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

 

Date:

Time:

Meeting Room:

Venue:

 

Monday, 26 March 2018

9am

Council Chambers
15 Forth Street
Invercargill

 

Finance and Audit Committee Agenda

OPEN

 

 

MEMBERSHIP

 

Chairperson

Ebel Kremer

 

 

Mayor Gary Tong

 

Councillors

John Douglas

 

 

Paul Duffy

 

 

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

26 March 2018

 

TABLE OF CONTENTS

ITEM                                                                                                                                                                                  PAGE

Procedural

1             Apologies                                                                                                                                                                9

2             Leave of absence                                                                                                                                                9

3             Conflict of Interest                                                                                                                                             9

4             Public Forum                                                                                                                                                         9

5             Extraordinary/Urgent Items                                                                                                                        9

6             Confirmation of Minutes                                                                                                                               9

Reports for Recommendation

7.1         Risk Management Framework Project Development                                                                19

7.2         Annual Report Audit Plan for year ending 30 June 2018                                                         25

7.3         Health and Safety                                                                                                                                            47

Reports

8.1         Health and Safety Update                                                                                                                           97

8.2         Digitisation Project                                                                                                                                        99

8.3         Financial Report for the month ended 31 January 2018                                                        105

8.4         Forecasted Financial Position for the year ending 30 June 2018                                     153

8.5         Audit NZ report of Council's LTP Consultation Document for the period 1 July 2018 to 30 June 2028                                                                                                                                                     179

8.6         Outstanding Debt as at 31 January 2018                                                                                        195

Public Excluded

Procedural motion to exclude the public                                                                                                       201

C9.1      Corporate Performance Report for period two - 1 November 2017 to 28 February 2018

C9.2      Quarterly Risk Register Update - March 2018

C9.3      Review of Animal Control Processes

C9.4      Insurance options for Underground Infrastructure

 


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, 11 December 2017

 


 

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 Monday, 11 December 2017 at 8.31am.

 

present

 

Chairperson

Ebel Kremer

 

 

Mayor Gary Tong

 

Councillors

John Douglas

 

 

Paul Duffy

 

 

Bruce Robertson

 

 

IN ATTENDANCE

Councillor Keast (8.31am – 9.33am)

Chief Executive

Steve Ruru

 

Chief Financial Officer

Anne Robson

 

Group Manager - Community and Futures

Rex Capil

 

Group Manager – Services and Assets

Ian Marshall

 

Group Manager – Customer Support

Trudie Hurst

 

Committee Advisor

Fiona Dunlop

 

 


1             Apologies

 

There were no apologies.

 

 

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 External Member Robertson, seconded Cr Douglas and resolved:

That the Finance and Audit Committee confirms the minutes of the meeting held on 16 November 2017 as a true and correct record of that meeting.

 

Reports

 

 

7.1

Health and Safety

Record No: R/17/11/28694

 

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

 

Mrs Ellis advised that the purpose of the report was to update the Committee on health and safety 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 5 December 2017.

 

 

7.2

Core Systems Review Scoping Report

Record No: R/17/11/28615

 

Chief Information Officer – Damon Campbell was in attendance for this item.

 

Mr Campbell advised that the purpose of the report was to provide introduction to the Committee on the planned approach and activities relating to the Core Systems Review project.

 

 

Resolution

Moved Mayor Tong, seconded External Member Robertson and resolved:

That the Finance and Audit Committee:

a)            Receives the report titled “Core Systems Review Scoping Report” dated 3 December 2017.

 

b)           Endorses the development of the Core Systems Review Scoping Project and Work stream development.

 

 

7.3

Digitisation Project Update

Record No: R/17/11/27817

 

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

 

Mrs Cavanagh advised that the purpose of the report was to provide an update to the Committee on the status of the Property file digitisation project.

 

 

Resolution

Moved Chairperson Kremer, seconded Cr Douglas and resolved:

That the Finance and Audit Committee:

a)            Receives the report titled “Digitisation Project Update” dated 1 December 2017.

 

 

7.4

Financial Report for the month ended 31 October 2017

Record No: R/17/11/29012

 

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

 

Mr Tweedie advised that the purpose of the report was to update the Committee on the financial results for the four months to 31 October 2017 or 33% of the 2017/2018 financial year.

 

The Meeting noted that the monthly and year to date actual results are compared to the full year budget (projection) in the summary monthly financial report.

 

 

Resolution

Moved Chairperson Kremer, seconded Cr Duffy \and resolved:

That the Finance and Audit Committee:

a)            Receives the report titled “Financial Report for the month ended 31 October 2017” dated 30 November 2017.

 

 

7.5

Forecasted Financial Position for the year ending 30 June 2018

Record No: R/17/12/29582

 

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

 

Mr Tweedie advised that the purpose of the report was to inform and obtain approval from Council of the forecasted changes to the 2017/2018 Annual Plan budget which includes unbudgeted expenditure in the forecasts.

 

(During discussion on this item, Councillor Keast left the meeting at 9.33am.)

 

 

Executive Summary

2          Forecasting the financial position for the year ended 30 June 2018 is intended to provide information at an early stage of the year of any variations from the Annual Plan and approved 2016/2017 Carried Forward items.

3          Forecasting enables the organisation to understand the anticipated year end position at all levels.  It will also assist with decisions and priorities for spending across Council.

4          The budgeted expenditure included in the Annual Plan for the 2017/2018 year was adopted in June 2017.  Forecasting allows a formal process to communicate to Council and the Executive Leadership Team (ELT) any known changes to the Annual Plan.  The net amount by business units is shown in Attachment A.

5          Approval is also sought for unbudgeted expenditure that has been identified as part of this process that has not been advised to Council previously.

6          This report is included in the Council agenda for the meeting on 13 December 2017. Council staff will update Council on any discussions and recommendations made by this committee.

 

 

Resolution

Moved Chairperson Kremer, seconded Cr Douglas and resolved:

That the Finance and Audit Committee:

a)            Receives the report titled “Forecasted Financial Position for the year ending 30 June 2018” dated 5 December 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)           Note the forecasted changes to Council’s year-end financial performance and position as detailed in attachment C of the officers report

 

e)            Recommends to Council to approve the changes as detailed in Attachment A and Attachment B. of the officers report

 

f)             Recommends to Council to approve the following unbudgeted expenditure for the 2017/18 financial year with changes as indicated (with strikethrough and underline):

 

Business Unit

Expense

Funding Source

Amount

Pound Maint - Stock

New Shed at the pound

Dog & Animal Control Reserve

$13,000

Gorge Road – Administration

Install bell from Oteramika Church at War memorial

Gorge Road General Reserve

$10,000

Gorge Road – Recreation Reserve

Complete the walking track loop

Gorge Road General Reserve

$10,000

Operating Costs - Winton

New hopper for Winton Pool

Winton General Reserve

$10,000

Around the Mountain Cycle Trail

Capital works not carried forward from last year

ATMCT Reserve

$249,000

Operations and Community Service

3 Vehicles for Area Engineers carried forward from 16/17

Depreciation Motor Vehicle Reserve

$68,405

Around the Mountain Cycle Trail

Increased spraying

Track realignment as approved by Council

Roading Rates

$25,000

$10,000

Venture Southland

2 Vehicles carried forward from 16/17

Depreciation Motor Vehicle Reserve

$20,053

Customer Services

New vehicle for operations manager

District Operating Reserve

$16,700

Ohai Forest

Costs associated with additional harvesting

Forestry Sales

$500,918

Waikaia Forest

Costs associated with additional harvesting

Forestry Sales

$576,425

 

 

 

 

7.6

Around the Mountains Cycle Trail Stage 2 Business Case

Record No: R/17/12/29546

 

Group Manager, Services and Assets – Ian Marshall was in attendance for this item.

 

Mr Marshall advised that the purpose of the report was to update the Committee on the development of a business case for options to progress the Cycle Trail project.

 

The Meeting noted that the report was a covering report for the Cycle Trail Stage Two business case.    The substantive body of work is the business case itself.  The options, of which there are three, are all detailed in the business case.

 

 

Executive Summary

3          The

4          The options range from a Do Minimum option estimated to be $200,000 to a construction cost option for option 3 of $4.1M.

5          The economic appraisal of the options shows Option 1 gives the best benefit to cost ratio however Option 2 gives better safety benefits.

 

Resolution

Moved Chairperson Kremer, seconded Mayor Tong and resolved:

That the Finance and Audit Committee:

a)            Receives the report titled “Around the Mountains Cycle Trail Stage 2 Business Case” dated 5 December 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 preferred option for completion of Stage Two of the Around the Mountains Cycle Trail be consulted on in the 2018-2028 Long Term Plan.

 

e)            Endorses the Around the Mountains Cycle Trail Stage 2 Business Case and agree to a preferred option to recommend to Council for inclusion in the 2018-2028 Long Term Plan.

 

 

Public Excluded

 

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

Resolution

Moved Cr Douglas, seconded Cr Duffy and resolved:

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

C8.1   Risk Register - December 2017

C8.2   Corporate Performance Report for period one - 1 July  to 31 October 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 - December 2017

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 period one - 1 July  to 31 October 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.

 

That the Chief Executive Officer, Group Manager, Services and Assets, Group Manager, Community and Futures, Chief Financial Officer, Group Manager, Customer Support, Governance and Democracy Manager, Committee Advisor, Strategy Development Analyst and Planning and Reporting Analyst be permitted to remain at this meeting, after the public has been excluded, because of their knowledge of the items C8.1 Risk Register - December 2017 and C8.2 Corporate Performance Report for period one - 1 July  to 31 October 2017. 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 9.54am.

 

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 ???                                 CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Finance and Audit Committee HELD ON MONDAY 11 DECEMBER 2017.

