Agenda of Audit and Risk Committee meeting

Audit and Risk Committee Agenda

4 June 2021

MINUTES OF A MEETING OF THE Central Otago District Council’s Audit and Risk Committee, HELD IN Ngā Hau e Whā, William Fraser Building, 1 Dunorling Street, Alexandra ON Wednesday, 24 February 2021 AT 9.33 am

PRESENT: Ms L Robertson (Chair), Cr N Gillespie, Cr S Jeffery, Cr N McKinlay

IN ATTENDANCE: Cr T Paterson, S Jacobs (Chief Executive Officer), L Fleck (Executive Manager – People and Culture), L Macdonald (Executive Manager - Corporate Services), J Muir (Executive Manager - Infrastructure Services), L van der Voort (Executive Manager - Planning and Environment), S Righarts (Chief Advisor), G McFarlane (Business Risk and Procurement Manager), K McCulloch (Corporate Accountant), D McKewen (Accountant), E Aucherlonie (Project Manager) and R Williams (Governance Manager)

1 Apologies

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That apologies from His Worship the Mayor T Cadogan and Cr T Alley be received and accepted.

Carried

2 Public Forum

There was no public forum.

3 Confirmation of Minutes

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the minutes of the Audit and Risk Committee meeting held on 14 December 2020 be confirmed as a true and correct record.

Carried

4 Declaration of Interest

Members were reminded of their obligations in respect of declaring any interests. There were no further declarations of interest.

5 Reports for Information

21.1.3 An update on the preparation of the 2021-31 Long-term Plan

To provide an update on the progress in developing the 2021-31 Long-term Plan.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the report be received.

Carried

21.1.4 Policy and Strategy Register

To present an updated register of council’s policies and strategies.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the report be received.

Carried

21.1.5 Audit NZ and Internal Audit Update

To update the Committee on the status of the internal audit programme and any outstanding actions for completed internal and external audits.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the Audit and Risk Committee receives the report.

Carried

21.1.6 Risk Management Update

To consider the Risk Management update.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the report be received.

Carried

21.1.7 Procurement Update

To provide an update on procurement activities at Central Otago District Council.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the report be received.

Carried

21.1.8 Financial Report for year ending 31 December 2020

To consider the financial performance for the period ending 31 December 2020.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the report be received.

Carried

21.1.9 Health Safety and Well-being Report

To provide information on key health and safety risks and the measures in place to mitigate those risks at the Central Otago District Council.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the Committee receives the report.

Carried

6 Chair's Report

21.1.10 Chair's Report

The Chair advised that she would be undertaking an evaluation of the performance of the Committee and would seek input from the members, observers and the executive team. A report back would be provided to the June meeting.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the report be received.

Carried

7 Members' Reports

21.1.11 February Members' Reports

It was noted that the June meeting would mark the midpoint of the triennium and that the two observers on the Committee would change from Crs Alley and Paterson to Crs Cooney and Laws. The Chair acknowledged Crs Alley and Paterson’s participation on the Committee.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the reports be received.

Carried

8 Status Reports

21.1.12 February Governance Report

To consider the legacy status reports from previous meetings.

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the report be received.

Carried

9 Date of The Next Meeting

The date of the next scheduled meeting is 4 June 2021. Cr Gillespie noted that he would be an apology for that meeting.

10 Resolution to Exclude the Public

Committee Resolution

Moved: Robertson

Seconded: Gillespie

That the public be excluded from the following parts of the proceedings of this meeting.

The general subject matter 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 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 for the passing of this resolution
21.1.13 - Confirmation of Non-Public Minutes from the Previous Meeting	s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons 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 otherwise to damage the public interest s7(2)(d) - the withholding of the information is necessary to avoid prejudice to measures protecting the health or safety of members of the public s7(2)(i) - the withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.1.14 - Cromwell Pool Update	s7(2)(d) - the withholding of the information is necessary to avoid prejudice to measures protecting the health or safety of members of the public	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.1.15 - Lake Dunstan Water Supply Project Audit - Implementation Plan	s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.1.16 - Litigation Report	s7(2)(g) - the withholding of the information is necessary to maintain legal professional privilege	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.1.17 - February 2021 Confidential Governance Report	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 otherwise to damage the public interest s7(2)(d) - the withholding of the information is necessary to avoid prejudice to measures protecting the health or safety of members of the public	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7

Carried

The public were excluded at 10.42 am and the meeting closed at 11.13am.

	Urgent	Necessary	Beneficial	Assigned	Estimated Completion	Status	Comments
Audit NZ 2019 Management Report
Asset valuation recommendations and processes (4.1)
Management should review and address the asset valuation recommendations made by the District Council's valuer. The valuation reports for both the roading and the 3-waters asset classes made several recommendations for improvement opportunities. In reviewing the valuation reports we concur with the valuer’s recommendations and have noted the more significant recommendations below.		ü		Executive Manager - Infrastructure Services and Executive Manager - Corporate Services		In progress	Bridges are contained within the RAMM database, but are valued outside of RAMM as there are not standard rates that can be used due to the varying materials used for bridge components, and the different lives for these. Each bridge needs to be assessed by a structural engineer and valued individually. This will be done again for the 2020 Activity Management Plan. The replacement options will also be confirmed during the development of the 2020 bridge strategy, which also forms part of the 2020 Activity Management Plan. Longer term the roading industry is considering the development of a more specific bridge asset database for use in the New Zealand environment. A project is currently underway to enable component information to be collected for water treatment sites. This will enable more accurate valuations to be undertaken from 2020. The engagement of valuers for the 2018/2019 valuation was delayed, until the issues relating to the previously unaccepted 2017 valuation could be clarified. The valuations are a costly process, and it was not financially prudent to continue with these until the outstanding issues had been cleared with Audit NZ. This has now occurred, and no delays are anticipated with future valuations. For the 2019/20 year the finance and Infrastructure staff created a timetable for the valuation of each activity which is reviewed on an annual basis. This improved the process somewhat. 2019/20 was the first time since the asset management process was updated where parks, reserves and pools assets have been revalued. Audit New Zealand were not expecting this, as the revaluation cycle falls outside of the three-year cycle and so was missed off their schedule. This contributed to increased audit fees. Council planned to do the land and building valuation in 202/21 however with the growth Council has been facing it was decided to do this in 2019, which caused some delays for Audit New Zealand as well.
Roading – the valuer made assumptions around installation dates for certain assets, as the construction date information was not recorded in RAMM. It is recommended that management review and update the dates for the next valuation. We note that management has performed some work already to address this, identifying that some relate to assets constructed as part of the Cromwell relocation when the Clyde Dam was constructed.
Roading – bridge assets were revalued outside of RAMM and it was recommended these assets should be moved to RAMM. In addition it was identified that some bridges may not be replaced at the end of their useful lives and the District Council should consider this as part of its Bridging Strategy.
3-Waters – the valuers noted that detailed component information for new plant projects completed since the previous valuation, have not been included in the plant asset register. Instead, high level project costs have been used.

Annual report preparation process (4.2)
Council should introduce a robust internal quality review process over the draft annual report to improve the quality of the draft information provided for audit.		ü		Executive Manager - Corporate Services / Finance Manager		Ongoing	Preparation for the Annual Report has been completed for 2019-20. For the first few weeks we had a more experienced team and have met our internal timetable. We also requested that Audit NZ meet their timeline. During the later part of the audit we lost two key staff which created challenges for CODC and Audit NZ also struggled with timelines due to reduced staff and delays across the councils due to COVID-19 disclosures. While there were improvements, there is still room for further improvement.


