in place a current, comprehensive and effective risk management framework and associated procedures for effective identification and management of the Council’s significant risks;

(b)            Considering whether appropriate action is being taken to mitigate Council’s significant risks.

 

Health and Safety

(a)          Review, monitor and make recommendations to Council on the organisations health and safety risk management framework and policies to ensure that the organisation has clearly set out its commitments to manage health and safety matters effectively.

(b)          Review and make recommendations for Council approval on strategies for achieving health and safety objectives.

(c)          Review and recommend for Council approval targets for health and safety performance and assess performance against those targets.

(d)          Monitor the organisation’s compliance with health and safety policies and relevant applicable law.

(e)          Ensure that the systems used to identify and manage health and safety risks are fit-for-purpose, being effectively implemented, regularly reviewed and continuously improved.  This includes ensuring that the Council is properly and regularly informed and updated on matters relating to health and safety risks.

(f)           Seek assurance that the organisation is effectively structured to manage health and safety risks, including having competent workers, adequate communication procedures and proper documentation.

(g)          Review health and safety related incidents and consider appropriate actions to minimise the risk of recurrence.

(h)          Make recommendation to the Council regarding the appropriateness of resources available for operating the health and safety management systems and programmes.

(i)            Any other duties and responsibilities which have been assigned to it from time to time by the Council.

 

Internal Audit

 

(a)          Approve appointment of the internal auditor, internal audit engagement letter and letter of understanding. 

(b)          Reviewing and approving the internal audit coverage and annual work plans, ensuring these plans are based on the Council’s risk profile;

(c)          Reviewing the adequacy of management’s implementation of internal audit recommendations;

 

(d)          Reviewing the internal audit charter to ensure appropriate organisational structures, authority, access, independence, resourcing and reporting arrangements are in place.

 

External Audit

(a)          Confirming the terms of the engagement, including the nature and scope of the audit, timetable and fees, with the external auditor at the start of each audit;

(b)          Receiving the external audit report(s) and review action(s) to be taken by management on significant issues and audit recommendations raised within;

(c)          Enquiring of management and the independent auditor about significant business, political, financial and control risks or exposure to such risks.

 

Compliance with Legislation, Standards and Best Practice Guidelines

(a)          Reviewing the effectiveness of the system for monitoring the Council’s compliance with laws (including governance legislation, regulations and associated government policies), with Council’s own standards, and Best Practice Guidelines as applicable.

(b)          Conducting and monitoring special investigations, in accordance with Council Policy, and reporting the findings to Council. 

(c)          Monitoring the performance of Council organisations, in accordance with the Local Government Act. 

 

Business Case Review

(a)     Review of the business case of work, services, supplies, where the value of these or the project exceeds $2million or the value over the term of the contract exceeds $2million.

 

Insurance

(a)          Consider Council’s insurance requirements, considering its risk profile

(b)          Approving the annual insurance renewal requirements

 

Treasury

(a)        Oversee the treasury function of Council ensuring compliance with the relevant Council policies and plans

(b)        Ensuring compliance with the requirements of Council’s trust deeds are met

(c)        Recommending to Council treasury policies.

 

 

The Finance and Audit Committee is responsible for considering and making recommendations to Council regarding:

(a)       Policies relating to risk management, rating, loans, funding and purchasing.

(b)       Accounting treatments, changes in generally accepted accounting practice, and new accounting and reporting requirements.

(c)       The approval of financial and non-financial performance statements including adoption of the Annual Report, Annual Plans and Long Term Plans.

 

The Finance and Audit Committee is responsible for considering and making recommendations to the Services and Assets Committee on business cases.

 


Finance and Audit Committee

06 September 2017

sdclogo

 

TABLE OF CONTENTS

ITEM                                                                                                                                   PAGE

Procedural

1          Apologies                                                                                                                        7

2          Leave of absence                                                                                                           7

3          Conflict of Interest                                                                                                         7

4          Public Forum                                                                                                                  7

5          Extraordinary/Urgent Items                                                                                          7

6          Confirmation of Minutes                                                                                               7

Reports for Recommendation

7.1       Draft Remission and Postponement of Rates Policy                                              21

7.2       Draft Investment and Liability Management Policy                                                 41

7.3       Draft Fraud Policy 2017                                                                                               65

7.4       Draft Unaudited Annual Report 2016/2017                                                               77

Reports

8.1       Options for Council funding of the Around the Mountains Cycle trail                 93

8.2       Health and Safety                                                                                                       101

8.3       2018-28 Long Term Plan Audit Fees                                                                       123

8.4       Digitisation Project Update                                                                                      129

8.5       Analysis of Actual results to Forecast for the year ended 30 June 2017            133

8.6       Overall Programme of Projects for 2017/18 including the Projects proposed to be Carried Forward from 2016/17.                                                                                161   

Public Excluded

Procedural motion to exclude the public                                                                            171

C9.1    Risk Register - September 2017 update

C9.2    Corporate Performance Report for year ending 30 June 2017

 


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 Finance and Audit Committee, 07 June 2017

6.2         Meeting minutes of Extraordinary Finance and Audit Committee, 19 July 2017


sdclogo

 

 

Finance and Audit Committee

 

OPEN MINUTES

 

 

 

Minutes of a meeting of Finance and Audit Committee held in the Council Chambers, 15 Forth Street, Invercargill on Wednesday, 7 June 2017 at 9am.

 

present

 

Chairperson

Councillor Ebel Kremer

 

 

Mayor Gary Tong

 

 

Councillor John Douglas

 

 

IN ATTENDANCE

 

Councillor Keast (9.50am – 10.09am)

 

Chief Financial Officer

Anne Robson

Group Manager – Community and Futures

Rex Capil

Group Manager – Services and Assets

Ian Marshall

Chief Information Officer

Damon Campbell

Group Manager – Customer Support

Trudie Hurst

People and Capability Manager

Janet Ellis

Communications Manager

Louise Pagan

Committee Advisor

Fiona Dunlop

 


1          Apologies

 

The Committee noted that Councillor Duffy had a leave of absence for this meeting and his apology was received.

 

Moved Cr Douglas, seconded Mayor Tong and resolved:

That the Finance and Audit Committee accept the apology.

 

 

2          Leave of absence

 

There were no requests for leave of absence.

 

 

3          Conflict of Interest

 

There were no conflicts of interest declared.

 

 

4          Public Forum

 

There was no public forum.

 

 

5          Extraordinary/Urgent Items

 

There were no Extraordinary/Urgent items.

 

 

6          Confirmation of Minutes

 

Resolution

Moved Cr Douglas, seconded Mayor Tong and resolved:

THAT the Finance and Audit Committee confirms the minutes of the ordinary meeting held on 15 March 2017 and the extraordinary meetings held on 26 April 2017 and 3 May 2017 as a true and correct record of those meetings.

 

Reports for Recommendation

 

 

7.1

Risk Management Review Project

Record No:         R/17/4/8727

 

Planning and Reporting Analyst – Shannon Oliver and Group Manager, Community and Futures – Rex Capil were in attendance for this item.

 

 

Miss Oliver advised that the purpose of the report was to provide a project scope and terms of reference for reviewing council’s risk management practices and to develop a risk management framework and policy review.

 

The Meeting noted that the Finance and Audit Committee had recommended at the March 2017 meeting that “a risk management review project to be established to develop a project scope and terms of reference to be considered at the June 2017 Finance and Audit Committee meeting.”

Miss Oliver also advised that Council’s approach to risk management is in the development phase and it is acknowledged further work is required and that the current Risk Management Policy is due for review.

 

 

Resolution

Moved Mayor Tong, seconded Cr Douglas and resolved:

That the Finance and Audit Committee:

a)         Receives the report titled “Risk Management Review Project” dated 24 May 2017.

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)         Endorses the project scope and terms of reference for the Risk Management Review Project.

e)         Recommends to Council approval of the project scope and terms of reference for the risk management review project.

 

 

7.2

Draft Early Payment of Rates Policy

Record No:         R/17/5/9921

 

Policy Analyst – Robyn Rout will be in attendance for this item.

 

 

Mrs Rout advised that the purpose of the report was to request endorsement from the Committee of the draft Early Payment of Rates Policy and recommendation to Council that the draft Policy be adopted.

 

The Committee noted that the draft Early Payment of Rates Policy allows ratepayers connected to some sewerage and water schemes to make full payments of loan rates early, to reduce their overall costs.

 

Mrs Rout further advised that in March this year the Committee endorsed the draft Policy which included some minor changes to the liability and payment sections, to staff roles/responsibilities, and some other changes were made to improve clarity.

 

 

The Committee further noted that the draft Policy was put out for consultation in accordance with the Special Consultative Procedure in March and April 2017 to which no submissions were received through the consultation process and no changes have been made to the draft Policy.

 

 

Resolution

Moved Mayor Tong, seconded Cr Douglas and resolved:

That the Finance and Audit Committee:

a)         Receives the report titled “Draft Early Payment of Rates Policy” dated 24 May 2017.

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)         Endorses the draft Early Payment of Rates Policy.

e)         Recommends to Council that the draft Early Payment of Rates Policy be adopted.

 

 

7.3

Draft Health and Safety Plan for 2017/2018

Record No:         R/17/5/11030

 

People and Capability Manager – Janet Ellis was in attendance for this item.

 

 

Mrs Ellis advised that the purpose of the report was to seek approval from the Finance and Audit Committee for the draft Health and Safety Governance Framework and draft Health and Safety Plan for 2017/2018 to be presented to Council for approval.

 

The Meeting noted that in February 2017, Council contracted Simpson Grierson to undertake a Health and Safety Gap Analysis.  The analysis identified a number of improvement opportunities which were reflected in a formal Action.

 

Mrs Ellis also advised that the Southland District Council has an obligation to manage the safety of workers under Health and Safety legislative requirements.  The Health and Safety Framework, containing a single policy with clear standard procedures will enable a risk based approach to managing health and safety.

 

The Meeting also noted that the Health and Safety Plan details a draft Health and Safety Commitment statement.  In addition the plan contains a review of previous performance and objectives and identifies key elements to deliver improvement.

 

 

 

 

Resolution

Moved Cr Douglas, seconded Mayor Tong and resolved:

That the Finance and Audit Committee:

a)         Receives the report titled “Draft Health and Safety Plan for 2017/2018” dated 27 May 2017.

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)         Recommends to Council that it approves the draft Health and Safety Commitment statement that details Southland District Council’s intent and direction.

e)         Recommends to Council that it approves the draft Health and Safety Plan for 2017/18 and recommends Council approve the Health and Safety Plan and notes that there will be ongoing financial implications for implementing the plan.

f)          Recommends to Council that it approves the Health and Safety Management System Governance Framework.

 

 

Reports

 

 

8.1

Financial Report for the month ended 30 April 2017

Record No:         R/17/5/10630

 

Management Accountant – Robert Tweedie was in attendance for this item.

 

Mr Tweedie advised that the report outlined the financial results for the ten months to 30 April 2017 or 83% of the financial year. 

 

The Committee noted that the monthly and year-to-date actual results are compared to the Full Year Budget (Projection) in the Summary Monthly Financial Report.  The projection values include any 2015/2016 carried forward items approved by Council in August 2016 and any changes as a result of October 2016 forecasting that Council approved. The 2016/2017 Annual Plan budget is shown in the Monthly Financial Summary Report as the Full Year Budget.

 

 

 

 

 

 

 

Resolution

Moved Cr Douglas, seconded Mayor Tong and resolved:

That the Finance and Audit Committee:

a)         Receives the report titled “Financial Report for the month ended 30 April 2017” dated 29 May 2017.

 

 

8.2

Digitisation Project Update

Record No:         R/17/5/9446

 

Chief Information Officer – Damon Campbell and Team Leader, Knowledge Management – Gillian Cavanagh were in attendance for this item.

 

Mr Campbell advised that the purpose of the report was to update the Committee on the status of the Property File Digitisation Project.

 

 

Resolution

Moved Mayor Tong, seconded Cr Douglas and resolved:

That the Finance and Audit Committee:

a)         Receives the report titled “Digitisation Project Update” dated 27 May 2017.

 

 

8.3

Audit Engagement Letters

Record No:         R/17/5/9727

 

Finance Manager – Sheree Marrah was in attendance for this item.

 

Mrs Marrah advised that the purpose of the report was to seek formal approval for the proposed audit arrangements for the three years to 30 June 2019, an audit engagement letter for three years to 30 June 2019 and an audit arrangements letter for the Annual Report for the year audit to 30 June 2017.

 

 

Resolution

Moved Chairperson Kremer, seconded Cr Douglas and resolved:

That the Finance and Audit Committee:

a)         Receives the report titled “Audit Engagement Letters” dated 3 May 2017.

b)         Determines that these matters 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 terms, conditions, arrangements and fees as set out in the letters attached.

e)         Authorises the Mayor to sign the following letters received from Audit NZ.