 

 

 

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

 

 

 

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

 


Finance and Audit Committee

26 March 2018

 

Risk Management Framework Project Development

Record No:             R/18/2/4483

Author:                      Rex Capil, Group Manager Community and Futures

Approved by:         Steve Ruru, Chief Executive

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1        The purpose of the report is to update the Finance and Audit Committee on the status of the Risk Management Framework (RMF) project and provide a recommendation to Council as to next steps in the project development.

Executive Summary

2        The Finance and Audit Committee at the 15 March 2017 meeting resolved 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.”

3        Subsequent to this the project scope and terms of reference for the Southland District Council (SDC) risk management review project was endorsed by the Finance and Audit Committee at the 7 June 2017 meeting.

4        The RMF project is now at a stage to progress the development of the RMF and undertake a review of the SDC Risk Management Policy.

5        The project involves the design and development of a RMF that can be applied across all activities and areas of Council business.

6        SDC provides a wide range of services to its communities directly and indirectly which can include a number of potential risks, hazards, uncertainties and unforseen events that could impact on Council’s ability to deliver both the range and level of service required.

7        Council recognises the need for a robust and operative RMF and acknowledges the importance of and need to invest and resource the next stages of this RMF project.

 

Recommendation

That the Finance and Audit Committee:

a)            Receives the report titled “Risk Management Framework Project Development” dated 9 March 2018.

 

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)           Endorse the approach to engage Structured Conversations Ltd on a preferred supplier basis to undertake the Risk Management Framework project.

 

e)            Recommends to Council to support the approach to engage Structured Conversations Ltd on a preferred supplier basis to undertake the Risk Management Framework project.

 

f)             Recommends to Council a request for approval for unbudgeted expenditure of up to $60,000 exclusive of GST to be split evenly over the two financial years of 2017-2018 and 2018-2019 and to be sourced from the Council District Operations Reserve to undertake the Southland District Council Risk Management Framework project.

 

Background

8        The Finance and Audit Committee at the 15 March 2017 meeting resolved 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.”

9        The project scope and terms of reference for the Southland District Council (SDC) risk management review project was endorsed by the Finance and Audit Committee at the 7 June 2017 meeting.

10      In accordance with the SDC Finance and Audit Committee Terms of Reference and scope of activities:

“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.

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

-     Council’s risk management framework.”

11      In accordance with the SDC Finance and Audit Committee Terms of Reference and power to act:

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

-     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.”

12      It is based on these points from the SDC Finance and Audit Committee Terms of Reference that the RMF and Risk Management Policy review project comes before this Finance and Audit Committee meeting.

13      Over recent times it has been acknowledged that Council needs to invest in and further develop its risk management processes and approach.

14      It is acknowledged that an organisation wide approach to risk management is important.

15      In developing the RMF the objective is to create a framework to effectively understand, plan for and mitigate risk across all levels and activities within SDC.

16      Understanding and mitigating risks is central to safeguarding Southland District’s critical community assets and services and other activities it is responsible for.

17      Risk management is a core enabling function that adds value to the activities of Council and supports the achievement of the strategic framework and Council’s objectives and vision.

18      A comprehensive RMF will inform Council’s Risk Management Policy and will:

·    Provide a consistent, structured approach to identifying and managing risk

·    Support the achievement of Council’s strategic and operational objectives by managing risks that would otherwise impede success

·    Encourage an open and transparent organisational culture where risk discussion and awareness are supported

·    Facilitate better decisionmaking practices that support risk informed choices, prioritise actions and distinguish between potential options

·    Provide assurance to Council, the Southland district community and stakeholders that critical risks are identified and are being managed effectively.

19      It is recommended that the Finance and Audit Committee endorse the approach to engage Structured Conversations Ltd on a preferred supplier basis to undertake the design and development of the RMF project for Council.

20      Structured Conversations Ltd has been engaged by Council on a number of projects and has a strong track record of high quality deliverables and understands the business of SDC.

21      Structured Conversations Ltd has recently completed the SDC Corporate Performance Framework project, developed the business case for the second stage of the Around the Mountains Cycle Trail project, prepared service delivery recommendations for regulatory services and facilitated a workshop with Council and contractor representatives for roading alliance governance and management options.

Issues

22      It is recognised by Council and staff that a RMF needs to be developed. To do this development of the RMF unbudgeted expenditure is required to be approved.

23      The current Risk Management Policy is currently overdue for review – being approved and effective from 29 October 2014.

24      It is appropriate to review this policy as part of the RMF project development and have Council staff work alongside and align the policy development with the RMF development.

25      It is also important to note, that to ensure success of the development and implementation of the RMF that elected representatives, stakeholders and staff are engaged in this process to ensure that the objective of assisting Council to better understand and manage risk is achieved.

Factors to Consider

Legal and Statutory Requirements

26      There are no direct or specific legal or statutory requirements for Council to meet with regards the development of the RMF project.

Community Views

27      Wider community views have not been sort in relation to the RMF project.

28      The RMF project relates to organisation wide operational practices.

Costs and Funding

29      The RMF project is an additional project to be added to the existing work programme of the Strategy and Policy Team in the Community and Futures Group.

30      The Finance and Audit Committee has previously endorsed the RMF project and recommended to Council the project scope and terms of reference for the RMF.

31      As an additional project there is no allocation of funding for the project and it will require Council to approve unbudgeted expenditure to deliver the RMF project.

32      Council officers have received a proposal based on preliminary discussions with Structured Conversations Ltd to deliver on an inclusive methodology involving stakeholders, elected representatives and staff and clearly defined milestones.

33      This will require recommending to Council approval for unbudgeted expenditure of up to $60,000 exclusive of GST to be split evenly over the two financial years of 2017-2018 and 2018-2019 and to be sourced from the District Operations Reserve.

Policy Implications

34      The RMF project and review of Risk Management Policy supports the practice of assisting Council in operating with a current policy.

35      The current SDC Risk Management Policy was approved and effective from 29 October 2014 and was identified as being due for review in November 2015.

36      The Risk Management Policy review is therefore overdue but this should be considered on the understanding that the RMF project is an identified priority project. It is deemed appropriate to review and update the Risk Management Policy alongside and in conjunction with the RMF project.

Analysis

Options Considered

37      The Committee is requested to consider two options to recommend to Council for approval. 

Analysis of Options

Option 1 – Endorse the approach to engage Structured Conversations Ltd on a preferred supplier basis to undertake the RMF project and recommend to Council a request for approval for unbudgeted expenditure of up to $60,000 exclusive of GST to be split evenly over the two financial years of 2017-2018 and 2018-2019 and to be sourced from the Council District Operations Reserve

Advantages

Disadvantages

·        Provides the ability to advance the RMF project as soon as is practicable.

·        Preferred supplier is a high performing external resource with a proven track record of delivery.

·        Has existing knowledge of Council systems, processes and can build on existing staff, elected representatives and stakeholder relationships across the organisation.

·        Provides experience, technical and professional knowledge and expertise to add value for Council.

·        Provides for alignment to other corporate and strategic projects.

·        Loss of opportunity to ‘test’ the market.

·        Loss of opportunity to consider alternative external resourcing provider options.

 

Option 2 – Request staff call for request for proposals by way of a tender process to undertake the RMF project and report back to Council with preferred contractor and the required amount of expenditure requesting approval for unbudgeted expenditure to be sourced from the Council Operations Reserve in 2018-2019.

Advantages

Disadvantages

·        Provides the opportunity to ‘test’ the market.

·        Provides an opportunity to consider alternative external resourcing provider options.

·        Requires additional time and internal resource commitment to progress the tender process

·        Delay in project start time

 

 

Assessment of Significance

38      This decision is not considered significant in relation the Council’s Significance and Engagement Policy.

Recommended Option

39      It is recommended that the Finance and Audit Committee endorse the approach to engage Structured Conversations Ltd on a preferred supplier basis to undertake the Risk Management Framework project and recommend to Council a request for approval for unbudgeted expenditure of up to $60,000 exclusive of GST to be split evenly over the two financial years of 2017-2018 and 2018-2019 and to be sourced from the Council District Operations Reserve.

Next Steps

40      If the Finance and Audit Committee supports the recommended option a report will be presented to the Council for consideration and decision at its 20 April 2018 meeting.

41      If the Finance and Audit Committee does not support the recommended option staff will assess the appropriate approach to be undertaken based on the Committee’s decision.

 

Attachments

There are no attachments for this report. 

 


Finance and Audit Committee

26 March 2018

 

Annual Report Audit Plan for year ending 30 June 2018

Record No:             R/18/3/5772

Author:                      Jacobus Meyer, Financial Accountant

Approved by:         Anne Robson, Chief Financial Officer

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1       The purpose of this report is to provide the committee with a copy of the annual report audit plan proposed by Audit NZ for the year ending 30 June 2018 and provide some commentary around the annual report process.

Executive Summary

2        Audit New Zealand has provided Council with an audit plan for the Annual Report for the year ending 30 June 2018.

3        This report provides a summary of the audit plan for the Council.  A copy of this plan is attached to this report for your information. This audit plan outlines the audit risks, issues, audit process, reporting protocols and logistics relating to the upcoming audit.

4        Audit NZ Director, Ian Lothian, will be present at the meeting to discuss the plan in detail and answer any questions.

 

Recommendation

That the Finance and Audit Committee:

a)            Receives the report titled “Annual Report Audit Plan for year ending 30 June 2018” dated 19 March 2018.

 

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

 

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

 

d)           Accepts the audit plan as set out in the attached document.

 

 

Background

5        The purpose of this report is to provide an overall summary of the audit plan, received from Audit New Zealand, for the year ending 30 June 2018. 

 

6        The four key areas discussed in the plan are:

•        Audit risks and issues;

•        Audit NZ’s audit process;

•        Reporting protocols; and

•        Audit logistics

7        To work through the report in more detail, Audit NZ Director, Ian Lothian will also be present at the meeting to answer any questions and provide further clarity.