Processing of NZTA claims (4.4)
The NZTA claims are submitted on a timelier basis, for example monthly.		ü		Executive Manager - Infrastructure Services		Complete	The submission of NZTA claims was sporadic due to changes in Roading Management. This task has now been re-assigned and claims have been submitted monthly for 2019/20.

2017 Management Report
Review of general ledger reconciliations
We recommend that general ledger reconciliations (e.g. bank, debtors and creditors) be independently reviewed, dated and evidenced as such.		ü		Executive Manager - Corporate Services / Finance Manager		Complete	General ledger reconcilations are being digitally reviewed, dated and evidence provided.

2015 Management Report
Independent review of journals
We recommend, as best practice, implementation of procedures to ensure that all journals posted into the financial system have been reviewed and are complete.		ü		Executive Manager - Corporate Services / Finance Manager		Complete	Journals and supporting documentation are prepared by a member of the finance team and then reviewed by the Finance Manager. Before posting journals, the finance team is ensuring appropriate supporting documentation or narrative is provided and that the journal is correctly coded. This is all provided to the Finance Manager who reviews the documents and signs a monthly journal checklist form.

4 June 2021

21.2.3 Sensitive Expenditure Policy

Doc ID: 534487

1. Purpose of Report

To review and recommend to Council the adoption of the Sensitive Expenditure Policy, the Travel Policy and the Credit Card Policy.

Recommendations

That the Audit and Risk Committee

A. Receives the report and accepts the level of significance.

B. Recommends to Council that they approve the Sensitive Expenditure Policy, the Travel Policy and the Credit Card Policy.

2. Background

Council’s Sensitive Expenditure Policy has been reviewed following the updated good practice guide on controlling sensitive expenditure distributed by the Controller and Auditor-General.

As a result of this review, it was recommended that the policy be revised and expanded, informing the creation of the Travel Policy and the Credit Card Policy alongside the Sensitive Expenditure Policy.

Official Information Requests surrounding sensitive expenditure and gifts are regularly received by Council, with spending practices scrutinised by the public. Sensitive expenditure covers a broad range of topics and it is important that both staff and elected members have clarity and guidance surrounding these, often controversial, topics.

3. Discussion

The Controller and Auditor-General have provided updated guidance around best practice, reinforcing the importance of performing in a manner which stands up to public scrutiny. Issues of sensitive expenditure arise often, and it is important that guidelines are in place and sensitive expenditure is managed diligently and robustly.

The Sensitive Expenditure Policy, Travel Policy and Credit Card Policy all provide practical guidance on specific types of expenditure and outline principles for decision-making for situations which are not clear-cut. Managing sensitive expenditure, and perceived sensitive expenditure, requires good judgement, and these policies provide a guide from which to base decisions.

There will be greater scrutiny on Sensitive Expenditure in the coming years, and it is important that these documents are robust.

4. Options

Option 1 – (Recommended)

The Committee recommends to Council the adoption of the Sensitive Expenditure Policy, the Travel Policy and the Credit Card Policy.

Advantages:

· Protects Elected Members and Council staff by providing comprehensive guidance surrounding sensitive expenditure

· Protects Council’s reputation

· Reinforces Council’s approach to appropriately managing risk

· Generates awareness of the topic of Sensitive Expenditure

· Reinforces a financial prudence approach

Disadvantages:

· None.

Option 2

The Committee retains the existing Sensitive Expenditure Policy.

Advantages:

· None

Disadvantages:

· Lack of guidance on sensitive expenditure

· Heighten risk of public scrutiny on an item of importance

· Not meeting the Controller and Auditor-General’s recommended best practice

5. Compliance

Local Government Act 2002 Purpose Provisions	This decision ensures the organisation conducts business in an open, transparent and democratically accountable manner.
Financial implications – Is this decision consistent with proposed activities and budgets in long term plan/annual plan?	Yes. The review of this policy, and consequential creation of additional policies, have been conducted in house and have not raised any financial implications. There are no costs associated with the recommendation to adopt these policies. Adequate guidance around sensitive expenditure will reduce the likelihood of financial or reputational damage to Council.
Decision consistent with other Council plans and policies? Such as the District Plan, Economic Development Strategy etc.	Yes. The suite of policies are a revision of the Sensitive Expenditure Policy. The policies maintain consistency with other Council policies and processes.
Considerations as to sustainability, the environment and climate change impacts	There are no implications.
Risks Analysis	The existing policy is outdated. Before the draft of these policies there was no clear and comprehensive policy for travelling or the use of credit cards, which provides uncertainty and therefore ineptness, leaving many aspects open for scrutiny and creating a significant risk to the organisation. These policies reduce the risk to the organisation. For the mitigation of risk, these policies are comprehensive, with the Travel Policy and Credit Card Policy being separated out into standalone policies for the purposes of transparency and simplicity.
Significance, Consultation and Engagement (internal and external)	The changes proposed to the policy are not significant and are therefore unlikely to generate community or media interest. No consultation is required as this is not significant under the Significance and Engagement Policy.

6. Next Steps

The policy shall be taken to Council for adoption. Staff will then be notified of the updated policy through the Council intranet.

7. Attachments

Appendix 1 - Sensitive Expenditure Policy ⇩

Appendix 2 - Travel Policy ⇩

Appendix 3 - Credit Card Policy ⇩

Report author:	Reviewed and authorised by:

Gabi McFarlane	Leanne Macdonald
Risk and Procurement Manager	Executive Manager - Corporate Services
18/05/2021	24/05/2021

4 June 2021

21.2.7 Financial Reserves Policy

Doc ID: 534573

1. Purpose of Report

To consider and provide feedback on the draft Financial Reserves Policy before submitting to Council for consideration at their 30 June meeting.

Recommendations

That the Audit and Risk Committee

A. Receives the report and accepts the level of significance.

B. Review and provide feedback on the draft Financial Reserves Policy.

C. Note the Financial Reserves Policy will be considered at the Council 30 June meeting.

2. Background

Council has a long record of managing financial reserves in a financially prudent manner that promotes and protects the current and future interests of the community.

Council is required to maintain a range of financial reserves and has chosen to create other financial reserves for the purpose of separately managing funds. Over time these funds have accumulated and now total significant sums. It is therefore important that they are managed consistently, accurately, and transparently.

A draft Financial Reserves Policy (refer appendix 1) has been created to provide guidance to council staff so they are able to manage reserves consistently, accurately and transparently with clearly defined parameters.

3. Discussion

Council staff seek to manage the reserves in a clear and transparent manner, to enable elected members comfort when authorising the use of these reserves. The reserves form part of the end of year annual report audits.

Reserves serve as a “rainy day fund” to lessen the impact on rates or to fund unplanned, additional, or delayed programmes of work as per Council or community board resolutions. Whether reserves have accumulated by way of under-spending of an activity in a specific year or collected for a specific targeted activity (such as an emergency event), the expectation applies that the use of the reserves is in a consistent manner that supports the initial intention behind the collection of the income relating to the activity it has originated from.

This policy will give staff guidance when seeking permission to use these funds to support operational and capital expenditure in the later years and ensure that the use of these funds reflects the intent behind the collection of these reserves, while offering transparency in the use of these funds.

4. Options

Option 1 – (Recommended)

The Committee shall provide feedback to be incorporated into the draft Financial Reserves Policy before its taken to Council for adoption.

Advantages:

· Maintain a consistent approach to the review of policies

· Complies with the Committee’s expectation of their role in policy overview

· Supports the intention to maintain transparency, consistency, and accurate management of reserve funds

· Protects Council reputation

· Supports the community’s expectation that council will use funds for the intention that they were collected for.

Disadvantages:

· None identified.