-     Proposal to conduct the audit of Southland District Council on behalf of the Auditor General for the 2017, 2018 and 2019 financial years

-     Audit engagement letter

-     Audit arrangements letter for the year ending 30 June 2017.

 

 

8.4

Interim Management Report from Audit New Zealand for the year ended 30 June 2017

Record No:         R/17/5/9859

 

Finance Manager – Sheree Marrah was in attendance for this item.

 

Mrs Marrah advised that the purpose of the report was to update the Committee as part of the audit process undertaken by Audit New Zealand at the conclusion of the interim stage of the Annual Report audit.  This report outlines the work that was performed and any recommendations for areas of improvement.

 

During discussion on the report the issue of investigating Council properties for potential sale was raised.  The Committee requested that a scoping report be prepared for the Committees consideration.

 

(During discussion on the report, Councillor Keast joined the meeting at 9.50am.)

 

 

Resolution

Moved Chairperson Kremer, seconded Mayor Tong recommendation a with a new b (as indicated) and resolved:

That the Finance and Audit Committee:

a)           Receives the report titled “Interim Management Report from Audit New Zealand for the year ended 30 June 2017” dated 24 May 2017.

 

b)            Request that the Chief Executive prepare a scoping report to identify properties for potential sale and report to the 6 September 2017 meeting of the Committee.

 

 

8.5

Health and Safety

Record No:         R/17/5/10791

 

People and Capability Manager – Janet Ellis was in attendance for this item.

 

Mrs Ellis advised that the purpose of the of the report was to update the Committee on Health and Safety activity at Southland District Council.

 

 

 

 

 

 

 

Resolution

Moved Chairperson Kremer, seconded Mayor Tong and resolved:

That the Finance and Audit Committee:

a)         Receives the report titled “Health and Safety” dated 27 May 2017.

 

 

Public Excluded

 

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

Resolution

Moved Mayor Tong, seconded Cr Douglas and resolved:

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

C9.1 Risk Register - June 2017 update

C9.2 Corporate Performance Report - February 2017 full report and variance report

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:

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

Risk Register - June 2017 update

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.

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

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.

Corporate Performance Report - February 2017 full report and variance report

s7(2)(c)(i) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

 

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.

 

That the Group Manager – Community and Futures, Group Manager – Services and Assets, Group Manager – Customer Support, Chief Financial Officer, Chief Information Officer, Communications Manager, Planning and Reporting Analyst and Committee Advisor be permitted to remain at this meeting, after the public has been excluded, because of their knowledge of the items C9.1 Risk Register - June 2017 update and C9.2 Corporate Performance Report - February 2017 full report and variance report.  This knowledge, which will be of assistance in relation to the matters to be discussed, is relevant to those matters because of their knowledge on the issues discussed and meeting procedure.

 

 

The public were excluded at 9.56am.

 

Resolutions in relation to the confidential items are recorded in the confidential section of these minutes and are not publicly available unless released here.

 

 

The meeting concluded at 10.09am.             CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Finance and Audit Committee HELD ON WEDNESDAY 7 JUNE 2017.

 

 

 

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

 

 

 

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

 


sdclogo

 

 

Extraordinary Finance and Audit Committee

 

OPEN MINUTES

 

 

 

Minutes of a meeting of Extraordinary Finance and Audit Committee held in the Council Chamber, 15 Forth Street, Invercargill on Wednesday, 19 July 2017 at 9am.

 

present

 

Chairperson

Ebel Kremer

 

Councillors

John Douglas

 

 

Paul Duffy

 

 

IN ATTENDANCE

 

Councillor Dillon

 

Chief Executive

Steve Ruru

Group Manager –Services and Assets

Ian Marshall

Chief Financial Officer

Anne Robson

Communications Manager

Louise Pagan

Publications Specialist

Chris Chilton

Governance and Democracy Manager

Clare Sullivan

Committee Advisor

Fiona Dunlop

 


1          Apologies

 

Apologies were received from Mayor Tong.

 

Moved Chairperson Kremer, seconded Cr Douglas and resolved:

That the Finance and Audit Committee accept the apology.

 

 

2          Leave of absence

 

There were no requests for leave of absence.

 

 

3          Conflict of Interest

 

There were no conflicts of interest declared.

 

 

4          Public Forum

 

There was no public forum

 

 

5          Extraordinary/Urgent Items

 

There were no Extraordinary/Urgent items.

 

 

6          Confirmation of Minutes

 

There were no minutes to confirm.

 

 

Public Excluded

 

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


 

Resolution

Moved Chairperson Kremer, seconded Cr Duffy and resolved:

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

C6.1 Southland District Council Resurfacing Programme

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:

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

Southland District Council Resurfacing Programme

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

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

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.

 

That the Chief Executive, Group Manager – Services and Assets, Chief Financial Officer, Communications Manager, Publications Specialist, Governance and Democracy Manager, Commercial Lead Transport, Roading Asset Management Engineer and Committee Advisor be permitted to remain at this meeting, after the public has been excluded, because of their knowledge of the items C6.1 Southland District Council Resurfacing Programme. This knowledge, which will be of assistance in relation to the matters to be discussed, is relevant to those matters because of their knowledge on the issues discussed and meeting procedure.

 

 

The public were excluded at 9.01am.

 

Resolutions in relation to the confidential items are recorded in the confidential section of these minutes and are not publicly available unless released here.

 

 

The meeting concluded at 9.43am.               CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Finance and Audit Committee HELD ON WEDNESDAY 19 JULY 2017

 

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

 

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

 


Finance and Audit Committee

6 September 2017

sdclogo

 

Draft Remission and Postponement of Rates Policy

Record No:        R/17/5/9991

Author:                 Robyn Rout, Policy Analyst

Approved by:       Anne Robson, Chief Financial Officer

 

  Decision                              Recommendation                         Information

 

  

 

Purpose

1        This report is to inform the Finance and Audit Committee (the Committee) that no submissions were received on the draft Remission and Postponement of Rates Policy when it was put out for consultation.

 

Executive Summary

The Remission and Postponement of Rates Policy specifies the circumstances where the Council will consider remitting or postponing rates.  The Policy aims to:·   provide financial assistance and support to ratepayers where it is reasonable;

·              address possible rating anomalies; and

·              provide Council with the ability to act reasonably in administering its rating powers and policies.

3        The Committee will recall that some minor changes were made to the Policy before it went out for consultation. The remission of rates for natural disasters and emergencies has been included, and the remission of rates in exceptional circumstances now has a clause including individual rating units which have been subject to fire. There has been clarification of the supporting documentation required and the applicable remission periods for each of the remission and postponement categories. The responsibilities and financial limits in the roles and responsibilities schedule have also been clarified.  

 

4        In March this year the Committee endorsed the draft Policy and it was put out for consultation. No submissions were received.

 

5        This report recommends the Committee both endorses the draft Policy and recommends to Council that the Policy be adopted (with any other desired amendments).

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Draft Remission and Postponement of Rates Policy” dated 31 August 2017.

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)         Endorses the draft Remission and Postponement of Rates Policy.

e)         Recommends to Council that the draft Remission and Postponement of Rates Policy be adopted.

 

 

Content

Background

6       The Remission and Postponement of Rates Policy is in the process of being reviewed in preparation for the Long Term Plan 2018-28. The Policy outlines several categories where Council may grant remission or postponement of rates, and it gives detail on the conditions and criteria under which applications will be considered. 

7        The draft Policy was presented to the Committee in March this year. At that time the Committee endorsed the draft Policy and recommended that it be released for public consultation. The endorsed draft Policy included a number of minor amendments to the previous policy, including:

·    Introducing an additional category allowing the remission of rates for natural disasters and emergencies

·    Amending the Remission of Rates in exceptional circumstances to include a specific clause in relation to individual rating units which are subject to a fire (when it limits the rating unit’s ability to be occupied or used for an extended period)

·    Minor changes to clarify the content of the Policy

·    Aligning the Policy with the current roles and processes within Council

·    Changes to application process, including clarify the supporting documentation required as well as specifying the period of remission or postponement

·    Updating the delegations part of the draft Policy. This includes updating the roles and responsibilities, and adding financial limits for Council staff to remit rates and penalties. The Finance Manager has been given delegated authority to set remission guidelines for finance officers to apply.

 

Issues

8        No submissions were made on the draft Policy, so officers are not aware of any concerns or changes that need to be made.

9        The draft Policy does make minor changes to the delegation to remit or postpone rates. If the draft Policy is adopted by Council, the delegation to remit or postpone rates will be updated at that time to reflect the new policy.

Factors to Consider

Legal and Statutory Requirements

10      If Council wishes to provide remissions or postponements to ratepayers, a policy of this nature is required under the Local Government (Rating) Act 2002 and the Local Government Act (2002).

11      The Local Government (Rating) Act 2002 (Section 85) states:

(1)        A local authority may remit all or part of the rates on a rating unit (including penalties for unpaid rates) if—

(a)   the local authority has adopted a rates remission policy under section 109 of the Local Government Act 2002; and

(b)   the local authority is satisfied that the conditions and criteria in the policy are met.

12      The Local Government Rating Act 2002 (Section 87) states:

(1)        A local authority must postpone the requirement to pay all or part of the rates on a rating unit (including penalties for unpaid rates) if—

(a) the local authority has adopted a rates postponement policy under section 110 of    the Local Government Act 2002; and

(b) the ratepayer has applied in writing for a postponement; and

(c) the local authority is satisfied that the conditions and criteria in the policy are met.

13      For this reason, it is essential that Council’s Remission and Postponement of Rates Policy contains conditions and criteria for each remission and postponement category.

14      This Policy is being reviewed as a result of a requirement in the Local Government Act 2002 (section 109 and 110) which states that the Policy must be reviewed at least once every six years using a consultation process.

15      Council has discretion to grant a remission or postponement of all or part of a ratepayer’s rates under the Local Government (Rating) Act 2002 provided it is allowed for in its Policy. The draft Policy complies with the requirements of the Act.

 

Community Views

16      People in the District have had an opportunity to present their views through the consultation process that was run through March and April this year. No submissions were received.

17      When the current Remission and Postponement of Rates Policy was put out for consultation in 2015, two submissions supported having a clear Policy and one submission thought Council should not allow rates to be remitted or postponed. The submissions received through the last consultation round were not very detailed as they were received online in conjunction with other comments on the Long Term Plan 2015-2025.

18        This Policy does not need to be included in the Long Term Plan 2018-2028, and will not be included in the consultation document for the Long Term Plan.

Costs and Funding

19      There are no direct costs associated with implementing the draft Policy.

20      For the 2017/2018 financial year, the value of remitted rates is $400,627 across 521 assessments.  This represents 0.77% of the total rates struck for the year ($51,982,369 incl GST) on 2.7% of the total number of assessments (19,090).  No postponement of rates have been requested for a number of years. 

21      If the draft Policy is adopted, the financial impact of the changes of the revised policy are not likely to be significant.

 

Policy Implications

22      If adopted, the draft Policy will not bring about any significant changes to the rates remission and postponement process. Council will now be able to remit rates if there is a natural disaster or emergency, and if rating unit cannot be used/occupied because of fire.

Analysis

Options Considered

23      The following options have been identified. The Committee could:

24      Option 1:   Endorse the draft Policy and recommend to Council that the draft Policy be adopted (with any desired changes); or

25      Option 2:   Recommend to Council that it continues with the existing Policy.

 

Analysis of Options

Option 1 – Endorse the draft Policy and recommend to Council that the draft Policy be adopted (with any other desired changes)

Advantages

Disadvantages

·        Achieves legislative compliance;

·        Informs ratepayers of when applications may be granted;

·        Provides a decision making framework for staff;

·        Ensures consistency in Council’s approach to applying remissions and postponements;

·        Increases the alignment of Southland District Council’s practices with those of other local authorities throughout New Zealand; and

·        Limits opportunities for complaints or appeals by limiting staff discretion in granting or declining applications.

·        There are no disadvantages to this option as there is no cost involved and no categories of postponement or remission have been removed.

 

Option 2 – Recommend to Council that it continues with the existing Policy

Advantages

Disadvantages

·        Achieves legislative compliance;

·        Informs ratepayers of when applications may be granted;

·        Provides a decision making framework for staff.

·        The Policy seems to have been operating effectively and is likely to continue operating well.

·        Does not include allowance for remission of rates for natural disasters or emergencies.

·        The delegations are out of date.

·        The roles and processes are out of date.

·        The existing Policy may give rise to opportunities for complaints or appeals as some conditions and criteria and remission periods are not stipulated.

·        The existing Policy may be less user friendly, as it gives less guidance on the required supporting documentation and the application process.