8        To ensure that Council is able to meet the timelines indicated in this plan, Council staff are developing a more comprehensive plan of the steps need to be completed to ensure the timelines discussed in this plan are met.  The timelines indicated are not significantly different from past years so Council staff are confident in meeting the dates proposed.

9        Additional to the Audit NZ audit timetable, this year we are also planning to have two finance and audit committee meetings in September 2018, the first on the 30th August 2018 will receive the draft Annual Report for the committees review, discussion and approval for audit review on the 3 September 2018.  The second meeting planned for the afternoon of the 24th of September 2018 will be to receive the final Annual Report (subject to any final adjustments leading up to approval), for recommendation to adopt by Council the following day.

 

Audit risks and issues

Focus areas

10      Specific details of the risks/issues are included in the audit plan (Attachment A).  These risks and issues are principally the same as previous years.

11      The key areas are:

•        The risk of management override of internal controls.  As there is an inherent risk in every organisation of fraud resulting from management override of internal controls, this is considered a risk on all audits.

•        Revaluation of property, plant and equipment.  Council revalues its infrastructure assets on an annual basis.  These revaluations are considered a significant risk as they involve the use of complex valuation methods as well as significant judgements and assumptions.

•        Valuation of Forestry Assets.  Forestry valuations are conducted annually to ensure values included in the financial statements are reflective of the assets fair value.

Areas of interest for all Local Authorities

12      In addition to the Council specific issues discussed above, Audit NZ will also focus on project management (Council has several high value or high profile capital projects underway), rates, the control environment, group consolidation, non-financial performance reporting, related parties and conflict of interests, sensitive expenditure and fraud risk.

The audit process

13      This section of the plan provides further detail in relation to: the various stages of the annual report audit, materiality, professional judgement and professional scepticism, compliance with laws and regulations, as well as wider public section considerations.

Reporting protocols

14      Audit NZ commits to communicating with management and Council and will maintain ongoing, proactive discussion of issues as and when they arise to ensure there are “no surprises”.

15      Draft reports will be provided to management for discussion and clearance purposes.  Management are requested to provide their comments on any draft within 10 working days to enable timely reporting.

Audit logistics

16      Senior audit team members are Ian Lothian (Director), Jenna Hills (Audit Manager) and Cynthia Jani (Audit Supervisor).

17     Proposed timeline for the audit is:

Date

Process

16 April 2018

Interim audit begins

17 May 2018

Draft interim management report issued

27 August 2018

Draft financial statements available for audit (including notes to the financial statements) with actual year-end figures

3 September 2018

Final audit begins

3 September 2018

Annual report available, including any Chair’s and Chief Executive’s overview or reports

20 September 2018

All amendments agreed to between us provided to SDC

24 September 2018

Verbal audit clearance given

25 September 2018

Audit opinion issued

25 September 2018

Draft final detailed management report issued

Issues

18     Council staff have no issues with the content of the audit plan.

19     The purpose of an audit is to provide an objective independent examination of the financial statements for Council and the Committee.  This increases the value and credibility of the financial statements produced by management thereby increasing user confidence in the financial statements.  As such, it is in Council’s interest for Audit NZ to define the audit programme of work.

20     As part of drafting the audit plan, Audit NZ sought feedback on the draft plan from Council staff.  The feedback wanted was is in regards to the clarity and understanding of the draft plan and if Council staff, for the purposes of transparency, believe that any additional business risks/issues should be included. 

Factors to Consider

Legal and Statutory Requirements

21     Section 98(1) of the Local Government Act 2002 requires the Council to prepare and adopt an Annual Report each financial year.  Section 99(1) requires the Annual Report to include an Auditor’s Report and this is required to be adopted by 31 October 2018.

22     In accordance with Section 14(1) of the Public Audit Act 2001, the Council’s Annual Report must be audited by the Office of the Auditor-General.  Audit New Zealand is the authorised audit service provider on behalf of the Auditor-General.

Community Views

23     As the Annual Report is a report on activities undertaken during the year, no consultation is required.

Policy Implications

24     There are no policy implications 

Analysis of Options

Option 1 - Accept audit plan as provided

Advantages

Disadvantages

·        Allows the Annual Report process to continue as proposed.

·      None

 

Option 2 - Request clarification or inclusion of any issue that Committee wants included in the audit plan from Audit NZ.

Advantages

Disadvantages

·        Council is able to seek the clarification it requires or discuss the inclusion of any issue it would like incorporated into the audit.

·      Could delay the audit process if Council and Audit New Zealand cannot agree to this plan.

Assessment of Significance

25     The audit of the Annual Report is not considered significant in terms of Council’s Significance Policy.

Recommended Option

26     Accept the audit plan as provided.

Next Steps

27     Council staff will work with Audit New Zealand to ensure that all necessary work is completed within the required timeframes to enable the Annual Report to be adopted at the meeting on 25 September 2018.

 

Attachments

a             Audit Plan for year ended 30 June 2018    

 


Finance and Audit Committee

26 March 2018

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Finance and Audit Committee

26 March 2018

 

Health and Safety

Record No:             R/18/2/4223

Author:                      Janet Ellis, People and Capability Manager

Approved by:         Steve Ruru, Chief Executive

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1        To provide an update on Health and Safety activity within the Southland District Council to enable the Finance and Audit Committee to endorse the work that is being undertaken and recommend to Council the continuation of the focus on Health and Safety training and critical risk.

Executive Summary

2        In February 2017, Council contracted Simpson Grierson to undertake a Health and Safety Gap Analysis.  The analysis identified a number of improvement opportunities.

3        As part of the improvement recommendations a Health and Safety Plan for 2017/18 and a Health and Safety Policy was finalised and approved by Council.

4        As part of the implementation of the plan a Health and Safety framework including procedures was approved and implemented.  The Health and Safety Framework, contains standard procedures that enables a risk based approach to managing Health and Safety.

5        The Health and Safety Plan also requires staff to be trained in the procedures, Council has developed a series of e-learning modules to do this.  The intention with this training is to guide staff through the process of understanding their responsibilities under the procedures but also to support the Council from moving to a more proactive Health and Safety culture.

Critical risks and the development of bowties and control plans continues as a focus of the work being progressed.  Once these controls are finalised and an action plan is developed there may well be additional costs which will need to be resourced in accordance with the Long Term Plan. 

 

Recommendation

That the Finance and Audit Committee:

a)            Receives the report titled “Health and Safety” dated 14 March 2018.

 

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 work that is being undertaken in Health and Safety within Council.

 

e)            Recommends to Council that there is a continued focus on Health and Safety and the implementation of the Health and Safety Plan including training and focus on critical risks.

 

Background

6        In February 2017, Council contracted Simpson Grierson to undertake a Health and Safety Gap Analysis.  The analysis included a review of Southland District Council’s Health and Safety Management System, discussions with key operational leaders, 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 presented to the March 2017 Finance and Audit Committee meeting.

7        The Gap Analysis determined that Council had a “developing maturity” in Health and Safety, some processes had been developed and good work had been undertaken in the identification and management of key risks.  However, there were a number of recommendations made that indicated that our Health and Safety systems were more reactive and that we had significant opportunity to further develop our overall Health and Safety systems.

8        The recommendations made included:

·      That the Executive Leadership Team needed to develop a statement of intent for Health and Safety that expressed their ambition and direction in this area.

·      The Executive Leadership Team needed to look for opportunities to express their support and leadership of Health and Safety, including site visits and more interaction with key contractors.

·      The Executive Leadership Team should consider Health and Safety Leader training to support them and their direct reports in their roles.  The training should cover key aspects of Health and Safety culture development, safety observations and conversations and behavioural safety elements.

·      Development of a Health and Safety Plan that details specific improvement initiatives for the following year. It was also recommended that the plan be approved by the Executive Leadership Team and ratified by both Council and the Finance and Audit Committee.

·      Establishment of a Health and Safety Governance Framework.

·      Review current procedural gaps and draft new procedures to ensure a full management system over time.

·      Ensure employees are involved in the change process and development of new procedures.

·      Create clarity on critical risks and what these are.  In addition create control plans that indicate how we control risk and who is responsible, using a ‘bow tie’ methodology.

·      Review hazard and risk procedures to create one process for management of risks and the risk registers.

·      Develop a reporting process that conveys how Council will report its Health and Safety performance, set targets and who details, who receives this information and when they receive the information.

·      Ensure measures include lead and lag indicators and provide a view of actual performance, so that Council can measure its progress.

9        Following the March Finance and Audit committee meeting, a plan, including objectives and targets was developed and was signed off by Council in July 2017.

10      Attachment A to this report details progress made to the plan as of 31 January. 

Training

11      Council’s responsibility is to ensure all our staff and workers are informed of and understand their responsibilities with Health and Safety.

12      The Health and Safety framework sets a clear expectation and targets via procedures for ongoing conversations about Health and Safety and reporting incidents in a timely and accurate manner.

13      Eight of the procedures form the foundation of the framework and have been converted into a series of e-learning modules.  Each module covers the requirement of a single procedure with the intent to guide staff through the process of understanding their responsibilities under the law with regard to Health and Safety in the workplace. The intention with the training is to guide staff through the process of understanding their responsibilities under the procedures but also to support the Council from moving to a more proactive Health and Safety culture.

14      The e-learning approach will enable Council to communicate immediately, effectively and has measurable results.  This training is a new approach for Council and it is expected that team and operational leaders will fully support staff in pursuing knowledge contained in the e-learning modules and encourage the innovative ideas that are likely to be generated.

15      All e-learning modules end with a short survey that takes the pulse of the staff and enables them to communicate freely their views with regard to the training.  This data will be anonymously collated and be a great indicator of the shift of the culture from reactive to generative over the duration of the training period.