Option 2

Do not provide feedback and recommend to Council the Financial Reserves policy for adoption.

Advantages:

· None

Disadvantages:

· A lack of policy causes confusion at times when determining how and when to use reserves.

· A lack of understanding across Council as to when to use reserves and for which purpose when requiring additional support to fund for operational and capital expenditure in years when funding is not available.

· Inconsistencies in the recording of such reserves may not balance with the expectation of staff or elected members when seeking to use or when approving the use of specific reserves.

· Lack of guidance to council staff

· Staff may seek to rate unnecessarily for activities that have appropriate reserves.

5. Compliance

Local Government Act 2002 Purpose Provisions	This decision enables democratic local decision making and action by, and on behalf of communities through the annual planning and reporting process. AND This decision promotes the economic well-being of communities, in the present and for the future by prudently managing the financial reserves of the Council on their behalf.
Financial implications – Is this decision consistent with proposed activities and budgets in long term plan/annual plan?	The financial implications of this new policy have been considered and is consistent with the proposed activities contained within the long-term and annual planning processes.
Decision consistent with other Council plans and policies? Such as the District Plan, Economic Development Strategy etc.	Other council policies and plans have been considered when creating this policy.
Considerations as to sustainability, the environment and climate change impacts	There are no implications.
Risks Analysis	Whilst there is no current policy to consider, this new policy supports best practice with no known risks.
Significance, Consultation and Engagement (internal and external)	No consultation is required in the creation of this policy. There are no significant issues arising from this new policy and should not generate media or community interest.

6. Next Steps

This policy will be taken to Council for adoption, with recommended amendments (if any). Staff will be notified of the update and uploaded on the Council website.

7. Attachments

Appendix 1 - Financial Reserves Policy ⇩

Report author:	Reviewed and authorised by:

Leanne Macdonald	Sanchia Jacobs
Executive Manager - Corporate Services	Chief Executive Officer
21/05/2021	24/05/2021

4 June 2021

21.2.8 Fixed Asset and Disposal Policy

Doc ID: 535074

1. Purpose of Report

To consider and provide feedback on the draft Fixed Asset and Disposal Policy before requesting that the Chief Executive approves this policy for council staff use.

Recommendations

That the Audit and Risk Committee

A. Receives the report and accepts the level of significance.

B. Review and provide feedback on the draft Fixed Asset and Disposal policy.

C. Note the draft policy, with any amendments, will be signed-off by the Chief Executive and issued to staff for implementation.

2. Background

Council and staff have a requirement to manage all assets in a fiscally responsible manner that best protects the community’s interest.

Council assets make up a significant component of the council’s balance sheet. The value of these assets is audited on an annual basis. It is therefore important that they are managed consistently, accurately, and transparently.

A draft Fixed Asset and Disposal Policy (refer appendix 1) has been created to provide guidance to council staff, so they are able to appropriately manage assets with clearly defined parameters, particularly when disposing of assets.

3. Discussion

Council staff seek to manage and dispose of assets in a clear and transparent manner. Staff also aim to maximise the life of assets and minimise the cost to rate-payers for managing and disposing of these assets. It is important when disposing of assets to protect the reputation of staff and Council through a transparent, arms-length disposal process. This also gives the community an assurance that their assets are being managed to best protect their interests.

This policy seeks to provide assurance across a wide group of stakeholders.

4. Options

Option 1 – (Recommended)

The Committee provides feedback to be considered and incorporated into the draft Fixed Asset and Disposal Policy before Chief Executive sign-off.

Advantages:

· Maintain a consistent approach to the review of policies

· Complies with the Committee’s expectation of their role in policy overview

· Supports the intention to maintain transparency, consistency, and fiscally responsible management and disposal of council assets

· Protects Council and staff reputation

· Supports the community’s expectation that council will manage council assets on their behalf in a fiscally responsible and ethical manner

· Meets Audit New Zealand’s expectations and supports the annual reporting process.

Disadvantages:

· None identified.

Option 2

Do not recommend to the Chief Executive the Fixed Asset and Disposal Policy for sign-off.

Advantages:

· None

Disadvantages:

· Council assets may be disposed of in a manner that could cause reputational harm to council

· The selling of assets if not managed in a transparent manner, with the appropriate arm-length process could result in council receiving a lower price than the asset is worth

· A potential lack of confidence by the community and by Audit NZ

· Council staff do not meet the Committee’s expectations in the deliverance of a policy

· There is a risk that the management and subsequent disposal of council assets may not be consistent with best practice and council expectations

· Risk of reputational harm to council and staff

· Lack of guidance to council staff

· The rate-paying community may not have confidence in council’s management of rate-funded asset

· Challenges in meeting Audit New Zealand’s expectations and receiving an annual report clearance.

5. Compliance

Local Government Act 2002 Purpose Provisions	This decision enables democratic local decision making and action by, and on behalf of communities through the annual planning and reporting process. AND This decision promotes the economic well-being of communities, in the present and for the future by prudently managing the assets of the Council on their behalf.
Financial implications – Is this decision consistent with proposed activities and budgets in long term plan/annual plan?	The financial implications of this new policy have been considered and is consistent with the proposed activities contained within the long-term and annual planning processes.
Decision consistent with other Council plans and policies? Such as the District Plan, Economic Development Strategy etc.	Other council policies and plans have been considered when creating this policy.
Considerations as to sustainability, the environment and climate change impacts	There are no implications, as the asset management plans consider the implications to sustainability, environment and climate change impacts.
Risks Analysis	This new policy supports best practice and through the policy mitigates the risk of reputational and fiscal harm to Council, staff and the community.
Significance, Consultation and Engagement (internal and external)	No consultation is required in the creation of this policy. There are no significant issues arising from this new policy and should not generate media or community interest.

6. Next Steps

This policy will be taken to Chief Executive for sign-off with recommended amendments (if any). Staff will be notified of the update and the policy will be uploaded on the Council intranet.

7. Attachments

Appendix 1 - Draft Fixed Asset and Disposal Policy ⇩

Report author:	Reviewed and authorised by:

Leanne Macdonald	Sanchia Jacobs
Executive Manager - Corporate Services	Chief Executive Officer
21/05/2021	24/05/2021

4 June 2021

21.2.9 Financial Report for the period ending 31 March 2021

Doc ID: 531295

1. Purpose

To consider the financial performance for the period ending 31 March 2021.

Recommendations

That the report be received.

2. Background

The Committee has requested regular financial updates.

3. Financial Reporting

March 2020-21 YTD operating surplus is $10.04M and is largely the result of external funding received for the Three Waters reform and land sales. The activity managers have reforecast their budgets in February 2021 based on year-to-date actuals as of 31 December 2020. This forecast was approved by Council in March and subsequently the revised budget has been updated to incorporate the forecast.

i. Land sales of $6.2M which relates to the Gair Avenue development and Cemetery Road/Harvest Road creating a $2.2M positive variance in income. This income is partly offset by $3.7M of costs that council has incurred including developer costs and profit-sharing costs.

ii. Funding received for the Three Waters reform is $4.73M.

iii. Expenditure is higher than budget by $112k attributed to a late settlement of Harvest Road from 2018 as well as refuse and recycling costs.

Attached to this report is the Council financial report presented in March 2021, which includes a variance analysis against the general ledger profit and loss statement, plus an activity level variance (Appendix 1).

The report also details the expenditure of the capital works programme across activities to enable oversight on progress of these projects.