 

 

Assessment of Significance

26      This issue has not been assessed as significant because the draft Policy does not exclude any of the existing categories of remission. Further, the financial impact of this issue is minor, as is the number of ratepayers likely to be affected.

Recommended Option

27      It is recommended that the Committee proceed with Option 1, and endorse the draft Policy and recommend to Council that the draft Policy be adopted (with any other desired changes).

Next Steps

28      If the Committee proceed with Option 1, the draft Policy will be presented to Council at its meeting in October, with the recommendation that Council adopt the Policy.

 

Attachments

a         Draft Remission and Postponement of Rates Policy    

 


Finance and Audit Committee

06 September 2017

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

6 September 2017

sdclogo

 

Draft Investment and Liability Management Policy

Record No:        R/17/8/18448

Author:                 Robyn Rout, Policy Analyst

Approved by:       Anne Robson, Chief Financial Officer

 

  Decision                              Recommendation                         Information

 

  

 

Purpose

1        This report is to inform the Finance and Audit Committee (the Committee) that no feedback was received on the Investment and Liability Management Policy when it was put out for consultation. 

Executive Summary

2        The Investment and Liability Management Policy outlines how Council will manage its investments, including what Council will invest in, and how investment risk will be assessed and managed.  The Policy also outlines how Council will manage borrowings.

3        The Committee endorsed a draft Policy in March this year and recommended that it be released for public consultation. The draft Policy incorporated some minor changes to the current policy, including clarity around the intent of Council in the setting of interest on internal loans, and changes to roles and responsibilities. 

4        Although no feedback was received, Council staff have subsequently noted that the current Investment and Liability policy was out of alignment with the 2015-2025 Long Term Plan (LTP).  The LTP allowed for Council to borrow up to 100% of total revenue, the current Investment and Liability policy allowed for 150% of total revenue.  Given Councils discussion at the time of approving the LTP, the attached draft Investment and Liability Policy has been changed from 150% to 100% of total revenue.

5        As no feedback was received on the draft Policy, officers are now requesting that the Committee endorses the draft Policy as amended by point 4 above and recommends to Council that the Policy be adopted (with any other desired amendments).

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Draft Investment and Liability Management Policy” dated 31 August 2017.

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)         Endorses the draft Investment and Liability Management Policy.

e)         Recommends to Council that the draft Investment and Liability Management Policy be adopted.

 

Content

Background

6          Under Section 102 of the Local Government Act 2002 (LGA 2002), Council is required to have both an Investment Policy and a Liability Management Policy. These policies have been merged into one document (the Policy) due to their similar nature.

Changes to the draft policy

7          This Policy was last revised and consulted on as part of the 2013/14 Annual Plan.  At that time, Bancorp was engaged to review sections of the Policy. In particular, Bancorp:

·                        reviewed sections relating to financial market investments,

·                        made recommendations to enable the treasury activities of SDC to be carried out under a set of market best practice standards, and

·                        reviewed sections relating to the Local Government Funding Agency.

8          As a thorough review of this Policy was undertaken in 2013, the draft Policy that was put out for consultation in March, did not include any substantial changes. The changes that were made clarified aspects of the policy and were updates to the roles and responsibilities of staff.

What is in the draft Policy

9          The investment part of the policy is designed to ensure that the financial resources of the Council are managed in an efficient and effective way. It sets out why Council holds investments, its strategy towards risk, the mix of investments it has and how it will distribute any return on investments.

10        The key aspects of the Investment Policy are:

·              Outlining Council’s risk profile, which is that Council is a risk adverse entity and does not wish to incur additional risk from its treasury operations.  As such, the types of treasury investments that Council allows investment in is limited to a Standard and Poors rating of A- or above. This currently excludes investment in SBS who has a rating of BBB.  Currently Council only invests in New Zealand Registered Banks where investment is limited to $10M if the bank has a rating of A1 or better.

·              Council’s ability to invest internally through Internal Loans - Council has $20M of internal loans at 30 June 2016. These loans are to facilitate the development of Council projects and the funding of these to date has been from funds held (generally reserve funds held by Council or committees of Council) rather than borrowings.

·              The ability for Council to invest in the Local Government Funding Agency Limited (LGFA) - The LGFA was established to enable Local Government to borrow at lower margins than would be available otherwise. All borrowers are required to contribute 1.6% of the total amount borrowed as capital. The Policy allows for Council to invest in the LGFA if circumstances are beneficial to Council.

11        The liability management part of the Policy is designed to provide a framework for prudent debt management. It sets out how Council may wish to use debt as a funding mechanism, along with limits to borrowing and how Council will handle risk.

12        The key aspects of the proposed Liability Management Policy are:

·                      That borrowing limits of Council remain unaltered.  Council has set the limit at 100% of total revenue, based on the 2015/16 Annual Report this would be around $67M.

·                      How Council will handle risk - This includes hedging, to manage the impact that movements in interest rates can have.  Table 4 in the policy outlines the policy around this.

·                      That security for borrowing will usually be way of a charge over rates.  However an option exists to offer security over other assets of Council where Council considers doing so would help further its community goals or objectives.

·                      That Council can borrow from the Local Government Funding Authority.

·                      That Council can advance Internal Loans for the purpose of capital or one-off activities.  Council investments may be used as a source of the funding of these loans.  Currently $20M of loans exist.

13      The policy also outlines the structure of responsibilities and reporting lines within Council. These ensure appropriate management and accountability of liability and investment activities.

14      Please note the borrowing limit has reduced from 150% of total revenue as per the draft policy to 100% in the final policy.  This has occurred as a result of aligning it with the 2015-2025 Long Term Plan, which was inconsistent with the previous Investment and Liability Management Policy.  The direction from Council as part of finalising the 2015-2025 Long Term Plan was to reduce the limit from 150% to 100% as they considered it artificially high.  The intent for the 2018-2028 LTP is that it will remain at 100% of total revenue.  

 

Issues

15      No submissions were made on the draft Policy, so officers are not aware of any concerns or changes that need to be made.

16      The draft Policy does include minor changes to delegations relating to investments. Pursuant to Clause 32(2), Schedule 7, of the Local Government Act 2002, the Council may make delegations to officers of the Council to allow for the efficient conduct of Council business.  Clause 32(3), Schedule 7 of the Act also allows officers to delegate those powers to other offices.

17      The power to borrow money, or purchase or dispose of assets, other than in accordance with the Long Term Plan remains the sole responsibility of the Council (Clause 32(1)(c), Schedule 7). This responsibility cannot be delegated.

18      If the draft Policy is adopted by Council, the delegations relating to investment will be updated at that time, to reflect the new Policy.

 

Factors to Consider

Legal and Statutory Requirements

19      As has been stated above, under the Act, Council is required to have both an Investment Policy and a Liability Management Policy. Council must state its policies in respect of investments, including:

·              The mix of investments;

·              Acquire new investments;

·              An outline of the procedures by which investments are managed and reported on to the local authority; and

·              An outline of how risks associated with investments are assessed and managed.

 

20      The Act also requires Council to state its policy in respect to both borrowing and other liabilities, including:

·              Interest rate exposure;

·              Liquidity;

·              Credit exposure;

·              Debt repayment.

21        Under Section 102 of the Act, amendments to the Policy can be made by a resolution of Council.  There is no legal requirement to consult.  By seeking community views on this draft Policy, Council has complied with its Significance and Engagement Policy. Council is also required to consider the views and preferences of persons likely to be affected by, or interested in, the matter (in accordance with Section 78).

Community Views

22        People in the Southland district had an opportunity to give their views on this Policy, however no submissions were received. No public feedback was received either, when this policy was consulted on as part of the 2013/14 Annual Plan.

23        In relation to investments, it is likely that the public would support prudent and effective management, a balanced investment/risk profile, and to maintain appropriate procedures, controls and reporting. In relation to liability management it is likely the public would support there being set limits on borrowing, compliance with any financing/borrowing covenants and ratios, and maintaining adequate internal controls to mitigate operational risks.

24        This Policy does not need to be included in the Long Term Plan 2018-2028, and will not be included in the consultation document for the Long Term Plan.

Costs and Funding

25        There are no costs associated with implementing a new Policy, aside from the minor costs associated with staff time.

Policy Implications

26        Changes to the Policy will not substantially alter how Council currently operates its investments and potential borrowings. It hopefully will clarify and confirm Council’s policy on these matters. 

Analysis

Options Considered

27        Council is required to adopt an Investment and Liability Management Policy. On this basis, the Committee has the option of endorsing the attached draft Policy, or suggesting changes to the Policy, as it sees fit.

Analysis of Options

28        Option 1 - Endorsing the draft Policy and recommending to Council that the Policy be adopted.

Advantages

Disadvantages

·        Gives a clear outline of how Council will manage its investments and liabilities.

·        Complies with legislation.

·        Meets best practice guidelines.

·        Documents current practice and the rationale for future reference.

·        Ensures appropriate management and accountability of liability and investment activities.

·        There are no known disadvantages.

 

29        Option 2 - Suggest further changes to the draft Policy

Advantages

Disadvantages

·        Further clarifies Council’s thinking on investments and borrowings.

·        This option may mean the policy is adopted later, however, there is still the capacity to meet legislative requirements.

 

Assessment of Significance

30        This Policy has been assessed as not being significant in relation to the Council’s Significance and Engagement Policy.

Recommended Option

31        It is recommended that the Committee endorses the draft Policy and recommends to Council that the Policy be adopted (Option 1).

Next Steps

32        If the Committee proceed with Option 1, the draft Policy will be presented to Council at its meeting in October, with the recommendation that Council adopt the Policy.

 

Attachments

a         Draft Investment and Liability Management Policy    

 


Finance and Audit Committee

06 September 2017

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

6 September 2017

sdclogo

 

Draft Fraud Policy 2017

Record No:        R/17/8/18473

Author:                 Rebecca McElrea, Policy and Planning Consultant

Approved by:       Anne Robson, Chief Financial Officer

 

  Decision                             Recommendation                        Information

 

  

 

Executive Summary

1        The current Fraud Policy was reviewed in 2005 and therefore overdue for a review.  In undertaking this review, Council have incorporated a number of recommendations from the Shared Service Business Process review undertaken by Deloitte in 2016.

2        In addition, a fraud response plan is also being developed to compliment this policy.

3        In the next 6 months Council will be undertaking a fraud risk assessment process.  As part of this and the resulting gap analysis undertaken, further changes to this policy may occur within the coming 12 months.

 

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Draft Fraud Policy 2017” dated 31 August 2017.

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

c)         Endorses the draft Fraud Policy (including any amendments agreed at this meeting).

d)         Recommends to Council that the draft Fraud Policy be adopted (including any amendments agreed at this meeting).

 

 

Content

Background

4        In 2016, Deloitte undertook a Shared Service Business Process review of which 11
South Island local authorities took part including Southland District Council (SDC). 
The purpose of the review was to provide an affordable and efficient programme where councils are able to learn from each other.  In undertaking this work, Deloitte reviewed policies and processes in respect of Fraud, Conflicts of Interest and Sensitive Expenditure.

5        Deloitte provided recommendations to Southland District Council (SDC) in relation to Southland District Council’s Fraud Policy (2005) as part of their Shared Service Business Process review.

6        In reviewing the current Fraud Policy, these recommendations have been incorporated into the Draft Fraud Policy (2017).  A Fraud Response Plan is also being developed.  This is an internal document outlining Council’s process and guidelines for dealing with suspected fraud and will compliment this policy.

 

Deloitte strongly recommended the following changes to the Fraud Policy

·              Fraud Control Officer

Deloitte strongly recommended that SDC appoint a Fraud Control Officer.  This is to be a member of staff who will be fully trained in fraud awareness and understand the requirements of initial response.

·              Fraud Response Plan (2017)

Deloitte strongly recommended that SDC modify its procedures for dealing with Fraud to fully explain the initial response responsibilities and to ensure a coordinated and effective response.

Council staff are currently developing a Fraud Response Plan that will ensure Council has a documented process for explaining the steps to be taken in the event fraud is suspected, and who is responsible for taking those actions. The Fraud Response Plan will be separate from the Policy, however available to all staff and elected members.

·              Communication of Policy

Deloitte strongly recommended that the Fraud Policy is fully communicated to all staff and elected members. SDC should also request staff to undertake an annual declaration of their understanding of the policy and the policy also needs to be added to the intranet.

 

Deloitte recommended the following changes to the Fraud Policy

·              Fraudulent activities by the CEO

Deloitte recommended that there be a back-up person for fraud reporting in case of suspected fraudulent activities by the CEO.  The Mayor was suggested for this role.

·              Whistle Blower Section

Deloitte recommended the addition of a whistle blower section to the policy to strengthen the protection provided to the whistle blower.  This is to ensure staff feel safe about coming forward with a suspected fraud case.  Reference to the Protected Disclosure Act gives employees legal reference for procedures and protection in place when coming forward with a suspected fraud.

