1                                                 23 April 2021

HUTT CITY COUNCIL

 

Komiti Iti Ahumoni I Tūraru | Audit and Risk Subcommittee

 

Minutes of a meeting held in the Council Chambers, 2nd Floor, 30 Laings Road,

Lower Hutt on

 Friday 23 April 2021 commencing at 2.00pm

 

 

 

PRESENT:

Ms S Tindal (Independent Chair)

Mayor C Barry (Deputy Chair)

 

Cr J Briggs

Cr A Mitchell

 

Cr S Edwards

Cr N Shaw

 

Cr S Rasheed

 

 

APOLOGIES:                  Cr D Bassett

 

IN ATTENDANCE:       Ms J Miller, Chief Executive

Ms A Blackshaw, Director Neighbourhoods and Communities

Mr M Boggs, Director of Strategy and Engagement (part meeting)

Mr K Puketapu-Dentice, Director Economy and Development (part meeting)

Ms J Livschitz, Group Chief Financial Officer

Mr B Hodgins, Strategic Advisor (part meeting)

Mr M Sherwood, Head of Parks and Reserves (part meeting)

Ms C Ellis, Head of Chief Executive’s Office (part meeting)

Mr A Yip, Strategic Projects Manager (part meeting)

Ms E Davids, Risk and Assurance Manager (part meeting)

Mr D Newth, Financial Accounting Manager (part meeting)

Ms H Stringer, Financial Transaction Services Manager (part meeting)

Ms L Rofe, Finance Systems and Projects Manager (part meeting)

Mr T Biggin, Project Manager (RiverLink) (part meeting)

Mr D Scott-Jones, Solicitor (part meeting)

Ms T Lealofi, Democracy Advisor

 

 

 

PUBLIC BUSINESS

 

 

1.       APOLOGIES 

Resolved: (Ms Tindal/Cr Mitchell)                                         Minute No. ARSC 21201

“That the apology received from Cr Bassett be accepted and leave of absence be granted.”


 

2.       PUBLIC COMMENT

Comments are recorded under the item to which they relate.

3.       CONFLICT OF INTEREST DECLARATIONS    

          There were no conflict of interest declarations.

The Chair declared that she had previously worked with Ms Cecilia Tse, Independent Consultant at Auckland City Council.

4.       Recommendation to Council

i)

Risk management update, including the setting of risk appetite (21/371)

 

The Chair noted the title of the item on the agenda was incorrect. She advised of the report should be stated Risk Management Update and Recommendation to Council of the draft Risk Appetite Statement.

Ms Cecilia Tse, Independent Consultant was in attendance for the item. The Group Chief Financial Officer declared that she had previously worked with Ms Tse at Auckland Council.

Ms Tse elaborated on the report. She advised the setting of risk appetite was an important element of risk management and had not been undertaken until now. She elaborated on the six risk appetite statements outlined in Appendix 2 of the report.

In response to a question from a member regarding adequate resources required, the Chief Executive advised that due to the current organisational restructure, future changes to systems investment, programme management and various resources were required. She said the current resources in place were adequate.

The Chair advised members recommendation (3) stated on the Order Paper was no longer required as the Risk Appetite statement was received at the meeting.

The Chair foreshadowed an additional recommendation regarding consideration being given to the proposed RMA and Three Waters reforms.

 

Resolved: (Ms Tindal/Mayor Barry)                Minute No. ARSC 1202

“That the Subcommittee:

(1)  notes and receives the information in this report;

(2)  notes the risk management framework, attached as Appendix 1 to the report;

(3)  endorses the ‘Roles and Responsibilities for risk management at Hutt City Council’ updated in respect of Risk Appetite aspects attached as Appendix 3 to the report;

(4)  endorses the updated risk rating assessment criteria attached as Appendix 4 to the report;

(5)  notes the Risk Register as updated by the Corporate Leadership Team, attached as Appendix 5 to the report;

(6)  notes and receives the Covid-19 risks update. Officers will update members at the meeting if there are any changes to be reported during the meeting;

(7) notes that officers are encouraged to give consideration to, and be cognisant of, the potential impacts of the proposed RMA and Three Waters reforms on Council, stakeholders and the community.”