4. Accounts Receivable

As of 31 March 2021, council had $59k outstanding in accounts receivables greater than 90 days. Resource consents are the key contributors and include:

The Canyon Vineyard $13.3k (objections to fees heard by hearings panel)

M N Shaw $8.5k (awaiting payment options)

Other includes:

ZK – RMH Trust $10k (dispute relating to airport rental)

Top Shelf Productions $5.7k (agreement to fund people on Bikes Series 2)

Debt is actively managed and monitored and if a debtor is past our three-month threshold, their information is sent to our debt collection agency, Receivables Management Limited.

5. Investment

As at 31 March 2021, Council had cash balances of $13.5M, of which term deposits of $6M mature within 90 days.

Weighted average interest rates for all council term deposits is 1.02%.

6. Internal Loans

Forecast closing balance for 30 June 2021 is $4.270M.

7. External Community Loans

The total amount of external loans at the beginning of the financial year 2020-21 was $241k and as of 31 March 2021, the outstanding balance was $202k. Council has received $38k in principal payments and $9.3k in interest payments.

Owed By	Original Loan	1 July 2020 Actual Opening Balance	Principal	Interest	31 Mar 2021 Actual Closing Balance
Cromwell College	400,000	164,184	24,877	6,711	139,306
Maniototo Curling	160,000	48,743	9,750	1,666	38,993
Oturehua Water	46,471	28,122	4,098	1,004	24,024
	606,471	241,049	38,725	9,381	202,324

8. Attachments

Appendix 1 - Financial Report for the period ending March 2021 ⇩

Report author:	Reviewed and authorised by:

Kim McCulloch	Leanne Macdonald
Corporate Accountant	Executive Manager - Corporate Services
14/05/2021	14/05/2021

Other costs breakdown is as below:

This table has rounding (+/- 1)

· Operating expenses are $88k favourable against budget. This is largely due to underspends in waste water operations.

· Advertising and office expenses are $128k favourable. This is largely due to underspends across the organisation.

· Administrative costs are $88k favourable. This is largely due to an underspend in weed control and compliance schedules.

· Projects are ($65k) unfavourable against budget. This variance is mainly due to Three Waters reactive maintenance expenses from the January 2021 flood of ($170k). This expense is still to be adjusted to reflect the resolution of 21.2.14, January 2021 Weather event – water report. In this resolution it was agreed to allow for an increase in expenditure as opposed to using the Emergency Event Reserve. This is offset by underspends in operating projects like the Community Development MBIE projects, Regional Identity Branding project and Road Safety projects.

Profit and Loss by Activity - 31 March 2021

This table has rounding (+/- 1)

* The funding activity has been removed as this is not an operational activity.

· Infrastructure – income has an unfavourable variance of ($775k). This variance is due to development contributions received being lower than budgeted. Lower than expected contributions are linked with the timing of subdivision developments in Cromwell and Alexandra. It is expected that development contribution income will remain lower than budget due to subdivision developments being pushed into the next financial year. Expenditure is over budget by $11k.

· Roading – income has an unfavourable variance of ($822k). This is predominately due to the Waka Kotahi subsidy, which moves in tandem with subsidised roading expenditure, which is favourable $421k. Both are due to the timing of the capital work programme which is running behind schedule largely due to the Clyde Heritage Precinct Project.

· Waste Management - income has a favourable variance of $25k. This is mainly due to the timing of green waste income. Expenditure has an unfavourable variance of ($282k). This is mainly due to the timing of the Central Otago District Council emission trading scheme contribution of ($277K).

· Parks and Recreation – the favourable income variance relates to the MBIE tourism grant of $48k received and updated in the revised budget. Expenditure has a favourable variance of $53k. This relates to a contestable grant for trail maintenance, that is subject to funding applications being received.

· Corporate Services – income has a favourable variance of $20k. This is due to profit on the sales of vehicle assets. Expenditure is $112k lower than budget mainly due to the timing of information services operating expenditure.

· People and Culture – income has a favourable variance of $20k driven by a grant received from New Zealand Libraries Partnership Programme. Expenditure has a favourable variance of $119k. Driving this favourable variance are underspends in Human Resources $46k, Health and Safety $42k and Administration $30k.

· CEO – Expenditure has a favourable variance of $251k which is mainly due to the Strategic Pay allocation which by end of year should be reflected in increased costs across the organisation, as the pay review impacts across the activities.

· Property – favourable income of $2.5M relates to the delayed settlement on Cemetery Road from 2018. Expenditure is unfavourable due to the costs associated with this delayed settlement.

· Governance and Community Engagement – income has a favourable variance of $27k due to grants received in tourism. Expenditure has a favourable variance of $408k. This is due to underspends in promotions and tourism $135k, governance $90k, economic development $81k, community development $63k, visitor centres $39k and regional identity $10k.

· Planning (Regulatory) – has a favourable income variance of $225k, this is mainly due to the recovery of costs incurred from external professionals related to resource consents and an increase in building permit revenue. The favourable expenditure variance of $481k is due to lower-than-expected staff costs and planning consultant (review) fees with further work required to progress the District Plan programme.

· Three Waters – income has an unfavourable variance of ($12k). This is due to lower revenue from septage fees. Expenditure has a favourable variance of $185k due to lower-than expected management consultants and operating costs.

Capital Expenditure

Year-to-date, 35% of the total capital spend against the full year’s revised capital budget, has been expensed.

Council Property and Facilities ($911k) unfavourable against budget:

This includes the purchase of Murray Terrace land approved by the Cromwell Ward in December 2020, which Council authorised as per resolution 20.40.3 in July 2020.

Waste Management ($195k) unfavourable against budget:

This variance is due to the progression of the glass crushing plant project, which Council authorised as per resolution 20.7.31 in August 2020.

Vehicle Fleet ($131k) unfavourable against budget:

Vehicle replacements are tracking well against the full year budget. At the end of April all vehicles have been purchased and should be delivered by the end of the year, and remain within the full-year budget.

Information Services ($14k) unfavourable against budget:

Records digitisation staff costs have been allocated to the project after the forecast creating an unfavourable variance, this will smooth out as the budget is released over the remainder of the year.

Libraries $20k favourable against budget:

Small favourable variance relating to the timing of library book and e-book purchases.

Parks and Recreation $42k favourable against budget:

Parks and recreation have a favourable variance due to projects in cemeteries where contracts have been awarded in April with completion date expected to be end of June.

Roading $1.3M favourable against budget:

Subsidised roading projects are behind, this is mainly due to delays to the capital programme. A month in the work programme has been lost due to the flooding event in January 2021.

Three Waters is $2.9M favourable against budget:

The favourable variance is due to the timing of construction projects. The main drivers include the Cromwell and Omakau water supply improvements and the Clyde wastewater reticulation network construction.

Internal Loans

Forecast closing balance for 30 June 2021 is $4.27M.

OWED BY	Original Loan	1 July 2020 Opening Balance	30 June 2021 Forecast Closing Balance
Public Toilets - Roxburgh & Cromwell	670,000	513,510	491,239
Tarbert St Building	25,868	14,502	13,067
Alexandra Town Centre	94,420	54,766	49,759
Alexandra Town Centre	186,398	101,720	91,041
Alexandra Town Centre	290,600	170,912	155,412
Centennial Milkbar	47,821	24,252	21,284
Vincent Grants	95,000	28,500	19,000
Pioneer Store Naseby	21,589	12,236	10,949
Roxburgh Water	867,000	743,391	717,829
ANZ Bank Seismic Strengthening	180,000	154,337	149,030
Molyneux Pool	262,000	604,000	571,900
Maniototo Hospital	1,873,000	1,824,913	1,775,142
Alexandra Airport	218,000	211,407	204,485
Total	4,831,696	4,458,446	4,270,137

External Loans

The total amount of external loans at the beginning of the financial year 2020-21 was $241k and as at 31 March 2021 the outstanding balance was $202k. Council has received $38k in principal payments and $9.3k in interest payments.