·              Fraud awareness training for staff

Deloitte recommended that SDC should consider fraud awareness training for all staff as all staff have a role to play in the prevention and detection of fraudulent activities.

Deloitte suggested the following changes to the Fraud Policy

·              Definition of fraudulent activities

Deloitte suggested that SDC include further definitions within the Fraud Policy to ensure there are no grey areas with regards to what is and what is not acceptable.

·              Councillors role

Deloitte suggested that the policy include the addition of explaining Councillor’s role in the detection and prevention of fraud.

·              Zero Tolerance

Deloitte suggested that SDC make a more firm and direct statement that it is their intent to prosecute and have a zero tolerance stance.  This demonstrates that Council will progress matters as far as possible and deter any fraudulent activities.

 

7        The draft policy was circulated to staff for feedback/comment on 21 August.  Five responses were received and these were reviewed by ELT and a couple of minor amendments were made to the policy as a result.  As at the date of this report Council had not received feedback from the Public Service Association on this policy, however anticipate that it will be received prior to this meeting.

8        Council staff are also currently seeking proposals from a number of independent experts to undertake a fraud risk assessment of Council.  As part of this process they will undertake a gap assessment to understand what systems and processes Council currently has in place to prevent and detect fraud and identify the areas where further improvement is required.  As part of this process they will review Council’s fraud policy and associated processes (fraud response plan), and as a result these documents may end up being re-reviewed again in the next 12 months if further amendments are recommended.

Factors to Consider

Legal and Statutory Requirements

9        This policy supports Council’s Strategic Framework, which has a vision of having thriving, healthy, Southland communities.  A desired outcome in the strategic framework is being an effective Council by being prudent and innovative.  This policy is prudent as it focuses on the definition of fraud, outlines prevention mechanisms and sets out responsibilities for the detection of fraud.  The Fraud Response Plan will set out the process and responsibilities if fraud is suspected.

10      This policy also aligns with the following associated documents:

·    Local Authorities (Members’ Interests) Act 1968.

·    The Secret Commissions Act 1910.

·    Sections 99, 105, 105A of the Crimes Act 1961.

·    Protected Disclosures Act 2000.

·    Delegation Manual.

·    Personnel Manual.

·    Policy on electronic communications (including the internet).

·    Credit Card Policy

·    Code of Conduct

·    Sensitive Expenditure Policy

·    Employment Relations Act 2000

·    Privacy Act 1993

·    Vehicle Policy

 

It is the intention that the Fraud Policy 2017 will be supported by the Fraud Response Plan, which is currently being developed.

 

Costs and Funding

11      There will be cost associated with Fraud Training for the Fraud Control Officer, as well as Fraud Awareness Training for all staff, however it is not expected to be significant.

Analysis

Options Considered

12      The two options for the Finance and Audit Committee are to:

·    Recommend to Council adoption of the Draft Fraud Policy 2017 (with any amendments made at this meeting)

·    That the current Fraud Policy (2005) remains as it is currently.

Analysis of Options

Option 1 – Recommend to Council adoption of the Draft Fraud Policy 2017 (with any amendments made at this meeting)

Advantages

Disadvantages

·        Create a more robust policy and system for the detection and reporting of suspected fraudulent activities.

·        Addresses recommendations from the Deloitte shared service business process review.

·        No obvious disadvantages

 

Option 2 – That the current Fraud Policy 2005 remains as it is currently

Advantages

Disadvantages

·        No advantages

·        This option would mean that the Fraud Policy and response plan for Southland District Council is not as strong as it needs to be should any fraudulent activities occur.

 

Assessment of Significance

13      This decision is not deemed as significant in terms of Council’s Significance and Engagement policy.

Recommended Option

14      It is recommended that the committee endorse this policy and recommend to Council that it adopts the Draft Fraud Policy 2017.

Next Steps

15     Once the Finance and Audit Committee have endorsed the draft Fraud Policy, it will be included in the agenda for the next Council meeting for adoption.

16     Once Council have adopted the Final Fraud Policy, it will be circulated to all staff and elected members.

17     Staff will finalise the Fraud Response Plan, and present this to ELT for approval.

18     The Executive Leadership Team need to appoint a Fraud Control Officer. 

19     The policy will be uploaded to Council’s intranet.

20     Training for the Fraud Control Officer will need to be set up.  A separate email address (fraudcontrolofficer@southlanddc.govt.nz) will also need to be established. 

 

Attachments

a         Draft Fraud Policy 2017    

 


Finance and Audit Committee

06 September 2017

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

6 September 2017

sdclogo

 

Draft Unaudited Annual Report 2016/2017

Record No:        R/17/8/20209

Author:                 Nicole Taylor, Project Co-ordinator Corporate Planning

Approved by:       Rex Capil, Group Manager Community and Futures

 

  Decision                              Recommendation                         Information

 

  

 

Purpose

1        To enable the Finance and Audit Committee to consider recommending the Annual Report 2016/2017 for adoption by Council on 27 September 2017.

Executive Summary

2        Council is required to develop and adopt an Annual Report within four months of the end of a financial year.  Development of Council’s Annual Report for the 2016/2017 financial year is nearing completion and will be circulated separately ahead of the meeting to enable review and input from the committee prior to audit.

3        The Annual Report compares and comments on the performance of Council against the budget and operating targets set in year two of the Council’s 10 Year Plan 2015 – 2025 and what was programmed in the Annual Plan 2016/2017.

4        A Summary of the Annual Report is also being prepared separately for review and audit later in September/early October.

5        The Audit and Risk Committee is asked to consider the report and make a recommendation as to whether Council should adopt the Annual Report on 27 September 2017 as presented with any changes.

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Draft Unaudited Annual Report 2016/2017” dated 30 August 2017.

b)         Determines that this matter or decision be recognised as 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)         Delegates authority to the chair of the Finance and Audit Committee to confirm changes to the Annual Report 2016/2017 resulting from either audit or officer review.

e)         Recommends to Council that it adopts the Annual Report 2016/2017 at its meeting on 27 September 2017, incorporating any changes resulting from “d” above; and

f)          Notes that the Summary Annual Report 2016/2017 is also being prepared and will be circulated to the Committee and Council for comment and released to the public in October.

 

Background

6        Section 98(3) of the Local Government Act 2002 requires the Annual Report to be adopted within four months of the end of the financial year to which it relates.  An Annual Report is intended to outline Council’s actual performance in comparison with its intended performance as outlined in its Annual or 10 Year Plan.

7        The Annual Report details the operating activities of the Council and includes financial statements for Council.

8        A draft copy of the unaudited Annual Report 2016/2017 is currently being finalised and will be circulated to the committee separately ahead of the meeting.  The committee are asked to review the draft Annual Report and discuss any risks, issues and changes that need to be addressed prior to audit process and approval by Council.

9        The Finance and Audit Committee need to be clear about the specific concerns and/or adjustments that it requires to be made to the proposed Annual Report so that officers can ensure that they are adequately reflected in any revised Report and submitted to Audit New Zealand for audit review.

10      The Report and financial statements will be audited by Audit New Zealand on behalf of the Auditor-General from 4-15 September.

11      Any changes, either resulting from the audit process or officer review, will be tracked and circulated to the Chair of the Finance and Audit Committee for confirmation prior to being presented at the Council meeting on 27 September 2017 for adoption.  This report requests that the Chair be delegated authority to provide this confirmation.

12      The Summary of the Annual Report is also being prepared and is to be audited, but is not required to be adopted by Council.  However the unaudited version of this summary document will be circulated to Council for comment at its meeting on 27 September prior to audit in early October.  The intention is that the Mayor and Chief Executive will then approve the summary document for distribution with any changes resulting from the audit process.

13      At the completion of the audit, a management report is prepared by Audit New Zealand.  This will be circulated to the committee once it has been received.

14      The Annual Report and Summary Annual Report must be publically available one month after the adoption of the Annual Report.  They will be made available to the public via Council’s website, by placing printed copies in libraries and service centres and having printed copies available for distribution on request. Availability of the Report will be advertised.

Status of the Report

15      At the date of this report the draft Annual Report is substantially complete.  Matters outstanding include:

•   Statement of Cashflows and associated reconciliation;

•   Funding Impact Statement for all activities;

•   Note 13 – Accounts receivable (classification of exchange and non-exchange transactions);

•   Note 16 - Fixed assets schedule and associated disclosures;

•   Final internal review of full document including project/KPI commentary (substantially complete);

•   Finalising changes required as a result of the internal review and audit process; and

•   Compilation of the Summary document.

 

16      Any content in the draft Annual Report which is yet to be finalised is shown in red text.

17      Audit NZ will undertake much of its testing and fieldwork on-site during the period 4-15 September 2017.  Assuming there are no material issues arising at this point, it is anticipated that Audit NZ will give verbal clearance on the draft Annual Report on Friday 22 September.

18      Audit clearance is advice that there are no material issues outstanding or unresolved and the draft Annual Report can proceed to finalisation.

Organisational Performance (KPI’s)

19      The Annual Report 2016/2017 details performance of the organisation against the key performance targets that were specified in 10 Year Plan.

20      Managers have reviewed the activities for which they are responsible and have provided commentary of the actual performance against targets, particularly in those instances where the performance targets have not been met.  This information is largely complete at the time of writing but may change for the final document depending on officer review and audit.

21      Of the 99 service performance targets, 58 (59%) were achieved, 34 (34%) were not achieved and 7 (7%) were not measured.  There were a variety of reasons why target Key Performance Indicators (KPI) were not met and these are outlined in more detail in the various activity sections of the Annual Report.

 

22      In most instances there are very low levels of risk associated with not achieving individual KPI’s.  The report does identify several areas where KPI’s were not achieved that may indicate a higher level of risk to the public – in particular related to Water Supply, Stormwater and Regulatory Services.

23      Further investigation into these results indicate that in a number of instances the risks are in fact quite low or that officers have undertaken remedial action to reduce any risks.  This commentary is outlined in the Annual Report document being circulated separately.

24      In addition, the KPI’s include several Mandatory Measures which the Council is required to report on. These measures, and the criteria for assessing these, have been standardised across the country which means not all of the measures relate well to the Southland District context with its widely dispersed small rural communities. Officers have provided commentary in the report to give more context to provide the reader with further detail of the significance of the results for Southland District.

25      The instances of non-measurement relate to situations where the KPI has not been measured in the reporting period, or there have been changes in methodology used or the information used for the measurement is no longer available.

26      The suite of KPI’s and targets that the Council will use to measure and monitor performance in the future are being reviewed as part of the development of the 10 Year Plan
2018-2028 and associated Activity Management Plans.

Projects

27      The Annual Report 2016/2017 includes information about projects, their completion status and actual cost versus budget.  The projects include those programmed in the Annual Plan 2016/2017 plus any projects carried forward from 2015/2016.

28      Of the 158 projects programmed, 59 (37%) of these were completed, 58 (37%) were in progress, 17 (11%) were deferred and 3 (2%) were deleted.

 

29      The Finance and Audit agenda for the 6 September includes two separate reports outlining more detailed information about projects (refer to the item ‘Corporate Performance Report’ and ‘Overall Programme of Projects to be Carried Forward’).  These reports contain more detail about the projects for the year and also discuss the key risks and issues associated with project completion rates.

30      More information in relation to the performance measures and project status can be found in the various activity sections of the report.

Financial Results

31      The final review of the financial results is currently being conducted and will be included in the draft Annual Report to be circulated separately.  Any changes to the financial information detailed below will be discussed at the meeting.

32      These financial statements have been prepared in accordance with Tier 1 PBE accounting standards.  Explanations of the variance between actual results and budgeted results for 2016/2017 year can be found in note 33 of the Annual Report.

33     A summary of key financial information is set out below.

Statement of Comprehensive Revenue and Expense

34      The Statement of Revenue and Expense records the revenue received and the expenditure incurred by Council. It also records changes in the value of Council’s assets.  In summary, Council’s financial performance was as follows:

 

Actual 16/17

Budget 16/17

Actual 15/16

Total Revenue

$72.1M

$68.4M

$67.2M

Total Expenditure

($71.8M)

($69.3M)

($65.8M)

Operating Surplus/(Deficit)

$0.3M

($0.9M)

$1.4M

Gains on Assets at fair value

($0.1M)

-

$1.3M

Gains on Assets

$95.2M

$21.7M

$0.4M

Total Comprehensive Revenue and Expense

$95.4M

$20.8M

$3.1M

35      Total revenue was $3.7M over budget primarily as a result of forestry sales being significantly higher than forecast ($3.9M) as well as an increase in the forestry valuation of $0.8M.  This was offset by a decrease in NZTA funding of $1.9M as a result of a delay in the tendering of the Alternative Coastal Route project and several bridge replacement projects; as well as reduced grants and subsidies income of $1.2M, predominantly associated with the Around the Mountains Cycle Trail.