 

ReCOMMENDED: (Ms Tindal/Mayor Barry)       Minute No. ARSC 21203

“That the Subcommittee recommends that Council endorses for approval to the draft ‘Risk appetite statement’ as attached as Appendix 2 to the report.”

 

5.

Kerbside Rubbish and Recycling Implementation Project (21/574)

Report No. ARSC2021/2/80 by the Strategic Advisor

 

Speaking under public comment, Mr M Shierlaw expressed concern regarding the risk assessment of the Rubbish and Recycling project. He said there was misinformation in the consultation document that stated the recycling bins were manufactured in New Zealand. He believed the misinformation had been removed on Council’s website.

The Strategic Advisor confirmed the rubbish and recycling bins would be delivered to Wellington on 29 April 2021. He said the recycling bins would be distributed from 5 May 2021. He advised three additional staff would be recruited to assist with the high volume of queries expected during the distribution period.

In response to a question from a member regarding refusal of recycling bins by customers, the Strategic Advisor advised customers would still be charged for the bins through the targeted rate. He said further monitoring would be required and contact would be made with customers who had yet to respond.

In response to a question from a member regarding the manufacturing of the recycling bins, the Strategic Advisor advised the rubbish and recycling bins were manufactured in Adelaide, Australia. He said there were four different shipments scheduled for arrival into New Zealand. The first shipment was scheduled for arrival on 29 April 2021 and the last shipment was scheduled to arrive on 18 May 2021.

 

Resolved: (Ms Tindal/Cr Shaw)                                         Minute No. ARSC 21204

“That the Subcommittee notes and receives the report.”

 

6.

Petone Wharf Refurbishment Project (21/564)

Report No. ARSC2021/2/81 by the Reserves Asset Manager

 

The Head of Parks and Recreation advised the detailed assessment of the Petone Wharf had been delayed due to weather conditions. He said the detailed assessment was expected to be received on 28 April 2021. He advised the Quantitative Risk Analysis was scheduled to be undertaken on 30 April 2021.

The Mayor left the meeting at 2.35pm.

The Chair foreshadowed an additional recommendation asking for a further update on the Petone Wharf if Council approved the project.

 

Resolved: (Ms Tindal/Cr Briggs)                                              Minute No. ARSC 21205

“That the Subcommittee:

(1)   notes and receives the information contained in the report;

(2)   notes the draft Project Risk Register attached as Appendix 1 to the report;

(3)   notes that a Quantitative Risk Analysis process is being carried out for the project; and

(4)   notes that if the Petone Wharf Refurbishment project is approved by Council and the budget is brought forward, a further update will be provided to the Audit and Risk Subcommittee on project initiation and then six monthly updates thereafter until completion.”

 

For the reasons to understand the risks and implications of undertaking this project.

 

7.

RiverLink Project Update (21/587)

Report No. ARSC2021/2/82 by the Project Manager (RiverLink)

 

The Project Manager (RiverLink) elaborated on the report.

The Chair foreshadowed an additional recommendation noting the further increase in the RiverLink project budget has been included in the consultation document.

 

Resolved: (Ms Tindal/Cr Edwards)                                        Minute No. ARSC 21206

“That the Subcommittee:

(1)   receives and notes the information contained in the report;

(2)   notes the updated Project Risk Register attached as Appendix 1 to the report;

(3)   notes that initial cost estimates for the RiverLink project have been received and are currently being reviewed by the project office and project partner representatives; and

(4)   notes that the request for a further increase in the RiverLink Project Budget of $64.5 million has been included in the consultation document for the draft 2021 – 2031 Long Term Plan”.

 

8.

Naenae Projects Update April 2021 (21/565)

Memorandum dated 6 April 2021 by the Strategic Projects Manager

 

The Strategic Projects Manager elaborated on the report. He advised a risk workshop with AECOM was conducted on 15 April 2021 to identify any new significant risks. He noted the Design Team would be finalised by end of April 2021.