16      The implementation of the e-learning modules will roll out in March 2018 and will enable sufficient time for staff to individually or in teams complete each module and put into practice the learnings from it.  Attachment B to this report details the Communication and Engagement Plan that is envisaged to ensure that this training is a success.  It is expected that there will be a module will be released every month and that time to do the training could range from 1 hour to 3-4 hours per month dependant on levels of involvement needed.

17      It is not the intent that the Health and Safety training will impact on delivery of projects and provision of customer support as it is part of everyday business.  However, it does need to be noted that there is time involved for every staff member and more so for leaders of people and operational leaders responsible for projects/contractors.

18      The staged approach will enable Council to monitor the impact and effect of the training and to adapt it to better suit staff based on feedback and results.

Critical Risks

19      Work continues on managing our critical risks.  The new Critical Risk and Management procedure outlines 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.

20      Development of critical risk control plans (bow ties) is well underway with three workshops held in early August 2017 and one in October 2017. 

21      A workshop was held with the Executive Leadership Team and Terry Johnson from Simpson Grierson in February 2018 confirming the critical risk control plan for Motor Vehicle Accidents.  Additional workshops will be held with the Executive Leadership Team and critical risk teams to continue to make progress in this.  Attachment C is a copy of the slides from the workshop.  A copy of the current critical risk bow tie for a Motor Vehicle Accident is included in the attachment.

22      Once the critical risk control plans are finalised action plans will be developed to prioritise the work that needs to be undertaken to ensure Council makes progress on minimising risk and ensuring all our staff and workers return safe home every night.

23      In the June 2017 report to the Finance and Audit Committee some of the additional costs were highlighted.  This included costs for additional equipment needed, education costs, Health and Safety system costs and recruitment of additional resources to ensure compliance with the Health and Safety framework and Health and Safety legislation.  Examples of additional costs include $15,000 per annum for Audit and Assurance requirements; $10,000 per annum for a Health and Safety system; $10,000 for education and training on Health and Safety, cost of GPS $20,000 per annum and security cameras in our area offices $10,000 per annum.

24      All the above costs are indicative only and the majority of these costs have been budgeted as part of the Long Term Plan process.

Factors to Consider

Legal and Statutory Requirements

25      Council has an obligation to manage the safety of workers under Health and Safety legislative requirements in New Zealand. 

26      The Health and Safety Framework, containing a single policy with clear standard procedures is enabling a risk based approach to managing Health and Safety based within its undertakings.

27      The Health and Safety at Work Act (2015) provides guidance that if cost is the reason for not implementing a safety system, the provision of safety equipment or the changing of a process, to enable work to be done safely, then that cost must be something deemed to be grossly disproportionate to the risk being managed.

28      There is no further guidance in the Act on what grossly disproportionate means however it does give us an indication that we need to be very clear if we limit taking action or providing equipment or implementing improvements based on costs that there is significant risk to breaching the Act.

Policy Implications

29      There are no policy implications

Analysis

Options Considered

30      The options considered are to recommend to Council that there is a continued focus on Health and Safety and the implementation of the H&S plan (Option 1), recommend them subject to some minor amendments (Option 2) or Do Nothing (Option 3).

Analysis of Options

Option 1 – Agrees to recommend to Council that there is a continued focus on Health and Safety and the implementation of the H&S Plan

Advantages

Disadvantages

·        Robust framework

·        Improvement of Health and Safety Culture

·        Illustration that Council and ELT are committed to caring for the wellbeing and safety of our people

·        Staff have a very good understanding of procedures and understand their responsibilities

·        Decline in the number of injuries

·        Meet legislative requirements

·        Continue to communicate the importance of Health and Safety ensuring all staff get home safe

·        Financial implications

·        May have an impact on the delivery of projects or expectations with the additional time needed for training

 


 

 

Option 2 – Modifies the focus on Health and Safety

Advantages

Disadvantages

·        Save some initial costs in the short term

·        Inconsistency in procedures

·        No clear guidelines

·        Health, safety and wellbeing of our people in jeopardy

·        May not be consistent with legislative obligations

·        Our Health and Safety culture does not move to a more proactive state remains static

 

Option 3 – Do nothing

Advantages

Disadvantages

·        Avoids short term cost implications

·        Inconsistency in procedures

·        No clear guidelines

·        Health, safety and wellbeing of our people in jeopardy

·        May not be consistent with legislative obligations

·        Our Health and Safety culture does not move to a more proactive state remains static

 

Assessment of Significance

31      The matter being considered is of an administrative matter and hence is not considered to be significant.

Recommended Option

32      Agrees to recommend to the Council that there is a continued focus on Health and Safety and the implementation of the H&S Plan including training and critical risks.

Next Steps

33      Seek approval from Council and continue with the Health and Safety initiatives including the training and critical risk work.


 

 

Attachments

a             Update on Health and Safety Action Plan as of 31 January 2018

b             Health and Safety Framework Communication and Engagement Plan 2018

c             Southland District Council Leadership Workshop 20 February 2018    

 


Finance and Audit Committee

26 March 2018

 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator

PDF Creator

PDF Creator

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

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

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator 


Finance and Audit Committee

26 March 2018

 

Health and Safety Update

Record No:             R/18/2/4221

Author:                      Janet Ellis, People and Capability Manager

Approved by:         Steve Ruru, Chief Executive

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1        To provide an update on Health and Safety related incidents and general health and safety initiatives.

Content

Review of Health and Safety related incidents

Incidents/Near Misses – Southland District Council

2        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. 

3        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.

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

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

 

Key Performance Indicator

1 May – 31 July 2017

1 August – 31 October 2017

1 November -31 December 2017

1 January – 31 December 2017

Worksafe Notifications

0

0

0

0

Medical Treatment Injury (MTI) as reported to ACC

0

0

1

2

Incidents

7

11

5

31

Lost time due to injury

0

1*

1

3

Near misses

4

9

1

18

Investigations completed

7

7

5

27

 

6        The Medical Treatment Injury (MTI)/Lost time Injury is related to an incident that occurred on Stewart Island while undertaking bush clearing work.  The employee needed to see an eye specialist but the outcome was that it was a superficial scratch.  Following the incident an investigation occurred and as a result a number of recommendations were implemented including issuing of additional PPE gear and more thorough hazard/risk identification.

 

Other Health and Safety Related initiatives

7        A Health initiative was run in October with the four councils.  Dr Tom Mulholland and Nadia Lim presented to over 500 staff over a two day period on healthy choices.

8        As part of this initiative Dr Tom Mulholland introduced the KYND application.  The KYND application is a Know Your Numbers Dashboard that enables you to benchmark yourself to see how “well” you are and if your wellness strategies are making a difference to your score. Southland District Council trialled the application with a selected group of staff and after a successful trial has made the application available to all staff in 2018. 

9        As part of our health initiatives in March 2018 Council will be running Healthy Thinking workshops for our staff.  These workshops are designed to help the participants to learn the tools of healthy thinking and to learn simple tools and techniques to control unhealthy emotions such as stress, frustration and anxiety.

10      The Health and Safety Committee had their first meeting of 2018 on 28 February 2018. Representation on the committee is from across the organisation including Leaders of people and operational staff.  The purpose of the Health and Safety Committee is to actively participate in the formation of our H&S plan and enable the health and safety representatives to formally review progress against plans and to collaboratively discuss and agree any opportunities for improvement.  The committee meets quarterly and more often when needed.

 

 

Recommendation

That the Finance and Audit Committee:

a)            Receives the report titled “Health and Safety Update” dated 2 March 2018.

 

Attachments

There are no attachments for this report.  

 


Finance and Audit Committee

26 March 2018

 

Digitisation Project

Record No:             R/18/2/2526

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 the Finance and Audit Committee with the final status of the Property File Digitisation Project.

2        The vendor has now completed their work and the tables included in this report show the full work completed from pilot in September 2016 to project completion in January 2018.

Reporting

3        Table 1 shows the total A4 and large format (LF) pages scanned per month along with the total file volumes and property IDs.  The property ID is a subset of the total file volumes.  A property ID can be made up of multiple files volumes.

 Table 1:  Page and File Volume Totals per Month

Month

A4 Pages

LF Pages

PDFs

File Volumes

Property IDs

 September 2016

24,168

155

2,737

111

106

 October 2016

214,510

2,642

22,266

810

791

 November 2016

231,683

4,168

19,543

896

842

December 2016

372,312

7,048

32,685

1,363

1,275

January 2017

391,643

7,347

34,251

1,725

1,602

 February 2017

364,277

8,334

32,115

1,610

1,556

March 2017

472,596

11,335

40,817

2,115

2,001

April 2017

256,402

4,510

21,359

1,102

1,061

May 2017

563,019

7,681

51,127

2,646

2,592

June 2017

503,183

3,785

47,165

2,349

2,288

July 2017

547,564

4,424

50,501

2,593

2,525

August 2017

589,143

4,087

56,439

2,568

2,498

September 2017

402,025

2,498

37,989

1,852

1,670

 October 2017

225,902

2,446

17,179

466

284

November 2017

24,854

279

2,374

154

134

December 2017

19,605

207

2,056

260

117

January 2018

8,011

98

840

52

51

Total

521,0897

71,044

471,443

22,672

21,393

 

 

4        Table 2 shows the average A4 and large format (LF) pages scanned per month along with total PDFs and file volumes completed.

 

TAble 2:  Page and File Volume Averages per Month

Month

A4 Pages

LF Pages

PDFs

File Volumes

 September 2016

218

1.4

25

111

 October 2016

265

3.3

27

810

 November 2016

259

4.6

22

896

December 2016

273

5.2

24

1,363

January 2017

227

4.2

20

1,725

 February 2017

226

5.0

20

1,610

March 2017

223

5.0

19

2,115

April 2017

233

4.1

19

1,102

May 2017

213

2.9

19

2,646

June 2017

214

1.6

20

2,349

July 2017

211

1.7

19

2,593

August 2017

229

1.6

22

2,568

September 2017

217

1.3

21

1,852

 October 2017

485

5.0

37

466

November 2017

161

1.8

15

154

December 2017

75

0.8

8

260

January 2018

154

1.9

16

52

Overall

230

3.1

21

 

5        Chart 1 below shows the total file volumes scanned by month from September 2016 to January 2018.  The months of May to August 2017 were high volume months with in excess of 2,000 file volumes scanned per month. In the last 4 months of the project the file volume numbers were considerably lower with less than 500 file volumes scanned per month.