36      Total expenditure was $2.5m above budget predominantly due to costs associated with the increased forestry harvesting ($1.9M) and costs associated with stage 8 and 9 of the Around the Mountain Cycle Trail being expensed. 

37      Gains on Assets was $73.4M greater than budget due to a significant increase in the roading revaluation as a result of current market conditions as well as more accurate costing information being available as a result of the Alternative Costal Route project tender being awarded recently.

Statement of Financial Position

38     The Statement of Financial Position (also referred to as the Balance Sheet) records the assets Council owns, and how those assets are financed.  Total Assets is what the council owns for example infrastructure assets, Total Liabilities are finance from third parties, for example accounts payable; and Total Equity is the net community assets (Total Assets less Total Liabilities).  Key items in the Statement of Financial Position are:

 

Actual 16/17

Budget 16/17

Actual 15/16

Total Assets

$1,496M

$1,437M

$1,400M

Total Liabilities

$11.5M

$13.9M

$11.0M

Total Equity

$1,485M

$1,423M

$1,389M

39      Total Assets are over budget primarily due to property, plant and equipment and investments being significantly more than budgeted by ($36.8M and $17.2M respectively).  This is primarily as a result of the higher than budgeted revaluation of infrastructural assets offset by less capital works being completed than anticipated, and consequently more funds being retained in investments.

Statement of Cash Flows

40      The Statement of Cash Flows records the cash that Council received and disbursed.  Broadly cash, under financial reporting rules is recorded in three separate categories:

•        Operating cash flows - the cash flow related to day-to-day operating activities.

•        Investing cash flows - the cash flow received from sale of assets and cash spent on capital assets.

•        Financing cash flows - the cash flow received from any borrowings and the cash flow disbursed in repaying borrowings.


 

41     Overall, Council’s cash position increased from June 2016 by $3.1M (rounded).  In summary, the cash flows recorded within these categories are as follows:

Operating cash flows

Actual 16/17

Budget 16/17

Actual 15/16

Cash surplus/(deficit)

$20.2M

$22.2M

$23.2M

 

Investing cash flows

Actual 16/17

Budget 16/17

Actual 15/16

Cash surplus/(deficit)

($17.1M)

($35.7M)

($27.1M)

 

Financing cash flows

Actual 16/17

Budget 16/17

Actual 15/16

Cash surplus/(deficit)

-

($0.9M)

($0.01M)

42      Net operating cashflows were lower than budgeted.  Payments to supplier and employees were $1.2M above budget primarily due to harvesting costs associated with increased forestry harvesting undertaken.

Financial matters of interest for 2016/2017 Annual Report

43      Appendix 1 includes a summary of some key financial matters identified whilst preparing the Annual Report for 2016/2017.  This includes a summary of the significant revaluations, being roading, three waters and forestry.

44      Items to note in relation to these revaluations are: 1) a significant increase in the roading valuation of $95M and 2) an error in the 2015/2016 three waters valuation of $835K.

45      These revaluation matters have been raised and discussed with the manager from Audit NZ and at this stage it is not expected that these matters will cause significant concern to the auditors.  The audit manager has advised that the quantum of the error is not considered material and therefore at this stage, believes that a prior period adjustment will not be required.  They have however indicated that it may be noted in the management letter.

Issues

46      As at the date of this report there are no significant unresolved issues in relation to the Annual Report 2016/2017.

Factors to Consider

Legal and Statutory Requirements

47      Section 98 of the Local Government Act 2002 requires Council to adopt an Annual Report within four months of the end of the financial year.

48      The Act also requires that Council publishes a Summary of the Annual Report within one month of the Annual Report being adopted.  Officers are preparing a Summary document which will be released in mid-October.

49      Part 3 of Schedule 10 also outlines a number of disclosures that are required to be included in the Annual Report.

Community Views

50      The community expects Council to adopt an Annual Report in accordance with the requirements of the Local Government Act 2002.  The Report is an important accountability document in terms of explaining the actual performance of the organisation relative to the objectives that were set via the Long Term Plan and Annual Plan.

Costs and Funding

51      The agreed fee paid to Audit NZ for the audit of the 2016/2017 Annual Report is $115,440 (excluding GST) plus associated disbursements.

52      There are no additional financial considerations associated with making a decision on whether to adopt the Annual Report.

Policy Implications

53      Council’s policies relating to the basis upon which the Annual Report is prepared are outlined in the Statement of Accounting Policies contained in the Report itself.

Analysis

Options Considered

54      Under the Local Government Act 2002, the Council must prepare and adopt an
Annual Report in respect of each financial year, no other options are available. 

Analysis of Options

Option 1 – Recommend adoption of the Annual Report 2016/2017, including any adjustments made by the committee

Advantages

Disadvantages

·        Compliance with Council’s legislative requirements and Council’s Committee delegations.

·        Committee has an opportunity to review the report and satisfy itself that the Report is complete and that it has been prepared on an appropriate basis.

·        The document provides information to the public on the performance to budget and against key performance indicators.

·        There are no disadvantages.

 

Option 2 – Do not recommend the adoption of the Annual Report 2016/2017

Advantages

Disadvantages

·        There are no advantages of this option.

·        Council will not be compliant with the legislation.

 

Assessment of Significance

55      The Annual Report 2016/2017 is considered significant under Council’s significance and engagement policy because the performance of Council is of wide community interest.

56      It is important to the public that Council meets both its financial and non-financial commitments to ensure it delivers its services efficiently and effectively.  To do this the public relies on the information provided in the Annual Report to give it assurance that Council is undertaking its responsibilities and how well it is performing these.

57      Along with the processes and procedures Council undertakes to track and record the information provided in the Annual Report, to ensure that the public can rely on the information provided an independent review is undertaken by auditors (Audit New Zealand).  In general the Audit New Zealand provides an opinion as to whether Council has complied with Generally Accepted Accounting Practice (GAAP) and that the annual report fairly reflects council’s financial position, results of operations and cashflows, and levels of service and reasons for any variance.

Recommended Option

58      The recommended option is Option 1 – Recommend adoption of the Annual Report 2016/2017, including any adjustments made by the committee

Next Steps

59      Audit New Zealand will undertake their audit of the Annual Report.  Any significant changes resulting from this will be circulated to the committee via email for confirmation, prior to the Annual Report being finalised for adoption by Council on 27 September 2017.

60      Information from the Annual Report 2016/2017 will be used to prepare a Summary Annual Report that will be approved by the Mayor and Chief Executive prior to distribution.


 

APPENDIX 1

FINANCIAL MATTERS TO NOTE

 

Roading Valuation

 

The roading valuation has been completed by Stantec and a copy provided to Council and Audit NZ.  The valuation resulted in an overall increase in the roading infrastructure of $90.7M.  A summary of the valuation is detailed below:

 

 

16/17

15/16

 

Bridges

$118,126,442

$100,493,531

17.5%  increase

Footpaths

$17,661,810

$17,747,609

-0.5% decrease

Unsealed Roads

$411,631,105

$396,240,107

3.9% increase

Sealed Roads

$717,411,947

$659,805,192

8.7% increase

Street Lights

$2,156,983

$2,089,700

3.2%  increase

 

Cycle Trail

$7,613,086

$7,526,707

1.1% increase

Overall the Roading Assets Depreciated Replacement Cost (DRC) revaluation has increased by:

$1,274,601,373*

$1,183,902,846*

7.7% increase

* The difference between these numbers doesn’t equate to the valuation increase due to adjustments for additions and depreciation.

 

Depreciation

16/17

15/16

 

Bridges

$2,215,231

$1,838,308

20.5% increase

Footpaths

$567,222

$554,138

2.4% increase

Unsealed Roads

$3,286,027

$2,991,495

9.8% increase

Sealed Roads

$9,529,576

$8,559,904

11.3% increase

Street Lights

$118,743

$114,845

3.4% increase

Cycle Trail

$142,976

$138,752

3% increase

Overall

$15,859,775

$14,197,442

11.7% increase

 

There are several variables that drive the valuation outcomes. Included in this are:

 

The rates have been derived from contracts carried out over the past 23 years. The rates were indexed up to June 2017 and averaged.  Following this, the individual historical bridge replacements were weighted in relation to the type of replacement. Some of the historical replacements were in fact only replacement of some of the bridges components.  For example some bridges only had their beams and deck replaced onto existing abutments.  By using weightings Stantec have arrived at a more appropriate replacement rate.  The bridge rate and the bridge culvert rate have gone up 20%.  Both of these increases are due to an indexed and rounded review of historic and recent contracts.

 

The increases in the sealed pavement surface values and annual depreciation are due to:

 

·    An overall increase in the unit rates with the unit rates changes ranging from 5.3% to 23.3%.

·    Changes in the mix of seal types, due to recent reseals.

·    An increase in the total sealed area being valued (2.7%), due to less first coats being the current top surface. These first coats are valued with the sealed pavement structure.

 

The reason that the annual depreciation increase is not as much as the replacement cost increase is due to a review of the Total Useful Life’s (TUL) where some were extended.  The review of the TUL’s revealed that the weighted average TUL was around 13.7 years where as the expected average TUL is around 13.3 years.

 

The increases in the sealed pavement structure values and annual depreciation are due to:

 

·    A mixture of increases and decreases in unit rates. The basecourse rates have a mixture of changes (-2.81% to 20.56%), the subbase rates have a mixture of changes (0.39% to 31.15%) and the first coat rates have gone up (7.58% to 7.69%).

·    A small increase in subbase quantity (3.3%), a small increase in the basecourse quantity (0.6%) and a small increase in the first coat quantity (0.1%). The quantity increases are due to recent rehabilitations, where the roads are now wider than before.

 

The reason that the annual depreciation increase is not as much as the replacement cost increase is due to a review of the TUL’s where some were extended.  The sealed basecourse TUL’s being extended by 1 year in different sub areas of the district based on the latest review of pavement lives expected, as recorded in RAMM.

 

Water/Sewerage/Stormwater Valuation

 

The WWS valuation has been prepared by Waugh and a copy of the detailed numbers provided to Council staff and Audit NZ.  The result is an overall decrease in the depreciated replacement cost of the infrastructure of $818K. A summary of the valuation is detailed below:

 

 

15/16

16/17

 

Water

$52,583,089

$51,912,846

1.27%  decrease

Sewerage

$75,307,344

$75,215,233

0.12%  decrease

Stormwater

$17,517,948

$17,462,138

0.32%  decrease

Overall the Water Sewerage and Stormwater Depreciated Replacement Cost (DRC) Valuation:

$145,408,381

$144,590,217

0.56% decrease

 

In addition to the depreciated replacement cost valuation for 16/17 there is an additional $4.6M in work in progress (this was work undertaken during the year but the asset information is yet to be included in Hansen).  This WIP is broken down as follows: Sewerage ($3M) mainly for Curio Bay Treatment system and Te Anau; Water ($1.6M) mainly for Winton Water Mains and Riverton; and stormwater ($43K).

 

After depreciation there is a net revaluation for the three waters of $1.7M.

 

In reviewing the numbers staff identified that there was an error in the 2015/16 valuation, where a number of assets relating to four water upgrades have been included twice, resulting in the prior year valuation being overstated.  The valuer has provided the following explanation:

 

1.   When the plants were upgraded, the assets were updated in IPS

2.   When checked against the payment schedules etc the assets weren’t at a component level that reflected all of the work

3.   There wasn’t time to fix it in the asset register so the improvements were valued as a single line

4.   As a result it is estimated that approximately 80% of the new assets in IPS for the upgrades were supposed to be excluded based on date, however it appears this step was missed

5.   New assets in IPS have been valued at component level as well as the one liner, therefore overstating the value

6.   Hence, now that we have fixed it and reviewed all the assets, the movement isn’t quite what you would have expected.

 

The following summary table outlines the water supplies impacted, actual valuation for 15/16, their estimated correct revaluation for 15/16 and the 16/17 valuation.  The overall prior year overstatement was approximately $834K.

 

 

 

Staff have discussed this matter with Audit New Zealand and are awaiting confirmation that it is not considered material, and therefore not considered a prior period error.

Around the Mountains Cycle Trail

 

$1.9M expenditure related to section 8 of the trail has been expensed to operational project costs after the decision was made to no longer proceed down the Oreti river.  This has contributed the increased other council expenditure in the statement of comprehensive income.

 

Emissions Trading Scheme

 

As at 30 June 2017, Council recognise ETS credits on the Statement of Financial Position (Balance Sheet).  The balance sheet reflects an asset of the number of units “received” (those still to be received will be disclosed by way of a note) multiplied by the value of the units at 30 June 2017.