 

Resolved: (Ms Tindal/Cr Rasheed)                                          Minute No. ARSC 21207

“That the Subcommittee receives and notes the information.”

 

9.

External Audit Update - Hutt City Council (21/560)

Report No. ARSC2021/2/83 by the Financial Accounting Manager

 

Mr Andrew Clark from Audit New Zealand (Audit NZ) was in attendance for the item.

The Group Chief Financial Officer highlighted the closure of the audit recommendations from the last two years. She advised there were no further updates on the Long Term Plan.

Mr Clark advised the modified opinion for performance measures contained audit recommendations for both Council and Wellington Water Limited to review what the outstanding issues were and what improvements needed to be made. He said this issue may be a risk if not resolved by 30 June 2021 and could remain on the 2022 audit schedule.

The Mayor rejoined the meeting at 2.44pm.

The Chair foreshadowed an additional recommendation noting the Mayor’s expenditure was now subject to approval by her.

 

Resolved: (Ms Tindal/Cr Mitchell)                                     Minute No. ARSC 21208

“That the Subcommittee:

 

(1)   notes the Audit New Zealand management report on the audit of the Group Annual Report for the year ended 30 June 2020, attached as Appendix 1 to the report;

 

(2)   notes the Audit New Zealand management report on the audit of the Long Term Plan 2021-2031, attached as Appendix 3 to the report; and

 

(3)   notes that the Mayor’s expenditure is now subject to approval by the Independent Chair of the Audit and Risk Subcommittee.”

 

10.

Annual Tax Compliance Update (21/575)

Report No. ARSC2021/2/57 by the Financial Accounting Manager

 

The Financial Accounting Manager noted the ‘Hutt City Council – FBT and GST Compliance Report – 2021’, attached as Appendix 2 to the report; was the final version.

 

Resolved: (Ms Tindal/Cr Shaw)                                         Minute No. ARSC 21209

“That the Subcommittee notes and receives the report.”

 

11.

Sensitive Expenditure Policy Update and Disclosures (21/577)

Report No. ARSC2021/2/64 by the Financial Accounting Manager

 

The Financial Accounting Manager noted a review of the Sensitive Expenditure Policy had been undertaken. He said the Policy and Guidelines would be revised and reported back to members in due course.

 

Resolved: (Ms Tindal/Cr Edwards)                                    Minute No. ARSC 21210

“That the subcommittee:

 

(1)   notes and receives the report;

 

(2)   direct officers to action the findings of the review of the Sensitive Expenditure Policy to ensure compliance with the Office of the Auditor General guidance published in October 2020;

(3)   agrees that the revised Sensitive Expenditure Policy be reported to the Audit and Risk Subcommittee on 9 September 2021 for review and endorsement ahead of submission to Council for approval;

(4)   directs officers to ensure that the revised Sensitive Expenditure Policy be prepared for the Council Group and that the intent be that there is no deviation to this Policy by any of the Council Controlled Organisations, in particular Urban Plus Limited; and

(5)   notes the sensitive expenditure disclosure information attached as Appendix 5 to the report.”

 

12.

Holidays Act 2003 Compliance (21/556)

Report No. ARSC2021/2/84 by the Financial Transaction Services Manager

 

The Group Chief Financial Officer elaborated on the report.  She advised compliance with the Holidays Act 2003 was a historical issue that needed to be addressed. She noted Council had engaged with Ernst & Young (EY) to undertake further work on estimating the liability to Council. She highlighted that it was scheduled for completion by 30 June 2021.  She said a rough estimate of $1M was included in the third quarter forecast information prepared.  She noted a review of the project’s governance structure would be undertaken to manage the risk areas identified in the report by Ernst & Young.

The Chair commended the officers for their work.

In response to a question from a member regarding the rough estimate of $1M included in the budget, the Group Chief Financial Officer said there were two key payments for remediation work and for staff who had not been paid the correct amount.