Audit and Risk Committee meeting

4 June 2021

Name	Date Issued / Review Beginning	Due for Review / Completion	Responsibility
People and Culture
Adverse Weather Policy	September-2017	September-2020	CEO
Smoking Policy	December-2004	December-2007	CEO
Staff Interests Policy	July-2020	July-2021	AR > CEO
Working From Home Guidelines	August-2020	August-2023	CEO
Respect at Work Guidelines	February-2020	February-2022	CEO
Leave Management Policy	December-2020	December-2023	CEO
Vehicle User Policy	February-2020	February-2023	CEO
Future Work Items
Performance Management Policy		May-2021	CEO

Information Services
Acceptable Use of Public Wi-Fi Policy	March-2019	March-2022	Council
Cyber Security Policy	October-2018	October-2021	AR > Council
Information Management Policy	June-2019	October-2021	Council
Future Work Items
Digital Strategy		June-2022	Council
Privacy Policy		October-2021	AR > CEO
LGOIMA Policy		October-2021	CEO

Governance
Appointment and Remuneration of Directors Policy	October-2019	October-2022	Council
Code of Conduct	October-2019	October-2022	Council
Delegations Register (incl. Audit and Risk Terms of Reference)	August-2020	October-2022	Council
Elected Members Allowances and Reimbursements Policy	October-2019	October-2022	Council
Standing Orders	October-2019	October-2022	Council

Parks and Property
Clutha River Mata-au Plan	May-2012	May-2017	Council
Molyneux Pool CCTV Policy	March-2018	Late 2021	CEO
Outdoor Recreation Strategy	June-2012	June-2022	Council
Public Toilet Strategy	July-2008	July-2011	Council
Council-owned Earthquake-prone Buildings Policy	June-2020	June-2023	Council
Cemeteries Bylaw	November-2020	November-2025	Council
Community Leasing and Licensing Policy	February-2021	February-2024	Council
District Tree Policy	August-2020	February-2022	Council
11x Reserve Management Plans	Various	Various	Council
Future Work Items
Playground Strategy		January-2022	Council
Reserve Management Plans		2019-2022	Council
Reserve Naming Policy		January-2022	Council
Responsible Camping Strategy		Hold pending government policy decison	Council
Plaques and Memorials Policy		January-2022	Council

Regulatory
Alcohol Restrictions in Public Places Bylaw	May-2019	May-2024	Council
Dangerous and Insanitary Building Policy	September-2013	September-2018	Council
Dog Control Bylaw	December-2020	December-2025	Council
Dog Control Policy	December-2020	December-2025	Council
Easter Sunday Trading Policy	July-2018	July-2023	Council
Gambling and Board Venue Policy	June-2020	June-2023	Council
Lighting Policy	March-2019	March-2022	Council
Litter Offences	July-2019	July-2022	Council
Psychoactive Substances Policy	June-2019	June-2024	Council
Smokefree Policy	June-2018	June-2021	Council
Future Work Items
Enforcement Strategy		Late 2021	Council

Environmental Engineering
Development and Financial Contributions Policy	September-2018	September-2021	Council
Subdivision Engineering Standards	September-2019	September-2024	Council
Sustainability Strategy	April-2019	April-2024	Council
Waste Management and Minimisation Plan	June-2018	June-2023	Council
Waste Management and Minimisation Bylaw	March 2021	March 2026	Council
Future Work Items


Three Waters
Leakage Remissions Policy	January-2012	January-2015	Council
Sewer Lateral Policy	July-2016	July-2019	Council
Drinking Water Quality Policy Statement	March-2020	March-2023	Council
Trade Waste Bylaw	June-2001	To be replaced by Water Bylaw	Council
Water Supply Bylaw	May-2008	To be replaced by Water Bylaw	Council
Future Work Items
Water Bylaw		July-2021	Council
Water Policy		July-2021	Council

Roading
Fingerboard Policy	April-2018	April-2021	Council
Low Cost, Low Risk Roading Improvements	February-2018	February-2021	Council
Roading Bylaw	November-2020	November-2025	Council
Roading Policy	January-2016	January-2022	Council
Speed Limit Bylaw	November-2007	July-2021	Council
Transportation Procurement Strategy	May-2020	May-2025	AR > Council

Libraries
Cataloguing Policy	July-2018	July-2021	CEO
Collection Development Policy	October-2018	October-2021	CEO
Deselection Policy	March-2019	March-2022	CEO
Donations Policy	August-2018	August-2021	CEO
Interloans Policy	May-2020	May-2023	CEO
Lost Property Policy	May-2019	May-2022	CEO

Community and Engagement
Arts Strategy	April-2013	April-2018	Community Owned
14x Community Plans	Various	Various	Community Owned
Grants Policy	August-2019	August-2022	Council
Heritage Strategy	April-2018	April-2023	Community Owned
Film Friendly Policy	June-2018	June-2023	Council
Media Policy	January-2020	January-2023	Council
Significance and Engagement Policy	September-2018	Expected Completion: June-2021	AR > Council
Social Media Policy	January-2020	January-2023	Council
Community Development Strategy	May 2021	May 2023	Council

Future Work Items
Museum Strategy		Expected Completion: June-2021	Council
Communications and Engagement Strategy		Expected Completion: December-2021	Council

Finance
C:\docs\~D427817Fixed Asset and Disposal Policy	January-2017	June 2021	AR > CEO
Fraud Bribery and Corruption Policy	May-2020	October-2021	AR > Council
Investment Policy	June-2020	June-2021	AR > Council
Liability Management Policy	June-2020	June-2021	AR > Council
Procurement Policy	August-2020	October-2021	AR > Council
Protected Disclosures (Whistleblowing) Policy	May-2020	October-2021	AR > Council
Rates Remission Policy	June-2020	June-2021	AR > Council
Rating Policy	June-2020	June-2021	AR > Council
Revenue and Financing Policy	September-2018	June-2021	AR > Council
Risk Management Policy and Process	August-2020	June-2021	AR > Council
Sensitive Expenditure Policy	October-2019	October-2022	AR > Council
Vehicle Procurement Maintenance and Disposal Policy	Ocotber-2020	October-2023	CEO

Future Work Items
Staff Delegations Manual	May-2021	June-2022	AR > Council
Financial Reserves Policy		June-2021	AR > Council

Health and Safety
Health and Safety Policy Statement	September-2020	September-2021	CEO

General
Annual Plan/LTP	June-2020	June-2021	Council
Asset Management Policy	February-2014	November 2021	AR > Council
District Plan	April-2008	April-2018	Council
Economic Development Strategy	May-2019	May-2024	Council
Infrastructure Strategy	June-2018	June-2021	AR > Council
Long Term Plan	September-2018	June-2021	Council
Tourism Strategy	June-2019	June-2024	Council
Future Work Items
Housing Strategy		June-2021	Council

4 June 2021

21.2.12 Update on progress of the Lake Dunstan Water Supply and Clyde Wastewater Reticulation Projects

Doc ID: 534575

1. Purpose

To provide an update on progress of the Lake Dunstan Water Supply Project and the Clyde Wastewater Reticulation Project.

Recommendations

That the report be received.

2. Background

The Lake Dunstan Water Supply Project involves extending the existing borefield above Clyde, constructing a new water treatment plant and piping treated water to the Alexandra Northern reservoir and the Clyde reservoir.

Construction of the pipeline between Alexandra and Clyde is complete.