 

chart 1:  Total files scanned per month

6        The average number of A4 pages scanned per month remained in the low to mid 200s for the majority of the project with a large spike in October 2017 due to completion of Fonterra and a number of other large commercial properties in that month. The overall average across the project is 230 A4 pages per file volume, below that of the agreed fixed monthly fee structure of 278.4.

 

chart 2:  average a4 pages per month

7        The average number of large format pages has remained below the agreed fixed monthly fee structure of 6.91 for the duration of the project.  The overall average across the project is 3.1.


 

chart 3:  avearge large format pages per month

 

8        The average number of PDFs per file volume has remained consistent across the project with the exception of October 2017 (large commercial properties) and the last three months where the overall numbers were low.

 

chart 4:  average pdfs per file volume per month

Financial Summary

9        The fixed price is based on 274.8 A4 pages; 6.91 large format pages and 24,000 file volumes.

10      At the end of February 2018 the actual spend is $1,971,615 with future costs to the end of April set at $9,241.  The forecast for the entire project is $1,980,856.

11      The future costs are solely related to staff and Iron Mountain storage.


 

12      The following table summarises expenditure (as per the original Business Case) to the end of February and forecast for the completion of the project (April 2018).

Description as per Business Case

Amount per Report

Actual Spent (February 2018)

Future Costs

Total Costs (Incl future)

Digitisation of Property Files

1,707,996

1,697,545

1,000

1,698,545

HP TRIM Upgrade

103,426

103,426

-

103,426

File Preparation and QA Resource

99,020

90,779

8,241

99,020

Website Enhancement

27,780

27,780

-

27,780

Shelving Removal

10,000

300

-

300

Offline staff access to files

-

-

-

-

Contingency

51,778

51,778

-

51,778

Total

2,000,000

1,971,615

9,241

1,980,856

Next Steps

13      At the time of writing this report we are on track to have completed the upload of all digitised files to Records Manager (Council’s Document Management System).  The focus of the project then moves to completing the quality assurance and auditing processes and tasks.

Over the coming months the following areas of work will be completed:

·    Complete quality assurance of digitised files

·    Provision of customer requests

·    Implement Public View in Kiosks at Council offices

·    Audit Public View against the Privacy Commissioners recommendations in order to implement Public View via Councils website

 

Recommendation

That the Finance and Audit Committee:

a)            Receives the report titled “Digitisation Project” dated 19 March 2018.

 

 

Attachments

There are no attachments for this report. 

 


Finance and Audit Committee

26 March 2018

 

 

Financial Report for the month ended 31 January 2018

Record No:             R/18/2/4137

Author:                      Dipal Patel, Project Accountant

Approved by:         Anne Robson, Chief Financial Officer

 

  Decision                                        Recommendation                                  Information

 

  

 

Background

1.         This report outlines the financial results for the seven months to 31 January 2018 or 58.3% of the financial year.

2.         The Monthly and YTD Actual results are compared to the Full Year Budget (Projection) in the attached Summary Monthly Financial Report. 

3.         The projection values include any 2016/2017 carried forward items approved by Council in September 2017 and October forecast changes approved by Council in December 2017.

4.         The 2017/2018 Annual Plan budget is shown in the Reports as the Full Year Budget (Budget).

Overview

5.         The Summary Monthly Financial Report consolidates the business units within each of the key areas of the Executive Leadership Team (ELT) responsibility.  The following commentary focuses on the year to date (YTD) results excluding GST.

6.         The Detailed Monthly Financial Report includes more detailed explanations and commentary on variances by the Executive Leadership Team.  Commentary generally focuses on the year to date (YTD) results and, where specified, monthly results. 

7.         In the Council Summary and Detailed Reports, the values in the columns for:

·              The Monthly Budget, is phased where appropriate and is based on the full year projection and includes carry forwards and forecasting.

·              The YTD Budget is based on the full year projection and is a combination of the Annual Plan, carry forwards and forecasting. 

·              The Full Year Budget is the Annual Plan budget for the year.

·              The Full Year Projection is the forecasted year end result.

8.         Phasing of budgets occurs in the first 2 months of the financial year, at forecasting and when one-off costs have actually occurred. This should reduce the number of variance explanations due to timing.

9.         Where phasing of budgets has not occurred, one twelfth of annual budgeted cost is used to calculate the monthly budget.

10.       Council staff will continue to refine the format of this report to enhance the financial information reported.  We welcome any feedback or suggestions on further improvements that could be made to this report.

11.       The Council Summary Report (actuals vs phased and forecast budget) year to date are as follows:

Income

12.       Operating Income is $2.7 million (6%) under budget year to date ($42.5 million actual vs $45.2 million budget).

 

13.       Transport and Roading income is $2.8 million below budget year to date as this activity has not been phased the budget represents half of the annual cost. However the majority is received during the second half of the financial year.  The Funding Assistance Rate (FAR) from NZTA is 52% of the total spend for approved projects. It is now expected that we will not receive the full NZTA funding for the year. Waipapa Point sealing is now expected to take place at the end of the year resulting in a delay in receiving planned funds. However NZTA will carry forward the related budget/funding to the 18/19 year.

 

14.       Other Activities are $189 thousand above budget. This is due to more interest being received on higher levels of cash reserves than budgeted. The reason for higher cash reserves is generally about when capital projects are undertaken. A number of projects including the roading activity will occur in the second half of the year.

 

Operating Expenditure

15.       Operating Expenditure is $2.8 million (7%) under budget for the year to date ($39.2 million actual vs $42 million budget).

 

16.       Transport (Roading) costs are 12% under budget, a variance of $2 million compared to the YTD budget of $16.3 million. This relates to the timing of various works including special purpose roads (lower Hollyford) which have required minimal work this financial year.

 

17.       Services and Assets are 5% under budget. District sewerage depreciation of $182 thousand was a timing error due to a journal posted for the month of February, this will be corrected during the February month end. District water also contributed to services and assets being under budget, due to less electricity being used than we originally expected. This is likely to continue until the end of the year and will be considered for forecasting. There is also lower interest costs this year due to an overall reduced loan balance required in previous years due to less capital work being completed than budgeted, one of the key projects affecting this is the deferral of the Te Anau wastewater project. Depreciation is under budget by $120 thousand for the month of January and will be corrected in February. Forestry is showing as 13% under budget, however this is expected to correct by the end of the year with harvesting in Waikaia about to start.

 

Capital Expenditure

18.       Capital Expenditure is $7 million (34%) under budget year to date ($13.5 million actual v $20.5 million budget).

                       

19.       Customer Support, Services and Assets, Environmental and Financial Services have vehicle replacements in their budgets which have not been spent yet. 20 vehicles are due for replacement by 30 June 2018, 15 of which were due for replacement by 31 January or earlier.  Of these 15, 12 replacement vehicles were ordered in December/January and 11 have been delivered during January/February.  Orders for the remaining vehicles are anticipated to be placed in March-April.

 

20.       Capital expenditure for Services and Assets is 53% ($2.5 miilion) under budget for the year to date. The budgets for water and wasterwater activities have not been phased but will be completed with the forecasting process which will assist with explaining this variance. 

Wastewater:

·   Winton ($274thousand) – It is now only expected that $200thousand of a $460k project will be spent this year for the wastewater treatmetn upgrade investigations.  The Long Term plan incorporates the expected full cost of the project.  The winton aerator has been procured to budget.

·   Te Anau ($207thousand) – The teanau aerators are expected to be $40k less than budget.  It is expected that some budget $248 thousand of the current year $623 thousand budget for the oxidation ponds willl be carried forward as it is subject to the finalisation of the treatment and disposal project.

·   Riversdale ($224thousand) – The budget in relation to the treatment upgrade $300thousand will be moved into 18/19 as additional testing is still required prior to any final purchasing done.  The sludge removal at riversdale has began and it is expected that it will be $85thousand over budget at year end due to increased costs of disposing to the AB Lime landfill.  The funding for this will come from the savings in cost in Winton. 

·   Otautau ($169thousand) – Currently $169k underbudget it is expected all three projects will be completed by year end within current budgets.

·   Stewart Island ($100thousand) – Work in regards to the pumps and additional standby generation is ongoing.  Although it is still expected to be completed within budget it is not expected to be completed in this year and as such $110thousand is proposed to be carried forward to 2018-2019.

Water:

·    Mananpouri ($88thousand) – The survey work in relation to the water treatment plant is completed, with design work in progress, the balance of funds will be carried forward as tanks are unable to be supplied in this financial year.  The project to replace the ttressels carrying the main over the swamp has been downgraded as a result of an onsite assessment.  As such the project is now only expected to cost $20k compared to a full year budgety of $144thousand.

·    Riverton ($170thousand) – The riverton water scheme main project has been completed, as part of commission it has been identified that a number of smaller projects need to be included.  It is proposed to use the balance of funds to cover these costs which may occur in the next financial year.

·    Eastern Bush water supply upgrade ($0.7million) – the design is being confirmed post receiving the outcome of Havelock North inquiry.

 

21.       Around the Mountain Cycle Trail is currently showing as being over budget by $133 thousand.  This is due to the additional expenditure approved by Council on 27 September 2017 for shelters, trail realignment and signage, not yet reflected in the forecast projection this will be updated in the second round of forecasting. The majority of funding is to come from MBIE. 

