Agenda of Audit and Risk Subcommittee

Audit and Risk Subcommittee

MINUTES

Minutes of an ordinary meeting of the Audit and Risk Subcommittee held in the Mayor's Lounge, Civic Centre, The Octagon, Dunedin on Thursday 21 February 2019, commencing at 1.00 pm

PRESENT

Chairperson	Susie Johnstone

Members	Mayor Dave Cull	Cr Doug Hall
	Cr Mike Lord	Cr Chris Staynes

IN ATTENDANCE

Sue Bidrose (Chief Executive Officer), Dave Tombs (General Manager Finance and Commercial), Andrew Slater (Risk and Internal Audit Manager), Martyn Solomon (Crowe Horwath) and Phil Sinclair (Crowe Horwath)

Governance Support Officer Wendy Collard

1 Apologies

Moved (Susie Johnstone/Cr Chris Staynes):

That the Subcommittee:

Accepts the apology from Ms Janet Copeland.

Motion carried (AR/2019/001)

2 Confirmation of agenda

Moved (Susie Johnstone/Cr Chris Staynes):

That the Committee:

Confirms the agenda without addition or alteration

Motion carried (AR/2019/002)

3 Declarations of interest

Members were reminded of the need to stand aside from decision-making when a conflict arose between their role as an elected representative and any private or other external interest they might have.

Moved (Susie Johnstone/Cr Doug Hall):

That the Subcommittee:

a) Notes the Elected or Independent Members' Interest; and

b) Confirms the proposed management plan for Elected or Independent Members' Interests.

Motion carried (AR/2019/003)

4 Confirmation of Minutes

4.1 Audit and Risk Subcommittee meeting - 6 December 2018

Moved (Susie Johnstone/Cr Chris Staynes):

That the Subcommittee:

Confirms the public part of the minutes of the Audit and Risk Subcommittee meeting held on 6 December 2018 as a correct record.

Motion carried (AR/2019/004)

Part A Reports

5 Audit and Risk Subcommittee Work Plan 2019

A report from Civic provided a copy of the updated Audit and Risk Subcommittee Work Plan 2019.

Moved (Susie Johnstone/Cr Mike Lord):

That the Subommittee:

a) Notes the Audit and Risk Subcommittee Work Plan.

Motion carried (AR/2019/005)

Resolution to exclude the public

Moved (Cr Mike Lord/Cr Doug Hall):

That the Committee:

Pursuant to the provisions of the Local Government Official Information and Meetings Act 1987, exclude the public from the following part of the proceedings of this meeting namely:

General subject of the matter to be considered	Reasons for passing this resolution in relation to each matter	Ground(s) under section 48(1) for the passing of this resolution	Reason for Confidentiality
C1 Audit and Risk Subcommittee meeting - 6 December 2018 - Public Excluded	S7(2)(c)(ii) 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 damage the public interest. 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)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information. S7(2)(h) The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities. S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person. S6(b) The making available of the information would be likely to endanger the safety of a person.	.
C2 Audit and Risk Subcommittee Action List Report	S7(2)(c)(i) The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C3 Internal Audit WorkPlan Update - February 2019	S7(2)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information. 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.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C4 Update on the DCC Internal Audit Actions Register - February 2019	S7(2)(c)(ii) 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 damage the public interest.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C5 Update on the DCC External Audit Actions Register - February 2019	S7(2)(c)(ii) 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 damage the public interest.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C6 Strategic Risk Register - Update February 2019	S7(2)(c)(ii) 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 damage the public interest.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C7 Audit and Risk Subcommittee Policy Update Report	S7(2)(c)(i) The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C8 Purchase Card Report	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.	This report is confidential because it refers and impacts Council staff positions where those staff have not had the opportunity to respond or comment on the report..
C9 Health and Safety Monthly Report for December 2018	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.	The information relates to the actions of individual staff who could be identified. This would breach their privacy and potentially prejudice any processes which may need to be managed..
C10 Dunedin City Holdings Ltd - Update on Audit and Risk Activity	S7(2)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C11 Treasury Risk Management Compliance Report	S7(2)(h) The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C12 Investigation Report 1	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person. S7(2)(c)(ii) 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 damage the public interest. S7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees and persons from improper pressure or harassment.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C13 Investigation Register	S6(b) The making available of the information would be likely to endanger the safety of a person.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 6.	The matters detailed in this report are subject to investigation and information should remain confidential so as not to prejudice the investigation and any possible outcomes of the investigation..
C14 Protected Disclosure Register	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person. 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.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987, and the particular interest or interests protected by Section 6 or Section 7 of that Act, or Section 6 or Section 7 or Section 9 of the Official Information Act 1982, as the case may require, which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as shown above after each item.