Final design of the borefield extension, and treatment plant is underway which will then enable construction to commence. The finished project will meet the requirements of the New Zealand Drinking Water Standards.

The Clyde Wastewater Reticulation Project involves construction of a reticulated wastewater scheme in the Stage 1 area of Clyde, connection of over 200 properties and construction of a pump station and pipeline to the Alexandra wastewater treatment plant. The pipeline between Clyde and the Manuherekia River is complete.

Budgets

The budget for the remaining work on the Lake Dunstan Water Supply Project is t $9.2M. The budget for construction of Stage 1 of the Clyde Wastewater Reticulation is $8.5M.

Programme

More detail is provided in the appended project reports.

Lake Dunstan Water Supply:

Project Stage	Expected Completion Date
Agree contract terms	May 2021
Detailed Design, updating estimate and creating delivery programme.	June – October 2021
Review design estimate against Council budget.	October 2021
Construction of Water Treatment Plant, balance rank and bore field	November 2021 – June 2022
Commission new Lake Dunstan Water Supply Scheme	Mid 2022

Clyde Wastewater Reticulation Stage 1:

Project Stage	Expected Completion Date
Construction commenced.	January 2021
Main pipelines	January 2021 – February 2022
Laterals from mains to properties	June 2021 – May 2022
“Winter Programme” for Clyde commercial area	May - September 2021
Commissioning of Clyde Wastewater Reticulation Stage 1	June 2022

Risk Analysis

A high-level review of risks on the overall Lake Dunstan and Clyde wastewater schemes was undertaken as part of the development of the business cases for each of these projects. Individual risk registers have been prepared for both projects with input from the design consultants, contractors and Council major projects staff. The appended reports also outline the key project risks.

The COVID-19 pandemic has created unpredictability in the market for supply of materials and is also creating price volatility. The cost re-imbursement contract models being used enable regular review of cost inputs and changes to be made to working and supply methodologies.

There is high demand on limited contracting resources for the large volume of work underway in New Zealand. This is placing pressure on construction companies who need to upsize to meet increasing work demands.

While projects are being reviewed individually the other projects they interface with are also taken into account. This is to ensure as little broader impact is felt as possible when making individual project decisions.

Gateway Review

Current phase is stage 4 – Implementation

3. Attachments

Appendix 1 - Monthly Project Report Clyde Wastewater Reticulation Stage 1 ⇩

Appendix 2 - Monthly Project Report Lake Dunstan Water Supply ⇩

Report author:	Reviewed and authorised by:

Patrick Keenan	Julie Muir
Capital Projects Programme Manager	Executive Manager - Infrastructure Services
19/05/2021	21/05/2021

Audit and Risk Committee meeting

4 June 2021

Monthly Project Report: Lake Dunstan Water Supply

Progress

The current programme is:

Project Stage	Expected Completion Date
Council resolution agreed to a two stage direct appointment contract to Fulton Hogan. The stages are referred to as Separable Portions (SP) and are called SP1 and SP2. SP1 is the Early Contractor Involvement (ECI) phase and includes detailing the project estimate, based on an optimised design through this process. Separable portion 2 is the construction phase and this will only be commenced upon CODC acceptance of updated estimate and programme from SP1.	24 March 2021
Agree contract terms	May 2021
Detailed Design, updating estimate and creating delivery programme. Timing based on feedback from Fulton Hogan on 12 May 2021.	June – October 2021
Review design estimate against Council budget. Completion of Separable Portion 1.	October 2021
Commence Separable Portion 2, including Construction of Water Treatment Plant, balance rank and bore field	November 2021 – June 2022 (Subject to revision on completion of Separable Portion 1)
Commission new Lake Dunstan Water Supply Scheme	Mid 2022 (Subject to revision on completion of Separable Portion 1)

Current Work

As per Council request a probity review of the procurement methodology was carried out. Morrison Low & Associates Ltd carried out the review and provided a letter in support of Council’s approach on the 30th of March 2021.

Council staff along with teams from Fulton Hogan, Stantec (designers), Switchbuild (telemetry), Pall Marshalls Water Consortium (membrane plant equipment) have started working together to optimise and finalise the design. Once complete Fulton Hogan will estimate the construction costs.

Council and Fulton Hogan are finalising the contract terms. Essentially it will be a two-stage process, as outlined above, with the first stage being Separable portion 1 and involves Fulton Hogan supplying an updated estimate, based on the final design which will then be reviewed against the budget. A detailed programme will also be delivered as part of Separable portion 1. The second stage, Separable portion 2 will commence upon acceptance of Separable portion 1 estimate and programme and includes the construction and commissioning.

Spend to forecast:

The capital cost budget for construction of the Lake Dunstan Water Supply Project from the budget approved by Council on 24 March 2021 is $9.2M. This will need to be reviewed once the detailed design estimate has been concluded. The contract will not move into construction phase until this review is complete.

Value of Professional Services Work

The overall life to date scheme investigation and design cost to March 2021 is $1.3M. As at March 2021 CODC have $120K of committed cost to Stantec for design of the water treatment plant and borefield up to handover point to the contractor. There will be more costs to optimise and finalise the design with further input from Fulton Hogan, Stantec (designers), Switchbuild (telemetry), Pall Marshalls Water Consortium (membrane plant equipment). The estimate for this portion of the design will be known in June 2021.

Value of Physical Work

No physical works are expected until November 2021. However, there will be greater clarity on this once Fulton Hogan start looking in detail at the programme. The budget approved by Council on 24 March 2021 is $9.2M.

Value of Property Work

At this stage the only anticipated easements or land crossing, other than on CODC land will be the backwash and overflow pipes from the water treatment plant to the Clutha. The design has not been initiated on that yet and therefore the route is not resolved. Once resolved an estimate can be put in place.

Value of Consent Work & Approvals

The costs associated with the resource consent application to convert the new bore into a water source are not confirmed. Comparable projects estimate for this work is approximately $25K.

Summary of Change Register

We will establish a variation order register once the contract document is agreed.

Health and Safety

There were no Health and Safety incidents during the term of this report.

Property

Contact Energy agreed with plans to provide easements and to fence the bore sites as per the recommendations in the New Zealand Drinking Water Standards Guidelines.

No further action is can be undertaken on easements until the detailed design approaches completion.

Consents

The resource consent for making the test bore a permanent water source is waiting for further processing by Otago Regional Council. This is being progressed by independent consultant Simon Beale.

Other Issues

The project interfaces with the Clyde Wastewater project. Staff are investigating the opportunities for synergies between the two projects.

Risks

The risk rating for the Lake Dunstan Water Supply Project is rated amber as the detailed project risk review has not been completed.

However, the top 3 risks from the most recent (April) monthly report produced by Stantec are as follows:

1. Timeline for completion - What’s practically achievable based on current programme versus community/council expectations.

2. Management of backwash, Clean in Place bywash, overflow, bypass/drains and commissioning pipe provision.

3. No water take consent for the 20 mega litres per day(mega litre = 1M litres) design flow for 2048 in place with construction of the Water Treatment Plant a number of months away from starting.

Project Status Summary Field:

Progress

Green. However, the sooner confirmation of final design and estimate the sooner a more detailed programme will be able to be put in place along with opportunities identified for programme advancement.

Review Cost

Amber. A review of cost versus budget will be carried out once the detailed design has been estimated by Fulton Hogan

Review Risk

Amber. A review of risk will be undertaken with the wider design team in June 2021.