 

22.       Overall roading capital expenditure is $4.3 million less than budgeted for the year to date due to the seasonality of the programmed works. The roading team have committed $14 million of works out of the current budget with other projects due to go to tender in early 2018. At the last Council meeting staff were forecasting that they would be under budget at year end. At the time they believed that due to Waipapa Point being completed late in the season, the sealing would have to wait till the new financial year.  However recently staff met with the contractor and he is still pushing to complete the sealing this year, of course that will be weather dependent.  NZTA have indicated that should Council not be able to complete the sealing the funding will be carried forward to next year albeit at 1% less.

Balance Sheet

23.       Council’s financial position as at 31 January 2018 is detailed below and is for the activities of Council only.  The balance sheet as at 30 June 2017 represents the audited balance sheet for activities of Council only.

24.       At 31 January 2018, Council had $15 million invested in five term deposits ranging from three to six month maturities as follows:

25.       Funds on call are : 

Balance at
31 January 2018

Bank

Account

Interest Rate

$ 591,334

 BNZ

 Funds on Call

1.00%

$ 10,000

 BNZ

 Operating Bank Acc

1.00%

$ 298,537

 BNZ

 Restricted Funds Acc

0.25%

 

26.       The movement in Property, Plant and Equipment is due to capital additions during the year less budgeted depreciation.

27.       The increase in Non-Current Assets (Intangible Assets) is the continued acquisition costs of Council’s digitisation software.

 

 

 

 

Recommendation

That the Finance and Audit Committee:

a)         Receives the report titled “Financial Report for the month ended 31 January 2018” dated 19 March 2018.

 

Attachments

a             Council s District Activities Summary Monthly Financial Report - 31 January 2018

b             Council s District Activities - Detailed Monthly Financial Report - 31 January 2018    

 


Finance and Audit Committee

26 March 2018

 

PDF Creator


 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator

PDF Creator

PDF Creator

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator

PDF Creator

PDF Creator

PDF Creator

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator

PDF Creator

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


 

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator

PDF Creator

PDF Creator


Finance and Audit Committee

26 March 2018

 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


Finance and Audit Committee

26 March 2018

 

Forecasted Financial Position for the year ending 30 June 2018

Record No:             R/18/3/5114

Author:                      Kate Westenra, Graduate Accountant

Approved by:         Anne Robson, Chief Financial Officer

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1        To inform the committee of the expected year-end financial result compared to the published 2017/2018 Annual Plan and seek the committee’s recommendation to Council to approve the resulting forecasted position. 

Executive Summary

2        Forecasting the financial position for the year ended 30 June 2018 is intended to provide information about the projected final year end results.  In considering the final position staff consider what they planned to do in the Annual Plan, the projects carried forward from 2016/17 that were approved by Council in September 2017, unbudgeted expenditure requests approved by Council during the year and the expected year end position as a result of operational decisions and information.

3       Forecasting enables the organisation to understand the anticipated year end position at all levels.  It will also assist with decisions and priorities for spending across Council.

4       The budgeted expenditure included in the Annual Plan for the 2017/2018 year was adopted in June 2017.  Forecasting allows a formal process to communicate to the Executive Leadership Team (ELT), Finance and Audit Committee and Council any known or expected changes.  The net amount by business units is shown in Appendix A.

5       The effect of the forecast changes on the Statement of Comprehensive Revenue and Expenditure and Statement of Financial Position is shown in Appendix B and C.

6       As part of the resolutions the Committee is asked to recommend to Council a number of unbudgeted expenditure requests that have not been advised to Council previously.  Additionally there are a number of projects that have been identified as needing to be deferred to future years.  This deferral will be undertaken as part of the submission hearing process to the Long Term Plan.  The committee are asked to support the deferral. A detailed list of these projects can be found in Appendix D.

7       This report is included in the Council agenda for the meeting on 27 March 2018. Council staff will update Council on any discussions and recommendations made by this committee.

 

 


 

Recommendation

That the Finance and Audit Committee:

a)            Receives the report titled “Forecasted Financial Position for the year ending 30 June 2018” dated 19 March 2018.

 

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

 

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

 

d)           Notes the forecasted changes to Council’s year-end financial performance and position as detailed in appendix B and C.

 

e)            Recommends Council approve the changes as detailed in appendix A.

 

f)             Recommends to Council that it include in the 2018-2028 Long Term Plan the projects indicated to be deferred from the current year as detailed in appendix D.

 

g)           Recommends Council approve the following unbudgeted expenditure for the 2017/18 financial year:

 

Business Unit

Expense

Amount

Funding Source

Customer Service

Acquisition of ex roading vehicle

$15,000

Loan

Financial Services

Increases in valuation contract and legal fees

$77,500

District Op Reserve

People and Capability

Uniform re-branding

 $24,196

Corporate Uniform reserve

People and Capability

Increased recruitment costs

 $58,425

District Op reserve

Community Leadership

Training and associated costs 

 $20,000

District Op Reserve

Community Leadership

Stewart Island/Rakiura Economic Study

 $40,000

Grant

Community Leadership

Purchasing two vehicles instead of leasing.

 $62,592

Loan

Chief Executive

Increased operational costs

$133,504

District Ops reserve

Operations & Community Service

1 early replacement , 1 vehicle purchased instead of leased and 1 additional team leader vehicle

$95,041

Loan & Reserve

Communications and Engagement

Increased operational costs

$20,000

District Ops reserve

Building Regulation

Increased operational costs

 $35,023

District Ops reserve & unused budget

Building Regulation

Purchasing two vehicles instead of leasing.

 $72,258

Loan

Resource Planning/Policy

Increased district plan costs

 $30,000

District Ops reserve

Venture Southland - Grant

Budgeting error, te Anau Destination Fiordland contribution

 $13,601

District Ops reserve

Buildings - Invercargill Office

Office refurbishments

 $13,337

Property Development reserve

Roading - Administration

One early replacement vehicle

 $45,204

Depreciation Motor Vehicle reserve

Roading - Special Purpose

Sealing of lower Hollyford Road

 $286,620

100% NZTA

Hall - Colac Bay

Urgent repairs to building.

$11,600

Colac Bay Com Centre reserve & unused budgets

SS Riversdale - Sludge Removal

Increase in sludge removal costs

 $84,014

Loan

Stormwater Drainage - Winton

Clyde/Eglington St SW Repairs

 $18,488

Winton General reserve

SIESA - Operations

Increased operational costs

 $103,489

SIESA Operations reserve

SIESA - Waste Recovery

Increased operational costs

 $18,000

SIESA Operations reserve

Water Services

Potential cost allowance for Havelock North drinking water implications

$100,000

District Water Reserve

Water, Wastewater and Stormwater

Potential cost allowance for Water and Land plan appeals

$100,000

District Water & Wastewater Reserves and Local reserves

 

 

Background

8        Forecasting enables transparency and Council to be informed of the anticipated year-end financial result. Forecasting is not intended to involve the time and effort undertaken in the annual budgeting process. 

9        This is the second round of forecasting for the financial year with the first completed in November 2017.

10      Budget managers were requested to undertake forecasts for their business units where the expected overall outcome would vary from the budget in the Annual Plan by specified tolerance levels.  These net levels are set at:

-           $1,000 for Council-owned halls;

-           $1,000 to $10,000 for townships depending on their operational expenditure in the current year;

-           $10,000 for all District business units.  The maximum limit of $10,000 was set in line with the delegation held by the Chief Executive in relation to him approving unbudgeted expenditure.

11      No changes have been made to depreciation or the revaluation of fixed assets.

12      Changes due to forecasting have been included in the attachments as follows. 

·   Attachment A provides details of changes to revenue and operating expenditure and capital expenditure for each business unit with commentary from the budget manager.

·   Attachment B shows the net effect of the changes to the Statement of Comprehensive Revenue and Expenditure for the year ended 30 June 2018.

·   Attachment C shows the effect of changes to the Statement of Financial Position for the year ending 30 June 2018.

·   Attachment D provides details of the specific projects being deferred to future years as part of the Long Term Plan. The recommendation to Council is that these planned deferrals be included in the 2018-2028 Long Term Plan and be considered as part of the Long Term Plan submission consideration process.

13      A breakdown of the movement of capital projects as a result of carry forwards and forecasting for the 2017/2018 year is as follows:

Financial Activity

Amount

Capital projects as per the 2017/2018 Annual Plan

$35,040,465

Carried forward from 2016/2017

$6,135,386

October Forecasting movement

($3,543,468)

February Forecasting movement

($4,140,911)

Expected project costs for 2017/18

$33,491,472

 


 

 

14      Major changes due to forecasting are shown below. Details can be found in Appendix A. Changes in revenue from the budget has increased by $1M (Appendix B). Major changes are:

·    Inclusion of grant income for the Milford opportunities project $250k

·    Proceeds from the Edendale hall & potential road stoppings $250k

·    Recognition of MBIE funding for Lumsden $302k

·    Increase in revenue from gravel extraction at Mairs Pit $200k

·    $287k from NZTA for sealing of Hollyford Road

·    Reduction of $200k in Stewart Is streetworks income as a result of the loss of development contributions $94k and the movement of a project to 18-19.

 

15      The forecast operating expenditure has decreased from the budget by $13K overall however as Appendix A shows there are considerable increases offset by decreases.  Major changes were:

·    District Sewerage – $500k for the Project Consultant has been decreased to $150K this was for work for Te Anau sewerage investigation/monitoring/consent

·    Interest on loans for sewerage and water schemes has been decreased $238k due to less loans than previously budgeted for the year

·    Reduction in Resource Planning/policy costs of $110k due to cost sharing on the landscape and biodiversity assessments

·    Inclusion of $146k of costs for the Lumsden toilets

·    Finance costs are forecast to be $74k above budget, due to increased valuation contract costs and legal fees.

·    Gravel pit costs are forecast to be $70k higher due to increased royalties due and maintenance.