 

History of the credits over the past 4 years is noted below:

 

 

16/17

15/16

14/15

13/14

Units

116,805

116,805

114,194

109,794

$ per Unit

$17.20

$17.85

$6.80

$4.15

Total

$2,009,046

$2,084,969

$776,519

$455,645

 

Forestry Valuation

 

The Forestry valuation has been completed by Woodlands Pacific Consulting Limited (previously known as Chandler Fraser Keating Ltd) and a copy has been provided to Council and Audit NZ.  The valuation resulted in an overall increase in the forestry asset of $0.773M.  A summary of the valuation is detailed below:

 

 

16/17

15/16

14/15

13/14

Discount Rate

7.5%

8%

8.5%

10.5%

Fair value of Tree Crop

$13.72M

$12.95M

$11.33M

$11.22M

Estate Value

$16.23M

$15.46M

$13.84M

$13.73M

Land Value

$2.51M

$2.51M

$2.51M

$2.51M

Hectares

1,416

1,423

1,348

1,283

 

 

16/17

15/16

 

Dipton

$0.2M

$2.5M

92%  decrease*

Gowan Hill

$1.4M

$0.9M

56%  increase

Ohai

$5.0M

$3.9M

28%  increase

Waikaia

$7.1M

$5.6M

27% increase

Overall Forestry valuation

 

$13.72M

 

$12.95M

 

6%  increase

Land valuation

 

$2.51M

 

$2.51M

 

No     increase

TOTAL ESTATE VALUATION

 

$16.23M

 

$15.46M

 

5%  increase

 

* Due to significant harvesting in 16/17

 

Extract from the Valuation illustrating the factors impacting the valuation:

 


 

Forestry Harvesting

 

When the forestry budgets were set the revenue was estimated based on net proceeds to Council, however in the current financial year, we changed to disclose both gross forestry sales and gross harvesting costs.  This has therefore impacted the budget vs actual reporting in the annual report.  A summary of the overall impact is noted below.

 

 

Actual 16/17

Budget 16/17

Difference

Forestry sales

$5.66M

$1.67M

$3.99M

Forestry harvesting costs

($1.90M)

-

($1.90M)

Net proceeds from harvesting

$3.76M

$1.67M

$2.09M

 

Increased tonnage as well as increased market prices both contributed to the successful financial result of forestry in 16/17 year.

 

Post Balance Sheet Event

 

On 31 July Council were served with a notice of proceeding from the High Court of New Zealand under the Judicial Review Procedure Act 2016 in the matter of the setting of a targeted rate under the Local Government (Rating) Act 2002.  The proceedings relate to 2016/2017 district wastewater rates for a single ratepayer totalling $12,591 (GST inclusive).  Council has engaged Simpson Grierson to act on its behalf in relation to this matter and staff are currently finalising the statement of defence and compiling relevant supporting information.  A case management conference is scheduled to occur on 11 September and subsequently a trial date set.

 

 

Attachments

There are no attachments for this report. 

  


Finance and Audit Committee

6 September 2017

sdclogo

 

Options for Council funding of the Around the Mountains Cycle trail

Record No:        R/17/5/9187

Author:                 Anne Robson, Chief Financial Officer

Approved by:       Steve Ruru, Chief Executive

 

  Decision                              Recommendation                         Information

 

  

 

Purpose

1        To recommend to Council that the decision on how to fund the balance of costs to date for the Around the Mountains Cycle Trail be consulted on as part of the 2018-2021 Long Term Plan.

Executive Summary

2        Council has previously deferred the decision on how it is going to fund the net cost (ie the difference between costs to date and external funding received) of developing the Around the Mountain Cycle Trail until the Deloitte report and the Environment Court decision had been received.  Both have now been received.

3        Council is still in the process of deciding how it will finalise the trail after deciding that the proposed Oreti River option is no longer a feasible option.

4        This paper explores the issues of when Council wants to make the funding decision on the net cost to date, how it wants to fund it and the level of consultation, if any, it wishes to undertake.  The recommendation is to undertake the funding decision as part of the 2018-2028 Long Term Plan, which also allows time for Council to consider how the trail will be completed.

5        It is also proposed that the decision on funding the remaining sections of the trail be made at the time that Council decides how and if to complete the trail.

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Options for Council funding of the Around the Mountains Cycle trail” dated 29 August 2017.

b)         Determines that this matter or decision be recognised as 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)         Recommends to Council that the decision on how to fund the net cost to date of $4.6 million incurred to develop the Around the Mountains Cycle Trail be made as part of the 2018-2028 Long Term Plan.

e)         Recommends to Council that options to be consulted on for funding include:

i)     The preferred option, based on current Council policy, funding by way of      Loan over 30 years, with loan repayments collected by way of the Roading          rate. 

ii)    Funded by the Strategic Asset Reserve, with no repayments of the reserve.

iii)   Funded 50% by way of a loan over 30 years, with repayments collected by     way of the roading rate and 50% funded by the Strategic Assets Reserve,    with no repayments of the reserve.

Content

Background

6        In preparing the 2016/17 Annual Plan, Council agreed to complete the Deloitte review and wait for the decision from the Environment Court prior to making any decisions on the future of the project and its funding.

7        Since then the Deloitte review and the decision from the Environment Court have been received. The decision of the Environment Court has resulted in the proposed route up the Oreti River Valley no longer being a viable option. 

8        Council agreed at its meeting on the 19th May to “further investigate the “Heartland Ride” option including consideration of the Walter Peak to Centre Hill section of the Trail being developed as either, A Great Ride; or A “Heartland Ride”.  This process will be undertaken in the coming months.

9        Although a decision on how to complete the trail is still progressing, Council staff are recommending that any funding decisions are now split into two decisions.  The first decision being that of how Council wants to fund the balance of costs incurred to date.  The second funding decision being made when the decision on how to complete the trail is made.

Issues

10      Council needs to decide how it wishes to fund the balance of the development cost of the trail incurred to date.  At the 30 June 2017, the balance of costs was $4,601,165 (after interest has been charged for 2016/17 of $235,279).

11      Council also needs to consider if it wishes to make the decision to fund on the basis of past discussions with the community or if it wishes to undertake further consultation.

12      Council has still to decide how and if it will complete the trail. As such additional costs will be incurred but the quantum will depend on the choices made. 

13      A funding decision can be made at any time.  It could be made now, given the trail is substantially complete or when the total costs are known. 

14      Additionally, Council still has a number of contractual obligations with external funders to complete development of the trail as originally envisaged. Council needs to work through its options and at the same time enter into discussions with these funders over the implications that any proposed change it makes to completing the trail has on the contractual obligations it has with the funders.

Factors to Consider

Legal and Statutory Requirements

15      As part of the discussion on funding options the option of rating by way of the General rate is discussed as an option for funding.  As noted under the policy implications below, the current Revenue and Financing Policy states district rates funding of the roading activity to be by way of the Roading rate.  Based on the current Revenue and Financing policy, to fund the cycle trail costs by any rate other than the roading rate would be an inconsistent decision under section 80 of the Local Government. 

16      Section 80 requires that if this decision where to be made, Council as part of the decision making needs to clearly identify the inconsistency, the reasons for the inconsistency and any intention Council has to amend the policy or plan to accommodate the decision.

17      Section 100 of the Local Government Act, requires Council to ensure that each years projected operating revenues are set at a level sufficient to meet that years projected operating expenses.

18      Section 101(1) of the Local Government Act states Council must manage its revenues, expenses, assets, liabilities, investments and general financial dealings prudently and in a manner that promotes the current and future interests of the community. 

19      Section 101(3) of the Local Government Act, states that the funding needs of the local authority must be met from those sources that the local authority determines appropriate, following consideration of

(a)  In relation to each activity to be funded, -

(i)         The community outcomes to which the activity primarily contributes; and

(ii)        The distribution of benefits between the community as a whole, any identifiable part of the community, and individuals and

(iii)       The period in or over which those benefits are expected to occur; and

(iv)       The extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and

(v)        The costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities and

(b)  The overall impact of any allocation of liability for revenue needs on the community.

Community Views

20      Submissions on the trail have been received as part of previous Long Term Plans and Annual Plans.  These submissions were mixed in their support.  A number supported the construction of the trail on the basis that it supports active healthy communities and would provide recreational opportunities for residents and visitors.  Submissions noted the likelihood that the Around the Mountains Cycle Trail will also attract new visitors and present opportunities for vibrant and successful Southland District communities.  Additionally submissions discussed the funding of the trail and noted the plan’s lack of detail in regards to funding and on-going maintenance.  A submitter also queried how future resources would be sourced and allocated to continue to support active communities, protect the local environment and maintain the trail.

21      It would be fair to say that a number are concerned about the increase in projected costs, beyond the original $8 million cost that was communicated to ratepayers, and the financial implications that these increases will have for ratepayers.

22      In recent months a number from within the community have made representations to Council on the issues relating to the way in which development of the ATMCT has been managed to date and the options that exist for its future development and funding.

23      Some of those speaking to Council have questioned the appropriateness of Council’s indication in its Long term Plan and Annual Plan to use the Strategic Assets Reserve (formally known as the Southroads Reserve) to partially fund the balance of costs.  They have also asked how this fund would be repaid.

Costs and Funding

24      The actual costs of the trail to the 30 June 2017 is $10.4m, including interest for 16/17 or $234k.   

25      The actual income received to the end of June 2017 is $5.8m.  This excludes the balance of funding yet to be received from NZ Lotteries of $500k.  This funding was to be received on completion of the trail. As discussed previously, discussions with funders about monies received and to be received are yet to be undertaken.

26      The balance to be funded at the 30 June 2017 is $4.6m (Costs $10.4m less Income $5.8m).

27      In the accounts to the 30 June 2017, $1.8m will be expensed, the balance will be capitalised (made into a fixed asset and depreciated over the life of the asset).  The $1.8m is the cost of the consent, Environment Court and appeal costs in relation to the Oreti River stage.  Because Council has decided not to pursue the Oreti River option, the costs incurred in relation to this stage need to be expensed as they no longer meet the definition of an asset as defined within the accounting standards.

28      It is generally considered good practice to fund any expensed item from funds collected in the year or cash held particularly given the section 100 requirement to operate a balanced budget.  This also reflects the fact that the expense does not have any long term benefits.  Council does, however, have the option of funding these costs over a longer timeframe if it considers that to be desirable. 

29      Options for funding the capital costs incurred to date include:

·    Loan, repayments funded from rates over a 30 year term.

·    Reserves, payment from existing cash reserves.  

·    Combination of a loan and reserves.

 

30      Council has indicated previously that it is considering funding the balance of costs, half from a loan over 30 years and the remainder from the Strategic Assets reserve (previously called the Southroads reserve).  At the 30 June 2017, the balance of this reserve was $8,507,783.  The loan was to be repaid from rates.  There was no intention to repay the reserve. 

31      Council has indicated in its Annual Plans/Long Term Plans to date that the purpose of the Strategic Assets Reserve was to offset rates.

 

Policy Implications

32      Council has included the cycle trail as part of its Roading activities.  Council’s current Revenue and Financing policy states that the rates funding of roading will be from the roading rate. 

33      As part of the Long Term Plan process, Council will be reviewing its Revenue and Financing Policy and hence any proposed changes to funding sources may be considered.  Additionally, as part of the preparation of the Long Term Plan Council may also review the activity to which the cycle trail is allocated. 

Analysis

Options Considered

34      In considering options for funding of the balance, Council needs to consider:

·    The timing of the funding decision.  Although the Deloitte report and the Environment Court verdict is back, a decision on how to complete the trail is still required. 

·    The funding option.  Loan, reserves or a combination.

Loan:       $4.64 million funded from a loan over 30 years at 5.15% would be $304,032 of repayments per year.  Currently the maintenance costs of the trail are collected through the roading rate which is a combination of a fixed rate and a rate in the $ in CV.   Alternatively, the repayment could be collected by the Uniform Annual General Rate (UAGR) at $19.52 per rateable unit.  Or a combination of UAGR and a rate in the $ on Capital Value.  The below table illustrates the impact of collecting through the roading rate or using the same tools but from the General Rate.  This is based on the 2017/18 roading rate model.

Reserves:         The most likely reserve to use, given Council’s indication in the past to use this reserve to offset rates is the Strategic Assets Reserve.  The current balance is $8.5 million.  In using this reserve Council needs to decide if it would look to recover the funds used.  To not recover the funds would mean the funding decision would have no future impact on ratepayers.  To recover the principal monies over say 30 years would mean $146,667 per year.

Combination:  The combination could be whatever Council chose.  To date it indicated 50% Loan, 50% reserves.  This would mean $144,150 in repayments of the loan over 30 years assuming Council would not seek reimbursement of the Strategic Assets Reserve.

-     The level of consultation, if any, Council wants to undertake with the community over the funding choice.  Given the level of discussion on this issue, Council may consider undertaking further consultation on how to fund the balance of costs as part of the Long Term Plan.