Project Phase Field:

Current Phase

Stage 4 - Implementation

Next Gateway Review Required:

Gate 4 – “Go Live”

Audit and Risk Committee meeting

4 June 2021

Monthly Project Report: Lake Dunstan Water Supply

Progress

The current programme is:

Project Stage	Expected Completion Date
Council resolution agreed to a two stage direct appointment contract to Fulton Hogan. The stages are referred to as Separable Portions (SP) and are called SP1 and SP2. SP1 is the Early Contractor Involvement (ECI) phase and includes detailing the project estimate, based on an optimised design through this process. Separable portion 2 is the construction phase and this will only be commenced upon CODC acceptance of updated estimate and programme from SP1.	24 March 2021
Agree contract terms	May 2021
Detailed Design, updating estimate and creating delivery programme. Timing based on feedback from Fulton Hogan on 12 May 2021.	June – October 2021
Review design estimate against Council budget. Completion of Separable Portion 1.	October 2021
Commence Separable Portion 2, including Construction of Water Treatment Plant, balance rank and bore field	November 2021 – June 2022 (Subject to revision on completion of Separable Portion 1)
Commission new Lake Dunstan Water Supply Scheme	Mid 2022 (Subject to revision on completion of Separable Portion 1)

Current Work

Spend to forecast:

Value of Professional Services Work

Value of Physical Work

Value of Property Work

Value of Consent Work & Approvals

The costs associated with the resource consent application to convert the new bore into a water source are not confirmed. Comparable projects estimate for this work is approximately $25K.

Summary of Change Register

We will establish a variation order register once the contract document is agreed.

Health and Safety

There were no Health and Safety incidents during the term of this report.

Property

Contact Energy agreed with plans to provide easements and to fence the bore sites as per the recommendations in the New Zealand Drinking Water Standards Guidelines.

No further action is can be undertaken on easements until the detailed design approaches completion.

Consents

The resource consent for making the test bore a permanent water source is waiting for further processing by Otago Regional Council. This is being progressed by independent consultant Simon Beale.

Other Issues

The project interfaces with the Clyde Wastewater project. Staff are investigating the opportunities for synergies between the two projects.

Risks

The risk rating for the Lake Dunstan Water Supply Project is rated amber as the detailed project risk review has not been completed.

However, the top 3 risks from the most recent (April) monthly report produced by Stantec are as follows:

1. Timeline for completion - What’s practically achievable based on current programme versus community/council expectations.

2. Management of backwash, Clean in Place bywash, overflow, bypass/drains and commissioning pipe provision.

3. No water take consent for the 20 mega litres per day(mega litre = 1M litres) design flow for 2048 in place with construction of the Water Treatment Plant a number of months away from starting.

Project Status Summary Field:

Progress

Review Cost

Amber. A review of cost versus budget will be carried out once the detailed design has been estimated by Fulton Hogan

Review Risk

Amber. A review of risk will be undertaken with the wider design team in June 2021.

Project Phase Field:

Current Phase

Stage 4 - Implementation

Next Gateway Review Required:

Gate 4 – “Go Live”

4 June 2021

21.2.14 Private Swimming Pool Inspections

Doc ID: 535467

1. Purpose

To consider Council’s approach to complying with its legislative responsibility to inspect privately-owned swimming pools under the Building Act 2004 (as amended 1 January 2017).

Recommendations

That the report be received.

2. Discussion

Background

On 26 March 2021, Central Otago District Council received a request under the Local Government Official Information and Meetings Act 1987, asking for the following information:

1. The number of residential swimming pools within Council boundaries as at 1st January 2014.

2. The number of residential swimming pools within Council boundaries as at 1st January 2017.

3. The number of residential swimming pools within Council boundaries as at 1st January 2020.

4. The number of residential swimming pools within Council boundaries that had a pool inspection conducted on them between 1st January 2014 and 31st December 2016.

5. The number of residential swimming pools within Council boundaries that did not have a pool inspection conducted on them between 1st January 2014 and 31st December 2016.

6. The number of residential swimming pools within Council boundaries that failed a pool inspection conducted on them between 1st January 2014 and 31st December 2016.

7. The number of residential swimming pools within Council boundaries that had a pool inspection conducted on them between 1st January 2017 and 31st December 2019.

8. The number of residential swimming pools within Council boundaries that did not have a pool inspection conducted on them between 1st January 2017 and 31st December 2019.

9. The number of residential swimming pools within Council boundaries that failed a pool inspection conducted on them between 1st January 2017 and 31st December 2019.

10. The number of residential swimming pools within Council boundaries that failed a pool inspection conducted on them between 1st January 2017 and 31st December 2019 that had passed the most recent previous pool inspection conducted prior to 2017.

11. For the residential swimming pools within Council boundaries that failed a pool inspection conducted on them between 1st January 2017 and 31st December 2019 that had passed a previous pool inspection conducted before 2017, provide the following additional information:

1. Number that had made consented changes to the circumstances of the pool

2. Number that had made unconsented changes to the circumstances of the pool

3. Number that had no changes to the circumstances of the pool

Council’s Regulatory Services Manager composed a response (Appendix 1) which was sent to the requestors. The requestors had sent the same request to other councils in New Zealand and compiled a review of their findings from the information they received.

A copy of their review was received by Council on 25 May 2021, having been sent by its authors (Appendix 2). This review graded councils according to the individuals’ perspective, and rated Central Otago District Council poorly.

This report to the Audit and Risk Committee is to address some of the matters raised in that review so that the committee can be accurately informed.

Relevant legislation

Previously, the Fencing of Swimming Pools Act 1987 required pools to be fenced, but also enabled councils to provide exemptions not to require fencing. Its purpose was to promote the safety of young children by requiring the fencing of certain swimming pools.

In 2016, that Act was repealed by the Building (Pools) Amendment Act 2016. In a residential context, its purpose was included into the Building Act 2004. The amendment took effect on 1 January 2017 through sections 162A-E of the Building Act 2004.

· The legislation’s purpose is to prevent drowning and injury to children under five years of age by restricting unsupervised access to residential pools (s.162A).

· It applies to swimming pools and spa pools with a maximum depth greater than 400mm (s. 162B)

· The compliance requirements for restricting access are outlined in s. 162C.

· Responsibility for regular inspections to ensure compliance is outlined in s. 162D.

o The inspections are to occur at least once every three years, but do not necessarily need to be undertaken by the territorial authority, as this section allows pool owners to use an independently qualified pool inspector to assess and confirm compliance.

· Section 162E relates to pool manufacturer and retailer compliance.

This legislation underpins Clause F9 the Building Code, which sets out the acceptable solutions to meets the requirements of restricting access to residential pools.

Complicating factors

While it is the territorial authority’s responsibility to ensure that residential pools are inspected periodically, this is not always straightforward to undertake. Awareness of private residential pools in the district is often challenging, where owners have not informed Council of a pool’s existence.

Furthermore, the legislation encompasses all above-ground pools, container pools, and inflatable pools over 400mm deep, and so these are also required to be fenced. The small size and sometimes temporary nature of these pools can present significant problems in attaining awareness of their existence.

However, small heated pools (e.g. spa pools) which have a safety cover (e.g. lid) are not required to be inspected, as self-compliance is determined through exemptions under the Building Act 2004.

Most commonly, Council becomes aware of residential pools through historical records, complaints, aerial photographs, and new building consents.

While officers are warranted to enter the property where the pool is located at any time during the day, staff are trying to work with pool owners to agree inspection dates and times for better customer service. This is challenging as pool owners do not necessarily want officers inspecting their pools, especially with the associated inspection fees and potential corrective works to be undertaken, which does cause some delays in the inspection programme.

There is also no legislative requirement to register a pool with Council under the current Building Act.

Current Situation

Councils must balance their territorial authority (TA) functions (e.g. residential swimming pool inspections) and their Building Consenting functions (e.g. processing building consents on a day-to-day basis).