·    Information management costs are forecast to increase $210k however $200k of this is a transfer from a capital cost line to a P&L line due to initial costs in regards to cores systems being classified as an annual expense.

·    Inclusion of $250k in relation to the Milford Opportunities project.

 

16      The forecast capital expenditure has decreased by $4.1M. $2.3M is capital projects being deferred to the LTP.

17      The total forecast net surplus for the year is $2.8M which is $1.4M more than the original Annual Plan budget.

18      Projects for this year which are forecast to be carried forward to the 2018-2028 Long Term Plan amount to $2.5M.

Issues

19      The roading team indicated that the LED lights might not be completed by the end of June, due to delays with NZTA approving the programme.  A number of Councils have experienced this delay and all are working with NZTA to ensure that any work not completed is able to be moved forward to 2018-2019.  Staff will keep Council informed.  No forecast changes have been made for this, with any changes to form part of the carry forward if needed.

20      The roading team also indicated that they were still planning to achieve the three year programme by year end.  However the end result may be slightly under due to weather conditions, contractor resource etc.  To ensure they are as close as they can be the team meets the first Friday after every month end to discuss where they are positioned and what adjustments need to be made.

21      Forecasting is part of the ongoing process to encourage better financial behaviours across the organisation.  This includes early identification of projects that will not be completed by the end of the current financial year.  The intention is that where projects will not be completed this year, there will be sufficient time to include them in the Long Term Plan budgets for future years as opposed to a Carried Forward report to Council.  The Carried Forward report is provided to Council after the end of a financial year to request that the work not completed during a year is carried into the next financial year’s budget. 

22      Forecasting also provides an opportunity to approve anticipated unbudgeted expenditure during the year.  This should reduce the number of individual requests needed to be handled by Council.  Council will still need to approve some expenditure items separately where the expenditure is large enough to require individual approval or where unbudgeted expenditure has been identified between the two rounds of forecasting. 

23      It is expected that forecasting will improve as the process is refined and it becomes part of the yearly process.  In 2016/17, $6.3M of projects were moved to 2017/18 as part of the Annual Plan consultation process.  An additional $6.1M was carried forward into 2017/18 at year end as a carry forward.  This year $2.5M is proposed to be deferred to the 2018-2028 Long Term Plan as part of the Long Term Plan submission process (Appendix D).  As part of the year end process Council finance staff will be checking if any carry forwards are required.  These will be reported to Council in September 2018.

24      Budget managers were asked if projects being deferred would impact on delivery of the currently planned 2018-19 projects.  The response was mixed.  The manager of Water and Waste indicated he would know better around the time Council is hearing the 2018-2028 Long Term plan submissions,  as it is expected that more detail about the implications of the Havelock North inquiry will be known but it also depends on happens with Te Anau wastewater.   The community engineers did not indicate any issues. 

25      It is expected that forecasting will improve as the process is refined and it becomes part of the yearly process.

Factors to Consider

Legal and Statutory Requirements

26      There are no legal or statutory requirements in regards to forecasting Council’s end of year position.

Community Views

27      Consultation was held with the community for the expenditure included in the 2017/2018 budget as part of the Annual Plan process and estimates meetings.

28      Changes proposed to capital and operational expenditure for townships will have been or will be reported to the relevant Community Board or Community Development Area Subcommittee.

29      Where increased expenditure is expected to continue into the 2018/2019 financial year, Council will be advised through the Long term Plan consultation process which will be subject to Councils approval.

Costs and Funding

30      Forecasting completed shows that overall net operating income and expenditure is expected to increase by $1,079,981.  This is shown by business unit in Attachment A.

31      Overall net Capital Expenditure is expected to reduce by $4,140,911 with the main items being cost removal for the Invercargill building projects, the Core Systems review, Riversdale Sewerage Scheme, SIESA projects, Riverton Water Supply and Eastern Bush Water Supply being proposed to be deferred to 2018/19 and beyond or funds that are no longer required.  Council is requested to approve the expenditure, not included in resolutions, shown in Attachment A.

32      The impact on the budgeted Statement of Comprehensive Revenue and Expenditure for the 2017/2018 is a $1.4M increase from the original Annual Plan.  This is shown in Attachment B and includes $236 thousand of approved carried forward amounts less $564 thousand (October forecast) and $1.1 million (February forecast).

Policy Implications

33      Council staff must ensure that all expenditure is carried out within approved delegations. 
The current financial delegations only allow the Chief Executive to approve unbudgeted expenditure up to $10,000. 

Analysis of Options

The options are to approve or not to approve, in full or part, the forecasted adjustments to the expenditure in the Annual Plan.

Option 1 - Approve the changes in income and expenditure in Attachment A

Advantages

Disadvantages

·        The Committee and Council is informed of anticipated changes from the Annual Plan for 2017/2018.

·        Council has had the opportunity to prioritise expenditure to be incurred in the current financial year.

·        Council staff are able to purchase services as required to provide services to the community in the most appropriate manner.

·        Deferral of projects which are going to be completed later and/or costing more than previously indicated.

 

Option 2 - Approve the forecast changes recommended 

Advantages

Disadvantages

·        Council is informed of anticipated changes from the Annual Plan for 2017/2018.

·        Council has had the opportunity to prioritise expenditure to be incurred in the current financial year

·        Council considers that the additional expenditure is not a current priority and does not need to be incurred.

·        Processes may be delayed where further approval needs to be sought from Council before committing to additional expenditure.

Option 3 – Do not approve, in part or in full, the forecast changes recommended 

Advantages

Disadvantages

·        Council is informed of anticipated changes from the Annual Plan for 2017/2018.

·        Council has had the opportunity to prioritise expenditure to be incurred in the current financial year

·        Processes may be delayed where further approval needs to be sought from Council before committing to additional expenditure.

 

Assessment of Significance

34      The content of this report is not deemed significant under the Significance and Engagement Policy.  The two projects which are of significant value are the deferral to future years of the Invercargill Office which is under investigation and the Core Systems.  These projects were included in the 2017/18 Annual Plan which was consulted on.  The likely impact and consequences on Councils finances will not significantly alter from that already consulted on.

Recommended Option

35      Option 1 to receive the forecasted adjustments to the financial statements and approve the expenditure in Attachment A not included in the Annual Plan for 2017/2018.

Next Steps

36      To advise managers of the approval of unbudgeted expenditure for the 2017/2018 financial year.

37      Ensure that deferred projects are included in the proposed 2018-28 Long Term Plan.


 

 

Attachments

a             Forecasting Financial Report - March 2018 - Attachment A: Forecast net adjustments to revenue, operating expenditure and capital expenditure by business unit

b             Forecasting Financial Report - March 2018 - Attachment B: Statement of Comprehensive Revenue and Expenditure

c             Forecasting Financial Report - March 2018 - Attachment C: Statement of Financial Performance

d            Forecasting Financial Report - March 2018 - Attachment D: Projects planned to be deferred to the 2018-28 Long Term Plan    

 


Finance and Audit Committee

26 March 2018

 


Finance and Audit Committee

26 March 2018

 


Finance and Audit Committee

26 March 2018

 


Finance and Audit Committee

26 March 2018

 


Finance and Audit Committee

26 March 2018

 

Audit NZ report of Council's LTP Consultation Document for the period 1 July 2018 to 30 June 2028

Record No:             R/18/3/5297

Author:                      Nicole Taylor, Project Co-ordinator Corporate Planning

Approved by:         Rex Capil, Group Manager Community and Futures

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1        To receive the report from Audit New Zealand on the audit of Council’s 2018-2028 Long Term Plan Consultation Document.

Executive Summary

2        As part of the audit process for the Long Term Plan, Audit New Zealand provides Council with a report on its consultation document and final Long Term Plan. 

3        Attached is the report received from Audit New Zealand in relation to the audit of the LTP Consultation Document (LTP CD) as part of the 2018-28 Long Term Plan (Attachment A).

4        In the report, Audit NZ noted that Council clearly articulated in its consultation document the key issues on which to consult with the community.  They noted that Council’s overall financial position is sound with low debt being a notable feature and that the challenge will be to balance the need to achieve income levels which support the long term sustainability of its reserves, while maintaining a strong focus on the affordability of rates. 

5        The report also commented on the Council’s focus on future planning and the perception risk that may occur around continual planning without corresponding decisions and action.

6        The report also noted that there is scope for further improvement of asset data/information in order to assist Council to develop appropriate asset management and renewal strategies.

7        Audit New Zealand issued an unmodified opinion on Council’s Long Term Plan Consultation document (LTP CD), on 27 February 2018. This meant that Council’s LTP CD “met its statutory purpose and provided an effective basis for public participation in Council’s decisions about the proposed content of the 2018 – 2028 LTP”.  In doing so Audit NZ found the LTP CD had no misstatements.

8        Audit NZ will issue an opinion and report on the final LTP, which is to be adopted by Council on 20 June 2018.

 

Background

9        Audit New Zealand completed their audit of the LTP CD on behalf of the Office of the Auditor General on 27 February 2018 and issued an unqualified audit opinion which was included in the LTP CD (pages 30-31).

10      In providing this opinion, the audit team completed a range of testing on the LTP CD and underlying information including assumptions, systems and Activity Management Plans (AMPs) in November followed by reviewing the consultation document and financial/infrastructure strategies in January/February.

11      As a result of this work the audit team have provided a report on the CD that sets out their opinion of the CD, the key issues identified and their comments in regards to these and points that Council may wish to consider.

12      The report reiterates a number of aspects related to the content of the LTP CD and supporting information. In particular their report highlights

a)       the potential for a perception risk in the LTP CD around the focus on continual planning without corresponding decisions and actions;

b)      scope for further improvement of asset information for ageing assets underlying AMPs.

13      Council staff are currently developing a programme related to this future planning work required to ensure that this is progressed in a timely manner so to inform future options and decisions (and therefore action) ahead of and as part of the 2021 LTP preparation.