That Martyn Solomon (Crowe Horwath) and Phil Sinclair (Crowe Horwath) be permitted to remain at the meeting, after the public has been excluded, because of their knowledge of Items C3 and C4. This knowledge, which would be of assistance in relation to the matters discussed, was relevant because they would be reporting on the item under consideration.

Motion carried (AR/2019/006)

The meeting moved into confidential at 1.06 pm and concluded at 2.51 pm.

..............................................

CHAIRPERSON

Audit and Risk Subcommittee

18 April 2019

Annual Report Timetable for Year Ended 30 June 2019

Department: Finance

EXECUTIVE SUMMARY

1 This report documents the timetable in relation to the preparation and approval of the Dunedin City Council Annual Report for the year ended 30 June 2019.

2 It also considers new accounting standards applicable to the reporting period.

RECOMMENDATIONS

That the Committee:

a) Notes the report as presented.

BACKGROUND

3 Following a request from the Audit and Risk Subcommittee, staff have prepared a high level timetable associated with the annual report process for the year ended 30 June 2019.

DISCUSSION

4 The following draft timetable relates to the preparation and approval of the annual report for the year ended 30 June 2019.

5 The dates are currently indicative pending receipt of the Audit Plan letter from Audit New Zealand. The primary driver of the proposed dates is to have the annual report approved by the outgoing Council – last meeting scheduled for 8 October 2019.

6 This report also includes a summary of the ‘significant considerations’ relevant to the 30 June 2019 financial statements. These have been discussed with the DCHL Financial Accountant who has provided to the group financial officers in these matters.

Date		Task

18-Apr-19		Audit Plan Letter - Audit NZ

29-Apr-19		Interim Audit Commences

28-Jun-19		Draft Interim Audit management report issued to management

19-Jul-19		Management feedback on Interim Audit Management report to
		Audit NZ

8-Aug-19		Interim Audit management report to Audit & Risk

19-Aug-19		Draft parent financial statement available for audit

TBC		Parent audit commences

2-Sep-19		DCHL Group financial statements available for audit

9-Sep-19		Draft DCC Group financial statements available for audit

12-Sep-19		Verbal Audit clearance for DCHL Group from Audit NZ

19-Sep-19		DCHL Annual Report approved by the DCHL Board

23-Sep-19		DCC Annual Report available for audit (including commentary Mayor
		and Chief Executive)

27-Sep-19		Verbal audit clearance from Audit NZ

30-Sep-19	*	Annual report presented to Audit and Risk for confirmation and
		endorsement

8-Oct-19		Annual Report presented to Council for approval.
		Letters of Representation signed (Governance and Management)

8-Oct-19		Audit Opinion Issued

28-Oct-19		Summary annual report available for audit

31-Oct-19		Draft Final Audit management report issued to management

TBA		Final Audit management report to Audit & Risk


		* Date to be confirmed

NZ IFRS 9 Financial Instruments

7 Effective date 30 June 2019 for the for-profit entities in the DCHL Group.

8 PBE’s effective date is 30 June 2022; however the DCC will early adopt, noting that the external hedging activity is held within Dunedin City Treasury Limited.

9 Changes include how we classify and measure financial assets as well as how we assess them for impairment. The new IFRS 9 impairment model is forward-looking, being based on expected credit losses (ECLs) rather than actual losses incurred.

10 IFRS 9’s new hedge accounting model is more closely aligned with an entity’s risk management strategies and offers some simplifications to hedge accounting.

11 New disclosure requirements will apply – systems and control changes may be necessary to capture the data required noting again that these changes will be reflected in the DCHL Group report presented for consolidation with the DCC.

NZ IFRS 15 Revenue from Contracts with Customers

12 Effective date 30 June 2019 for the for-profit entities in the DCHL Group.

13 PBE’s have already adopted their equivalent standard.

14 Many revenue transactions are straightforward, but some can be highly complex. It might be difficult to determine what the entity has committed to deliver, how much and when revenue should be recognised.

15 This revenue standard provides principles that an entity applies to report useful information about the amount, timing, and uncertainty of revenue and cash flows arising from its contracts to provide goods or services to customers. The core principle requires an entity to recognise revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services (focus on control).

16 There is no material impact anticipated from the introduction of this standard on the DCHL Group activities.

OPTIONS

17 Not applicable.

NEXT STEPS

18 The timetable to be confirmed following receipt of the Audit Plan letter from Audit NZ.

Signatories

Author:	Gavin Logie - Financial Controller
Authoriser:	Dave Tombs - General Manager Finance and Commercial

Attachments

There are no attachments for this report.

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This report provides a guideline of processes and procedures for the Subcommittee.