Analysis of Options

Option 1 – Consult on the funding option for the repayment of $4.64million as part of the 2018-2028 Long Term Plan.  Consultation on 3 options:

i)         Funded from a loan over 30 years with loan repayments being     collected from the roading rate over 30 years.

ii)        Funded from the Strategic Assets reserve, no repayment of the reserve being sought with no impact on future rates.                

iii)       Funded 50% from a loan over 30 years and 50% from the Strategic Assets reserve.  With loan repayments being collected from the roading rate over 30 years.       


 

 

Advantages

Disadvantages

·        Greater transparency on the decision making process

·        Decisions on the completion of the trail and potential costing of such will be more certain.

·        Can provide details of the impact of various options to the ratepayers.

·        Further delays the certainty for ratepayers.

 

Option 2 – Council could decide the option of how to fund the balance of costs now

Advantages

Disadvantages

·        Certainty for ratepayers now.

 

·        Could face criticism from ratepayers given the level of recent submissions received over Councils current proposed funding option.

·        The total costs to completion are unknown at this time.

 

Option 3 – Council could delay the decision on how to fund the current balance of costs until the decision is made on how it is going to complete the trail.

Advantages

Disadvantages

·        The total costs would be known and a decision on how to fund the total cost could be made at one time.

·        Continued lack of certainty for ratepayers

 

 

Assessment of Significance

35      In terms of Council’s Significance and Engagement policy, the financial implications of developing the Around the Mountain Cycle Trail are significant. There has also been a high level of interest in the issues relating to it. As such a decision on the Trail is to be funded is considered to be significant.  

36      Council has previously consulted on the trail as part of its Long Term Plans and Annual Plans.  In these it proposed a funding option of 50% from a loan and 50% from the Strategic Assets Reserve.

37      Given the level of community interest and recent representations by some members of the community Council may consider it appropriate to further consult as part of the 2018-2028.  This consultation would focus on how to fund the current balance of costs and provide ratepayers with the impact of each option.

Recommended Option

38      Option One - Consult on the funding option as part of the 2018-2028 Long Term Plan.

Next Steps

39      If agreed by Council, Staff would incorporate the options into the consultation document of the 2018-2028 Long Term Plan.

 

Attachments

There are no attachments for this report. 

 


Finance and Audit Committee

6 September 2017

sdclogo

 

Health and Safety

Record No:        R/17/8/19028

Author:                 Janet Ellis, People and Capability Manager

Approved by:       Steve Ruru, Chief Executive

 

  Decision                              Recommendation                         Information

 

  

 

Purpose

To provide an update on Health and Safety activity within the Southland District Council.

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Health and Safety” dated 31 August 2017.

 

Content

Health and Safety Plan 2017/18

1        In February 2017, Council contracted Simpson Grierson to undertake a Health and Safety Gap Analysis.  The analysis included a review of Council’s Health and Safety Management System, discussions with key operational leaders and visits to operational locations and discussions with workers and key contractors.  The result of the Gap Analysis was a written report detailing findings and recommendations for improvement.  The report was considered at the March 2017 Finance and Audit Committee Meeting.

2        In June 2017 at the Finance and Audit Committee meeting, a plan, including objectives and targets was presented and approved.  Council subsequently approved the plan on 17 July 2017 with a slight change to the Health and Safety Commitment statement.

3        An updated Health and Safety Plan 2017/2018 is attached for your information.

4        Appendix 2 to this report details progress made to the plan as of 18 August 2017.  Progress is on track and has been well supported by the organisation as a whole.

Health and Safety Implementation Plan

5        To ensure completion of all actions a Draft Health and Safety Implementation Plan (Attachment C) has been drafted.  This includes more detail in relation to each of the actions required. There are a number of actions that need more detail on timeframes. This is because this is a working document and will continue to be updated as progress is made. 


 

Review of Health and Safety related incidents

Accidents/Incidents/Near Misses – Southland District Council

6        As part of the Health and Safety Plan for 2017/2018 we will be ensuring that we have consistency of reporting on both lead and lag indicators. 

7        Lagging indicators are typically “output” oriented, easy to measure but hard to improve or influence while leading indicators are typically input oriented, hard to measure and easy to influence.

8        The indicators we will be reporting on will be finalised by the Executive Leadership Team by the end of September 2017.  From there Targets will be developed and signed off by the Finance and Audit Committee and Council.

9        Draft Lead indicators may include Near Misses, Audits and Inspections and progress to Health and Safety Plan.  Draft Lag indicators may be Medical Treatment Interventions (MTI), Incidents, Lost time due to injury, Worksafe notifications and Number of Incident Investigations completed.

10      Please find below a summary of these indicators for the year from 1 January 2017 to 31 July 2017.  Please note we currently do not record the number of Audits and inspections carried out.

 

Key Performance Indicator

1 January 2017 – 30 April 2017

1 May 2017-31 July 2017

1 January 2017 – 1 July 2017

Worksafe Notifications

0

0

0

Medical Treatment  injury (MTI) as reported to ACC

1

0

1

Incidents

2

3

5

Lost time due to injury

1

0

1

Near Misses

4

4

8

Investigations completed

8

7

15

11      The Lost time incident was the serious motor vehicle accident in January 2017 where an Animal Control Officer suffered a broken arm and had an overnight stay in hospital.

12      The three incidents in the period 1 May 2017 to 31 July 2017 included bruising to a leg following an issue with a desk, a trip in the carpark and an incident with a ram.  None of these incidents were serious and involved minor injuries.

Accidents/Incidents/Near Misses – Contractors

13      Collecting relevant information from our contractors on Health and Safety is still a work in progress.  This quarter we have included some relevant information from IFS Growth and our Roading Alliances. 

14      Attached is IFS Growth’s Health and Safety Report to end of June 2017.  Below is the information from the three Alliance Contracts.

 

 

15      June 2017 Foveaux Alliance

16      July 2017 Central Alliance

17      June 2017 Waimea Alliance

Critical Risks

18      Work continues on managing our critical risks.  The new Critical Risk and Management procedure will outline clearly how Council will identify and manage its most critical risks, including the development of a control plan and assessment against the effectiveness of these controls.

19      Currently, contractors who have been on the pre-approved list for over two years are being asked to supply updated health and safety information.  Information will include statistics on their health and safety incidents and key risks.  This will help us to clearly articulate the biggest risks for our contractors.  Currently, these are seen as being working at heights, moving machinery parts and mobile plant and vehicle movements.

20      Development of critical risk control plans (bowties) is well underway with three workshops held in early August 2017.

21      Work is also nearing completion with the review of the Motor Vehicle policy. As part of this policy review a strong focus is being placed on ensuring that health and safety is a predominant factor.  There are now provisions regarding

·    specification of minimum safety requirements for vehicles

·    utilisation of GPS in vehicles

·    Pool and General use vehicles will be streamlined dependent on the fit for purpose assessment, options will be limited

·    limiting Council Pool and General Use Vehicles to be driven by others only when accompanied by a Council employee

·    distractions in the vehicle, being food, children, hitch hikers, headphones, animals, phones (only voice controlled dialling, or pulling over)

·    fatigue, and guidance in relation resting or staying overnight

·    travel in adverse conditions – consider if travel is necessary, defer, delay or consider an alternate route

·    travel with other Council staff where possible

·    weekly informal vehicle checks

·    formal quarterly vehicle checks

·    mandatory training for designated drivers of Council vehicles.

Attachments

a         Health and Safety Plan 2017/18

b         Appendix B - Update on Health and Safety Action Plan

c         Health and Safety Implementation Plan

d         IFS Health and Safety Report    

 


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

6 September 2017

sdclogo

 

2018-28 Long Term Plan Audit Fees

Record No:        R/17/8/19170

Author:                 Anne Robson, Chief Financial Officer

Approved by:       Steve Ruru, Chief Executive

 

  Decision                              Recommendation                         Information

 

  

 

Summary

1        The Office of the Auditor General advises Council auditors, Audit NZ in this case, of the fee envelope within which it can set the fees for the 2018-28 Long Term Plan (LTP) group of audits.

2        The attached letter from the Office of the Auditor General outlines that the fee envelope that it has set is based on the 2015-2025 Long Term Plan audits plus an increase of 5%.  This increase they say reflects inflation over the 3 year period to 2018.  The letter also outlines the approach of seeking recoveries where the actual costs exceed expected levels.

3        Based on this letter, Audit NZ will be commencing discussions with Council shortly over the proposed fee for the 2018-2028 LTP audit of Council. The fee for the 2015-25 LTP was $80,000 plus $5,710 of disbursements plus GST.

4        To ensure that expectations in regards to the audit are met, the letter also includes two attachments, outlining what the Office of the Auditor General considers “good delivery” by a local authority for an LTP audit engagement and guidance on the minimum information a local authority will need to support their consultation document.  

5        Attachment One outlines the LTP audit cost recovery guidance provided to auditors.  It sets out that the information provided by Council needs to be complete, reviewed appropriately and provided within the timelines set.  Additionally, Council needs to ensure all relevant disclosures have been made and that Council staff assist where needed.

6        Attachment Two, sets out the expected documentation to support the LTP consultation document, including Community Outcomes, Groups of Activities, the Financial and Infrastructure strategy, forecast financial statements and the Revenue and Financing Policy.

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “2018-28 Long Term Plan Audit Fees” dated 31 August 2017.

 

b)         Notes the content of the letter and attachments from the Office of the Auditor General.

 

 

Attachments

a         2018-28 Long Term Plan Audit fees - SDC    

 


Finance and Audit Committee

06 September 2017

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

6 September 2017

sdclogo

 

Digitisation Project Update

Record No:        R/17/8/19204

Author:                 Gillian Cavanagh, Team Leader - Knowledge Management

Approved by:       Damon Campbell, Chief Information Officer

 

  Decision                              Recommendation                         Information

 

  

 

Introduction

1        The purpose of this report is to provide an update to the Finance and Audit Committee on the status of the Property File Digitisation Project.

2        The figures outlined in the table below are for the months of January to July which provides the committee with an overview of the year to date.

3        At the time of writing this report we are yet to finalise the automated reporting directly from the software with the vendor.  In the meantime we can now report of average pages per files scanned rather than per files prepared (the April report used files prepared).  Because a file is not necessarily scanned in the same month it is prepared reporting the page number average of pages against files scanned instead of files prepared gives a more accurate picture of the overall average number of pages per file.

Year to Date Reporting

4        The following table provides details of files scanned, average A4 pages and large format (LF) pages scanned and average metadata/pdf compilation for the months of January to July.

 

Files

Scanned

Average

A4 Scanned

Average

LF Scanned

Average

Metadata/PDF

January

1724

227

4.3

20

February

1607

227

5.2

20

March

2107

225

5.4

20

April

1099

255

4.4

21

May

2617

203

2.9

18

June

2313

215

1.6

20

July

2570

212

1.7

19

Total

14037

220

314

20

5        These details have been extracted directly from the vendor’s software using an interim manual process.  The new reporting structure within the existing software is in the final stages of testing and will available for future reporting.

6        The current fixed price is based on 274.8 A4 pages and 6.91 large format pages and 24,000 files. 

7        The charts on the following page show the total number of files scanned increasing month to month over the course of the year (with the exception of April due to the number of statutory days in the month) and the average number of pages per file scanned.  While this number is trending down it has not decreased as much as we would have expected at this stage.  This is likely due to the fact that the remainder of the collection to be completed includes a number of low activity areas compared to the rest of the district.

 

8        Monthly updates to the Chief Executive and Chair of the Finance and Audit Committee between committee meetings has not been provided due to the timing of the provision of the interim reporting. Monthly updates will be available from August for the duration of the project.

9        Council officers completed a progress review meeting with PBS on Monday 21 August.  As a result of this meeting we can confirm that all processing will be completed by the end of November.  At the December Finance and Audit Committee meeting we expect to be able to provide final completion numbers for the project.

10      Council officers at the time of writing this report are in the process of identifying, packing and sending the last of the files left on site (approximately 400 file volumes).  This will be an ongoing process over several weeks to ensure no files are left onsite.

11      Council officers are also in the process of testing the import process of the completed files into Records Manager (Council records system).  Once testing has been completed this will be an ongoing process completed daily until all files have been imported successfully.

12      The following table summarises expenditure (as per the original Business Case) to the end of June and forecast for the completion of the project. 

Description as per Business Case

Amount per

Report

Actual Spent

(June 2017)

Future Costs

Total Costs

(incl future)

Digitisation of Property Files

                1,707,996

    1,187,265

      508,893

1,696,158

HP TRIM upgrade

                   103,426

      103,426

               -  

103,426

File Preparation and QA resource

                     99,020

        57,814

        41,205

99,020

Website Enhancement

                     27,780

        27,788

               -  

     

27,788

Shelving Removal

                     10,000

             300

          9,700

 10,000

Offline staff access to files

                            -  

               -  

               -  

Contingency

                     51,778

        51,778

               -  

51,778

Total

                2,000,000

    1,428,371

      559,799

1,988,170

13      At the end of June the updated forecast for the entire project is $1.988m, compared to the approved budget of $2.0m

 

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Digitisation Project Update” dated 24 August 2017.