In response to questions from a member, the Financial Transaction Services Manager advised staff who were no longer employed at Council would be contacted. She said information had been published on Council’s Ourspace and in the Chief Executive’s regular updates to staff.

In response to a question from a member, the Chair advised the issue had arisen due to the way the current legislation was written and that it was frequently interpreted inconsistently. She noted this had impacted many public and private sector entities in New Zealand and that Council had not intentionally done the wrong thing by their staff.

The Chair noted that the incorrect or incosistent interpretation of the legislation resulted in some payroll system configurations and records being incorrect. She said these also needed to be rectified as part of the remediation project. The current legislation had been reviewed and it would be important for Council to familiarise themselves with any forthcoming amendments.

The Chair foreshadowed an additional recommendation noting the remediation work required to ensure HRIS and Payroll systems were compliant with the Holidays Act legislation.

 

Resolved: (Ms Tindal/Cr Briggs)                                            Minute No. ARSC 21211

“That the Subcommittee:

(1)     notes and receives the report;

 

(2)     notes that officers are considering the project governance structure; and

 

(3)     notes that it is intended to provide regular reporting to the Corporate Leadership Team, the Major Projects Board and this Subcommittee, covering key milestones including the estimation of liability; business case development; procurement processes to assist the remediation calculations and the work that will be required to ensure that the Human Resource Information System (HRIS) and Payroll System are compliant with the Holidays Act legislation.”

 

13.

Internal Audit Charter and Internal Audit Plan 2021-2024 (21/467)

Report No. ARSC2021/2/85 by the Risk and Assurance Manager

 

The Risk and Assurance Manager elaborated on the report.

 

Resolved: (Ms Tindal/Cr Rasheed)                                     Minute No. ARSC 21212

“That the Subcommittee:

(1)   notes and receives the information contained in this report;

(2)   approves the Internal Audit Charter, attached as Appendix 1 to the report;

(3)   agrees with prioritisation of the internal audits; and

(4)   approves the Internal Audit Plan 2021–2024, attached as Appendix 2 to the report.”

 

14.

Legal Compliance and Litigation Risk Reporting (21/619)

Report No. ARSC2021/2/98 by the Chief Legal Officer

 

The Solicitor elaborated on the report.

 

Resolved: (Ms Tindal/Cr Mitchell)                                           Minute No. ARSC 21213

“That the Subcommittee:

(1)   notes the results outlined in the report; and

(2)   notes that Council is moving to a new legal compliance system called ComplyWith, which will produce more detailed reporting every six months.”

 

15.

Seismic Performance Register (21/573)

Report No. ARSC2021/2/86 by the Acting Facilities Manager

The Head of Chief Executive’s Office elaborated on the report.

In response to a question regarding the new earthquake rating for the War Memorial Library, the Head of Chief Executive’s Office advised that was the current rating since the Detailed Seismic Assessment was undertaken.

In response to a question from a member, the Head of Chief Executive’s Office confirmed the Wainuiomata Swimming Pool was not earthquake prone and was not included in the report.

 

Resolved: (Ms Tindal/Cr Mitchell)                                         Minute No. ARSC 21214

“That the Subcommittee notes the information contained in the report.”

 

16.

Audit and Risk Work Programme 2021 (21/581)

Report No. ARSC2021/2/58 by the Democracy Advisor

The Chair foreshadowed an additional recommendation stated as recommendation (2) in the resolution.

 

Resolved: (Ms Tindal/Cr Rasheed)                                          Minute No. ARSC 21215

That the Subcommittee:

 

(1)     notes and receives the work programme; and

 

(2)     notes the expectation of future reporting on the Petone Wharf Refurbishment Project on project initiation and then six monthly updates thereafter until completion of the project, subject to Council’s approval of the project.

17.     QUESTIONS   

          There were no questions.

 

There being no further business the Chair declared the meeting closed at 3.13pm.

 

 

S Tindal

CHAIR

 

CONFIRMED as a true and correct record

Dated this 8th day of July 2021.