Fit with strategic framework

	Contributes	Detracts	Not applicable
Social Wellbeing Strategy	☐	☐	☒
Economic Development Strategy	☐	☐	☒
Environment Strategy	☐	☐	☒
Arts and Culture Strategy	☐	☐	☒
3 Waters Strategy	☐	☐	☒
Spatial Plan	☐	☐	☒
Integrated Transport Strategy	☐	☐	☒
Parks and Recreation Strategy	☐	☐	☒
Other strategic projects/policies/plans	☐	☐	☒

This report provides a guideline of processes and procedures for the Subcommittee.

Māori Impact Statement

There are no known impacts for tangata whenua.

Sustainability

There are no implications for sustainability.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report provides a guideline of processes and procedures for the Subcommittee.

Financial considerations

Not applicable – reporting only.

Significance

Not applicable – reporting only.

Engagement – external

The timetable has been prepared in conjunction with Audit New Zealand.

Engagement - internal

Not applicable – reporting only.

Risks: Legal / Health and Safety etc.

This report provides a guideline of processes and procedures for the Subcommittee.

Conflict of Interest

Not applicable – reporting only.

Community Boards

There are no known implications for Community Boards.

Audit and Risk Subcommittee

18 April 2019

Resolution to Exclude the Public

That the Audit and Risk Subcommittee:

Pursuant to the provisions of the Local Government Official Information and Meetings Act 1987, exclude the public from the following part of the proceedings of this meeting namely:

General subject of the matter to be considered	Reasons for passing this resolution in relation to each matter	Ground(s) under section 48(1) for the passing of this resolution	Reason for Confidentiality
C1 Confirmation of the Confidential Minutes of Audit and Risk Subcommittee meeting - 21 February 2019 - Public Excluded	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)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information. S7(2)(h) The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities. S7(2)(c)(ii) 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 damage the public interest. S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person. S7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees and persons from improper pressure or harassment. S6(b) The making available of the information would be likely to endanger the safety of a person.	.
C2 Report to the Council on the annual audit of Dunedin City Council for the year ended 30 June 2018	S7(2)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C3 Dunedin City Holdings Ltd - Update on Audit and Risk Activity	S7(2)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C4 Audit and Risk Subcommittee Action List Report	S7(2)(c)(i) The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C5 Internal Audit WorkPlan Update - April 2019	S7(2)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information. 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.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C6 Internal Audit - 2018 Data Analytics	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.	The report is considered confidential because it refers to Council staff positions where those staff may not have had the opportunity to respond or comment on the report..
C7 Update on the DCC Internal Audit Actions Register - April 2019	S7(2)(c)(ii) 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 damage the public interest.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C8 Update on the DCC External Audit Actions Register - April 2019	S7(2)(c)(ii) 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 damage the public interest.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C9 ComplyWith Legal Compliance Survey (Jan - Dec 2018)	S7(2)(c)(ii) 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 damage the public interest.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C10 Strategic Risk Register - Update April 2019	S7(2)(c)(ii) 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 damage the public interest.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C11 Health and Safety Monthly Report for February 2019	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.	The information relates to the actions of individual staff who could be identified. This would breach their privacy and potentially prejudice any processes which may need to be managed..
C12 Treasury Risk Management Compliance Report	S7(2)(h) The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C13 Investigation Register	S6(b) The making available of the information would be likely to endanger the safety of a person.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 6.	The matters detailed in this report are subject to investigation and information should remain confidential so as not to prejudice the investigation and any possible outcomes of the investigation..
C14 Investigation Close Out Report - Awarding of Contracts	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person. S7(2)(b)(ii) The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information. S7(2)(f)(ii) The withholding of the information is necessary to maintain the effective conduct of public affairs through the protection of such members, officers, employees and persons from improper pressure or harassment.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
C15 Protected Disclosure Register	S7(2)(a) The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person. 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.	S48(1)(a) The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

That Julian Tan (Audit NZ) be permitted to remain at the meeting, after the public has been excluded, because of his knowledge of Items C2 and C3. This knowledge, which would be of assistance in relation to the matters discussed, was relevant because they would be reporting on the item under consideration.

	Title	Page
⇩a	Elected and Independent Members' Register of Interest	7

	Title	Page
A ⇩	Minutes of Audit and Risk Subcommittee meeting held on 21 February 2019	12

	Title	Page
⇩a	Audit and Risk Subcommittee workplan	22

Chairperson	Susie Johnstone
Deputy Chairperson
Members	Janet Copeland	Mayor Dave Cull
	Cr Doug Hall	Cr Mike Lord
	Cr Chris Staynes

Author:	Wendy Collard - Governance Support Officer
Authoriser:	Sharon Bodeker - Team Leader Civic