 

 

Attachments

There are no attachments for this report.  

 


Finance and Audit Committee

6 September 2017

sdclogo

 

Analysis of Actual results to Forecast for the year ended 30 June 2017

Record No:        R/17/8/19349

Author:                 Robert Tweedie, Management Accountant

Approved by:       Anne Robson, Chief Financial Officer

 

  Decision                              Recommendation                         Information

 

  

 

Background

1.         The 2016/17 Annual report compares the actual results to the forecast approved for 2016/17.

2.         During the year Council considers and approves changes to the budget set as part of forecasting the year end position.

3.         This report compares the actual results to the forecast approved for the financial year.

4.         The comparison is made using the same reporting layout as the Annual Report. This reflects the Groups of Activities of Council supported by the Funding Impact Statements included in Attachment A.

Overview

5.         The headings in the Funding Impact Statements relate to the following:

·              The YTD Budget is the 2016/17 Annual Plan. 

·              The Forecast is the 2015/2016 carried forward items approved by Council in August 2016 and any changes as a result of October 2016 and February.

 

6.         The below table is a summary of the actual results compared to forecast for the year. A summary of the detail contained in the Appendix is noted below in the report.

 


 

Income

7.         Overall Operating Income is $1.8M (3%) more than forecast ($72.1M actual vs $70.3M forecast).

 

8.           District Leadership includes Other Financial Activities and Forestry. Other Activities is over budget due to external interest income on operating investments being higher than budgeted.  Annual budget assumptions were made based on the level of cash reserves of projected capital works that were going to be undertaken.  Cash reserves have been higher than expected due to the revised project scope and timing of some key projects.  This has resulted in earning additional interest income. Forestry sales ended ahead of projection by $1.2M.  Dipton sales were ahead of target by year end due to better sale prices and greater than expected volumes.  Additionally, the creation of some access tracks resulted in additional harvesting occurring.

 

9.           Roads and Footpaths income was below budget for the year.  The capital works programme commenced but was still behind the planned schedule which directly affects the level of income from NZTA. Work on the Southern Scenic Route is progressing but behind where it was projected to be.  Operational expenditure is slightly over budget at year end. In order to fully utilise the operational budget the Strategic Roading team had instructed SDC’s Alliance partners to pull forward some unsealed road metalling and complete additional unsealed road drainage renewals.  These works were confirmed by the Alliance partners and completed by 30th June. (note monies in relation to Southern Scenic route are being carried forward)

 

 

 

 

 

 

Operating Expenditure

10.       Operating Expenditure is $1.4M (2%) under forecast ($71.8M actual vs $73.2M forecast).

 

 

11.       District Leadership, in particular, Financial Services is $310K below budget year to date. This was principally due to lower insurance, debt collection, legal and valuation roll costs as well as savings due to staff vacancies. 

12.       Regulatory Services was below forecast.  This was due to reduced staffing levels particularly in resource consents and planning and less costs being incurred in relation to the district plan than forecast.

 


 

Capital Expenditure

13.       Capital Expenditure is $7.4 (29%) under forecast ($17.8M actual v $25.2M forecast).

 

14.       Due to the review of the current vehicle policy, a number of vechicle replacements within Community Services $108k (Community Engineers), Regulatory ($41k) and District Leadership ($41k) have not been replaced.  The replacement budgets have been included in the report to Council that seeks to carry the amounts forward to 2017/2018. 

15.       Water Supply is $1.8m behind forecast,

-     Work on the second stage of the Winton Water Main replacement was completed at the end of June under budget $573k, the remaining balance has been requested to be carried forward to 17/18 as additional funds for the next stage of replacement of the water main. 

-     Pipeline renewal work in the Te Anau Rural Water Schemes commenced in June but will continue into the new financial year ($331k) the delay was due to the method of installation proposed by the only tenderer. 

-     $168k of a 2015/16 carry forward for the Riverton water scheme upgrade has been spent.  The remaining monies of $356k have also been requested to carry forward to 2017/2018 to allow for completion of the treatment plant upgrade including potential enhancements to the sludge lagoon. 

-     $166k for the partial replacement of laterals on Mackinnon Loop has been deferred to 18/19.  When the project was started it was identified that in fact a greater area needed to be replaced.  

 

 

 

16.       Wastewater is $1.2M behind forecast,

-     $576k of desludging work planned for Riversdale and Winton was not undertaken during the year as the contractor did not re-establish in Southland although he was expected to. 

-     $116k of planned work on the disposal field and pumps at Stewart Island did not occur and will be carried forward due to the lack of contractor availability.

-     $217k related to the Te Anau sewerage project development and lateral replacement.  The majority was to allow for scoping works on the proposed scheme however the timing of decisions has delayed this work.

-     $93k relating to the Bay Road sewerage protection works was completed in 2015/2016 as part of another project occuring at that time.

17.       Overall roading capital expenditure is $3.4M less than budgeted at the end of June due to weather conditions. The resealing programme and tendered projects had commenced with various categories being underspent by $1.5M and the Southern Scenic Route which was $1.9M behind budget at year end.  The NZTA contract runs over a 3 year period ending June 2018. This will be under underspent at year end with approval for all carried forward projects been approved by NZTA.

 

Projects

18.       The following table and graphs are based on the actual spend on projects for the year and their statuses as of 30 June 2017.

 

 

19.       Specific details of the projects in progress, not started, deferred are included in the report to Council on the 7 September titled “Projects form the 2016/2017 to be carried forward into the 2017/2018 Financial Year”.

 

20.       The graphs below show graphically the actual project spend for the year ended 30 June 2017 compared to forecasted spend by activity.  The commentary explaining the variances as detailed in the attached Funding Impact Statements outline the significant variances and the reasons for this variance.

 

21.       The total actual spend for all projects was $21.4M (Operational maintenance $3.6M and Capital expenditure $17.8M) against a budget of $27.3M (Operational maintenance $2.1M and Capital expenditure $25.1M). The value of roading projects made up $15.8M (73% of the total value of projects).

 

 

 

22.         The Airport project is under review and the expenditure has been deferred over a number of years until a report has been received on the condition of the runway.

 

23.         The upgrade to the community facilities at the Otautau camping ground has not progressed Changes to the plans drafted has caused delays in its development.

 

24.         Parks and reserves was underspent, the Riverton Grandstand was delayed as the contractor could not schedule the work before 30 June 2017. The 2 projects in Te Anau for the walking track and town entrance signs have been deferred pending a decision from the community board on the future development plan.

 

 

 

25.       District projects include $1.3M for Digitisation and $63K for the core systems review.

Forecast Statement of Comprehensive Income

 

26.       The Forecast Statement of Comprehensive Income at 30 June 2017 is detailed below.

 

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Analysis of Actual results to Forecast for the year ended 30 June 2017” dated 31 August 2017.

 

Attachments

a         Council's Local and District Activities Funding Impact Statements - 30 June 2017    

 


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


Finance and Audit Committee

6 September 2017

sdclogo

 

Overall Programme of Projects for 2017/18 including the Projects proposed to be Carried Forward from 2016/17.

Record No:        R/17/8/20049

Author:                 Susan McNamara, Management Accountant

Approved by:       Anne Robson, Chief Financial Officer

 

  Decision                              Recommendation                         Information

 

  

 

Purpose

1        To inform the Committee of the overall programme of projects that will be included in the 2017/18 financial year.  This includes an overview of the projects for Council teams showing the proportion of projects for 2017/18 that have originally been budgeted for in earlier years. 

2        The Carry Forward expenditure noted in this report is subject to the Council approving the report on the 6 September 2017 agenda titled ‘Projects from 2016/17 to be carried forward into the 2017/2018 Financial Year’.

Summary

3        Every year Council staff undertake projects as planned in the Long Term Plan/Annual Plan/Carried Forward.  Although many are completed in the financial year in which they were budgeted to occur, often some projects are delayed for a variety of reasons but are still identified as needing to be undertaken/completed.  These projects are generally carried forward into the next financial year, as a project in progress/not been started.  Typically only projects of a maintenance or capital nature are carried forward, but occasionally budget managers request operational expenditure to be carried forward as well.

4       The final approved expenditure for a project may be a combination three processes.  These are an original project included in the 2017/18 Annual Plan, a staff submission to the 2017/18 Annual Plan from the March forecasting round or a Carry Forward at the end of the financial year. 

5       In March budget managers completed a second round of forecasting of the year-end financial result.  During this process budget managers identified projects that would not be completed by 30 June 2017 and when they expected this work to be done.  The forecasted projects expected to be completed in 2017/18 were then included as part of a staff submission to the Annual Plan and were included in the final 2017/18 Annual Plan that was adopted.  These items are shown in the graphs below in red.

6        The completion of the Annual Report for 2016/17 is the last stage of identifying projects to carry forward.  This final step requires project managers to consider whether any budget not spent/projects not completed are still required and to make a request for approval to carry forward the project and the amount remaining.  These projects are considered by the relevant Group Manager before being included in a report to Council for approval to include as expenditure in the 2017/18 financial year.  The schedule of expenditure items included in the report to Council to be approved on 6 September has been included as Attachment A to this report.  These items are shown in the graphs below in green.


 

 

7        Included in the Carry forward report to Council is a number of negative amounts.  As noted above as part of the 2017/18 Annual Plan, a staff submission was made for projects identified as not being complete at year end.  An estimate of the remaining budget was made and included in the submission.  Overall, the aim is to ensure that the original budget is maintained, unless Council is advised of a change.  Where the actual amount spent in 2016/17 was higher than forecasted in March a negative amount is included to Carry Forward.  For 2016/17 there were five projects identified needing negative carry forward amounts.

8        The complete list of projects, on which this report is based is itemised in Attachments A & B.  The schedule of expenditure items included in the report to Council to be approved on 6 September has been included as Attachment A to this report.  All projects included in the adopted 2017/18 Annual Plan are included in Attachment B to this report.

9        For projects that have accumulated from more than one of these processes they have only been counted as one project in the graphs provided in this report.  The report to Council   requests approval to Carry Forward a list of 65 expenditure items. As 14 of these were   partly included in the adopted Annual Plan for 2017/18 the number of carry forward items in this report is only 51; however all dollar amounts are included based on how expenditure approval has been requested.

10      To show the quantity of work for each team the project information has been split based on the staff that are to complete the work instead of the activity used for financial reporting.  The Water Team complete projects across the Water, Wastewater and Stormwater activities. The projects included for stormwater in 2017/18 relate to the reticulation network and will be completed by the Water Team.  If maintenance projects had been budgeted they would be completed by the Community Engineers.  The Community Engineers complete projects across Public Toilets, Cemeteries, Parks and Reserves, Community Facilities, Roading & Transport and Airport activities.    The projects for the Property team all relate to the Community Facilities activity.  This activity includes halls and office buildings (both area offices and libraries).

11      The information included in the graphs for the Roading Team is the value of the work being carried forward and does not include the remainder of the program for the year.  This is the as the Roading budget is set on a dollar value rather than as individual projects.


 

12      This graph shows the number of projects to be completed by each team by the method the expenditure is approved.

13      This graph shows the dollar value of the projects to be completed by the method the expenditure is approved.

14      As part of the Annual Report process managers discussed the implication of the additional work being transferred to 2017/18.  Most managers did not believe that the additional work with cause any issues for 2017/18.  There are some projects that have been identified where ongoing discussions with the Community mean that they may not be completed during 2017/18.  There may also be additional projects required as Community Plans are completed.

15      Any changes to the programme of work identified in this report will be formally captured into the reporting system when forecasting occurs during the year.  Forecasting will occur for the first time at after the October month end and again after the February month end.

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Overall Programme of Projects for 2017/18 including the Projects proposed to be Carried Forward from 2016/17.” dated 31 August 2017.

 

 

Attachments

a         2016 2017 Proposed Carry Forwards into 2017 2018 year

b         Projects included in the 2017/18 Annual Plan    

 


Finance and Audit Committee

06 September 2017

 

PDF Creator

PDF Creator

PDF Creator


Finance and Audit Committee

06 September 2017

 

PDF Creator


 

PDF Creator


 

PDF Creator

 

 


Finance and Audit Committee

06 September 2017

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.

C9.1  Risk Register - September 2017 update

C9.2  Corporate Performance Report for year ending 30 June 2017

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:

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

Risk Register - September 2017 update

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.

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

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.

Corporate Performance Report for year ending 30 June 2017

s7(2)(c)(i) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

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.