14      It is intended that a Community and Futures Research and Analysis Work Programme report will be presented to the Community and Policy Committee meeting on 9 May 2018 for endorsement. This report will provide an overview of the various project topics, work-streams, objectives, timeframes, staff responsibilities and budgets where applicable and available.

15      It is important that Council and staff acknowledge and understand that this Community and Futures research and analysis work is necessary to inform the 2021 LTP and how/when this will flow through into the processes, including community planning, budgets, strategic direction/community outcomes, early community engagement processes, AMPs (including asset data and related asset/renewal strategies) and climate change modelling.

16      Decisions on certain issues/options may need to occur ahead of the next LTP to enable the impacts and consequences of these decisions to be included appropriately in the 2021 LTP. This may also require separate consultation/engagement with communities about the issues and options.

Next Steps

17      Staff to develop and scope proposed Community Future research programme and discuss with Community and Policy Committee in May 2018.

18      Audit NZ will also issue an opinion and management report on the final LTP, which is to be adopted by Council on 20 June 2018.


 

 

Recommendation

That the Finance and Audit Committee:

c)            Receives the report titled “Audit NZ report of Council's LTP Consultation Document for the period 1 July 2018 to 30 June 2028” dated 19 March 2018.

 

 

 

Attachments

a             Audit NZ Management Report - LTP Consultation Document 2018-2028    

 


Finance and Audit Committee

26 March 2018

 


 


 


 


 


 


 


 


 


 


 


 


 


Finance and Audit Committee

26 March 2018

 

Outstanding Debt as at 31 January 2018

Record No:             R/18/2/3595

Author:                      Shirley Carruthers, Finance Officer - Credit Control

Approved by:         Anne Robson, Chief Financial Officer

 

  Decision                                        Recommendation                                  Information

 

 

Overview

1       In December 2017, in response to the discussion around abandoned land sales, Council requested staff to provide a report outlining the status of Council’s debt. This report provides a summary of Council’s outstanding debt as at 31 January 2018, and includes debt associated with rates, water charges, electricity charges (SIESA) and sundry debt (such as building consent, licencing fees, rentals etc). All figures included in this report are GST inclusive and exclude any credit balances.

 

30 June 2017

31 January 2018

Variance

 

$

#

$

#

$

#

Rates (30/6/17 and earlier)

$1,900,586

1,098

$979,839

279

-48%

-75%

Water charges

$104,907

159

$27,639

67

-74%

-58%

SIESA Electricity

$161,243

436

$175,699

519

+9%

+19%

Sundry

$743,400

517

$1,081,375

486

+45%

-6%

Total

$2,910,136

2,210

$2,264,552

 

1,351

 

-22%

-39%

2        It is important to note that of the $2.3 million owing at 31 January 2018, $903,000 is current.  Therefore total overdue debt is $1.4 million of which rates is $980,000.  Further analysis of each of these outstanding debt types is outlined below.

Background

As part of the organisational review a new role of debt collection officer was introduced.  Up until this time debt collection was completed on an ad hoc basis.  Since starting in March 2017, the debt control role has focussed on rates training and understanding outstanding debt, principally in the rating area.  During the last year, a lot of planning has been undertaken to set key dates for rates collection, identifying the course of action required for each rating debt, undertaking abandoned land sales, drafting an internal debt policy, obtaining rates arrears from mortgage holders, processing some rating sales, looking at debt collection options including agencies, contacting ratepayers with outstanding rates.  The result is overdue rating debt is down by $1 million, with an excellent understanding of the debt remaining and processes in place for dealing with this as shown in the table below.  The next area will be to advance on collection of other areas of arrears.    

Rates

3        These arrears relate to rates for the year ended 30 June 2017 and earlier.  Current year rates (2017/2018) do not become overdue until 1 July 2018.  As at the date of this report there is approximately $310,000 (net) of current year’s instalments that have not been paid.

4        The status of the $980,000 rates outstanding at 31 January 2018 is summarised in the graph below:

 

 

5        Abandoned land/Potential Abandoned Land: This is the estimated amount of rate arrears on properties, after due investigation, where the owners cannot be located and no payments have been received for at least three years.  There are currently four properties waiting for approval from the District Court to be put up for tender as abandoned land. A further 21 properties are likely to be progressed as abandoned land, however they have not yet passed the three year legislative timeframe.  A substantial amount of work has been undertaken to identify the whereabouts of these ratepayers including electoral roll review, online searches, contacting neighbours etc, with no success.  The possibility of recovering revenue from these properties is low.  Staff will continue to progress with selling these properties as abandoned land as they become eligible.

6        Recovery Agency (Baycorp)There are eight properties historically lodged with Baycorp.  Three of which are in the process of a rating sale, three properties have a payment arrangement, and one property is being defended in court by the owner. Baycorp have not managed to find the whereabouts of the owner of the remaining property, so it will potentially become abandoned land in due course.  Recovery of the rates arrears in full may not be achievable.  The next step for the property which is not paying or being defended in court, is to seek judgement for arrears which may potentially lead to a rating sale.

7        Recovery Agency (Debt Management Central):  There is 36 outstanding rates accounts with DMC a total of $152,000, eight are on a payment arrangement, and three have paid in full. 
DMC are awaiting authorisation from SDC to proceed to recovery through the court for the remaining 25.  Recovery of the rates arrears in full is still achievable and could be received in the next 12 months if judgement is successful.

8        Bank demands:  Council are awaiting payment from financial institutions on final demands for eight properties.  Several have private mortgagees, whilst others have defaulted on payment arrangements previously made with Council and therefore the demand on the bank was made late. All these arrears are recoverable in full and expected to be received within the next six months. 

9        Arrangements:  The number of customers on approved payment arrangements is 125, most will be finalised by 30 June 2018.  A small number of arrangements have been extended to 30 June 2019. These customers typically have no further penalties being applied to encourage compliance with the arrangement. Full recovery of arrears is expected.  Where the arrangement is dishonoured, staff will progress with seeking judgement through the court.

10      No Mortgage:  There are 78 properties that do not have a mortgage against their certificate of title. Council staff are actively pursuing these customers for payment, and they have not been escalated to any external collection agency.  As these ratepayers are followed up, more than likely Council will receive payment in full or will agree a mutually acceptable payment arrangement.  Confidence is high that payment will be made in full before legal action would be necessary.

11      Write offWe have one write off of rates arrears related to a property that was sold as abandoned land. 

12      Other Issues:  There are nine properties consisting of Estates that are waiting for probate, properties that are under investigation or the sale of the property is pending. Full recovery of arrears is expected in due course.

Water charges

13     Water charges outstanding at 31 January 2018 are summarised in the table below:

Jan-current

Dec

Nov

Oct

Sept

Aug and earlier

Total

Total Overdue

Amount Outstanding

$-

$13,961

$-

$116

$1,917

$11,645

$27,639

$27,639

Number of Debtors

-

36

-

2

13

16

67

67

14      Water invoicing occurs quarterly and the next invoices will be issued during March 2018.  Overdue water debtors will receive reminder notices on their next invoice/statement and followed up accordingly.  Council staff are also looking at the options surrounding implementing water restrictions for those properties with water arrears to encourage prompt payment.

15      In July 2018, a payment demand will be made to the mortgage holder for any outstanding water charges in conjunction with rates demands.


 

Electricity charges (SIESA)

16      Electricity charges outstanding at 31 January 2018 are summarised in the table below:

 

Jan-current

Dec

Nov

Oct

Sept

Aug and earlier

Total

Total Overdue

Amount Outstanding

$121,960

$10,701

$5,466

$3,896

$3,139

$30,537

$175,699

$53,739

Number of Debtors

391

58

24

13

8

25

519

128

17      At the Stewart Island Community Board meeting in October 2017, Council staff presented a report summarising the outstanding SIESA debt and the collection processes being applied.  In response to this report the Community Board requested that staff actively use disconnection notices to encourage payment of arrears and requested that disconnection notices be issued regularly in relation to arrears older than 60 days.

18      13 disconnection notices were issued in February.  No disconnections were required as nine accounts were paid in full and four made significant payment arrangements.

19      Of the total overdue debt $7,000 relates to 15 accounts who are no longer consumers and $15,000 relates to accounts that are in dispute.  Staff are progressing collection through recovery agency where appropriate, however recovery of the charges in full may not be achievable.   The Stewart Island Community Board will be updated regularly.

Sundry debt

20     Sundry debt outstanding at 31 January 2018 is summarised in the table below:

Jan-current

Dec

Nov

Oct

Sept

Aug and earlier

TOTAL

Total Overdue

Amount Outstanding

$780,642

$100,282

$117,601

$6,188

$27,502

$49,160

$1,081,375

$300,733

Number of Debtors

271

79

63

18

14

41

486

215

21      In February 58 letters were issued requesting payment, and 10 final warning notices.  Three accounts are in the process of being forwarded to Baycorp for debt recovery.  Staff will continually review the long outstanding arrears to assess if they should be progressed to collection through a recovery agency or written off (in the instance that is uneconomical to progress through a recovery agency).  Recovery of the revenue in full may not be achievable.  

 

Recommendation

That the Finance and Audit Committee:

a)            Receives the report titled “Outstanding Debt as at 31 January 2018” dated 19 March 2018.

 

 

Attachments

There are no attachments for this report. 

 

 


Finance and Audit Committee

26 March 2018

 

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   Corporate Performance Report for period two - 1 November 2017 to 28 February 2018

C9.2   Quarterly Risk Register Update - March 2018

C9.3   Review of Animal Control Processes

C9.4   Insurance options for Underground Infrastructure

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

Corporate Performance Report for period two - 1 November 2017 to 28 February 2018

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.

Quarterly Risk Register Update - March 2018

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.

Review of Animal Control Processes

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)(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.

Insurance options for Underground Infrastructure

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.