The first three-year period following the implementation of the amendment to the legislation was January 2017 – January 2020.

Council staff met with the Ministry of Business, Innovation and Employment (MBIE) in April 2019 regarding its TA functions. At that meeting staff specifically discussed the plan regarding the inspection of residential swimming pool barriers in the coming three years, i.e. 2020 – 2023.

Additional resources and specific training have been provided since 2019 to undertake these inspections, as part of implementing this inspection programme.

We currently have 341 registered pools and spa pools, of which 153 residential pools have been inspected, and the remaining 185 to be inspected by 2023.

As part of our customer service, staff are contacting pool owners to firstly determine the status of the pool, to ascertain if the pool still requires an inspection, and if so to schedule this where appropriate. If it is instead determined that the pool is now exempt, staff are updating Council records to remove the pool from the inspection programme.

Where inspection is required, staff determine the legislative requirements for the pool in place at the time of its construction, as the current standards cannot be applied retroactively. However, the team do provide guidance to the pool owners of improvements that would meet current standards.

As a result of the inspection programme, the level of compliance is likely to be maintained, making future inspections of the pools less time-consuming and costly.

This planned approach is reflective of the strong senior and executive management leadership in meeting Council’s legislative obligations as discussed with MBIE, while balancing a positive customer experience for pool owners and minimising costs where possible.

3. Attachments

Appendix 1 - Regulatory Services Manager response to LGOIMA ⇩

Appendix 2 - Review report authored by LGOIMA requestor ⇩

Report author:	Reviewed and authorised by:

Lee Webster	Louise van der Voort
Regulatory Services Manager	Executive Manager - Planning and Environment
25/05/2021	26/05/2021

A. Audit and Risk Committee meeting

B. 4 June 2021

Audit and Risk

Forward Work Programme 2021 - 2022

Area of work and Lead Department	Reason for work	Committee’s role (decision and/or direction)	Expected timeframes Highlight the month(s) this is expected to come to Audit and Risk in 2021/22
Area of work and Lead Department	Reason for work	Committee’s role (decision and/or direction)	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun
Long-term Plan 2021/31
Long-term Plan Chief Advisor/Executive Manager - Corporate Services	Oversight of the preparation of the Long-term Plan.	Direction required: Direction on timeline and progress. To make recommendations to Council on matters and proposals relevant to risk management and internal review practices.	Not applicable until 2024/34 LTP is being prepared
Annual Report
Annual Report Executive Manager - Corporate Services	Oversight of the preparation of the Annual Report.	Direction required: For the Committee to recommend to Council that they adopt the 2020-2021 Annual Report subject to any changes the Committee may identify.				R
Governance Reports
Governance Reports Executive Manager - Corporate Services	Oversight of governance reports post internal and external audits	Direction required: Overseeing the progress of key recommendations arising from the audits.				R		R		R				R
Internal Audits
Internal Audits Executive Managers / Business Risk and Procurement Manager	Reviewing the internal audit programme of work and the results arising from those audits.	Direction required: Direction on timeline and progress. Identifying the key risks and actions arising from the audits.				R		R		R				R
Policy Reviews
Policy Reviews Senior Strategy Advisor	Oversight of Council’s policy renewal schedule and reviewing relevant updated and new policies.	Direction required: Provide feedback on policies and recommend for approval and implementation. Review policy schedule to ensure timelines are being achieved.				R		R		R				R
2022 Annual Plan
2022 Annual Plan Executive Manager - Corporate Services	Oversight of the preparation of the Annual Plan.	Direction required: Direction on timeline and progress. To make recommendations to Council on matters and proposals relevant to risk management and internal review practices.						R		R

Key – R = recommendation , U = update

4 June 2021

21.2.16 Health, Safety and Wellbeing Report

Doc ID: 535037

1. Purpose

To provide information on key health and safety risks and the measures in place to mitigate those risks at the Central Otago District Council.

Recommendations

That the report be received.

2. Discussion

COVID-19

With the opening of the Travel Bubble, Council remains prepared to change levels at any time without notice. And has provided guidance to staff wishing to travel to Australia or the Cook Island.

Previous alert level 1 control measures are still in place.

COVID-19 Vaccination

In February 2021, the Ministry of Health began a roll out of COVID-19 vaccination. The COVID-19 vaccination is important to protecting the health and wellbeing of people in New Zealand. It is intended to help New Zealand’s social, economic and cultural recovery from the global pandemic.

New Zealand Government is asking employers to encourage and support their workers to get vaccinated by:

• Facilitating onsite vaccinations

• Allowing workers to get vaccinated during work hours without loss of pay

• Providing timely, relevant information to workers from the Ministry of Health about vaccination and its benefits

Council intends to undertake these actions as staff become eligible for vaccination in Groups 3 and 4 from May 2021.

Council has commenced engaging its workforce about the vaccination rollout in the workplace.

Human Resources and Health and Safety processes have been put in place to manage the vaccination rollout.

Council will maintain a vaccination register that will be kept confidential as per privacy guidelines.

Contractor Health and Safety

Sitewise prequalification is one tool Council uses to support and manage our health and safety duties relating to contractor management.

Sitewise has introduced a fourth tier to its standards. Previously, contractors were awarded Red, Amber, or Green ratings alongside a percentage score. A Gold standard has been introduced for contractors scoring 90% or higher.

63 contractors have been awarded Gold standards in the launch.

Council’s contractors continue to score above the national average and achieved a 2% increase in scores since September 2020.

Incidents Statistics

There were significantly more incidents reported in April 2021 compared to April 2020. However, April 2020 saw many Council staff working from home. When compared to April 2019, the reporting levels are more consistent.

Monitoring and review will be required to ensure that winter-related risks are being managed. This will help to avoid the “winter spike” that has been seen in previous years.

It is encouraging to note that the number of incidents in February fell this year.

During the current financial year to 30 April 2021, 149 incidents have been reported to council.

The following breakdown below:

· 59% of incidents involved the public

· 32% involved employees

· 3% involve contractors

· 61% occurred at the Aquatics facilities.

Cromwell and Alexandra Pools achieved their PoolSafe status for 2021/22.

There have been no notifiable incidents since the last Committee meeting. A status update has been provided for the notifiable incident that occurred on 24 May 2020.

Critical risks

Critical risks identified during this period remain the same: driving, working alone and psychosocial risks.

Health, safety well-being training and well-being initiatives

Internal training

External training

· Health and safety inductions conducted (8)

· BWare software upgrade with training scheduled for June 2021

· Risk management training for the Health and Safety Committee

· First Aid (new and refreshers)

· Financial Wellbeing Training scheduled for July 2021

· Occupational Therapist visited May 2021

3. Attachments

Nil

Report author:	Reviewed and authorised by:

Rachel Ennis	Louise Fleck
Health, Safety and Wellbeing Officer	Executive Manager - People and Culture
11/05/2021	14/05/2021

Audit and Risk Committee Agenda

4 June 2021

10 Resolution to Exclude the Public

Recommendations

That the public be excluded from the following parts of the proceedings of this meeting.

General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Ground(s) under section 48 for the passing of this resolution
Confirmation of Non-Public Minutes from the Previous Meeting	s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons s7(2)(d) - the withholding of the information is necessary to avoid prejudice to measures protecting the health or safety of members of the public s7(2)(g) - the withholding of the information is necessary to maintain legal professional privilege	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.2.19 - Audit New Zealand Report To the Council on the 30 June 2020 Annual Report	s7(2)(i) - the withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.2.20 - Deloitte Report on the Cash Handling Review	s7(2)(i) - the withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.2.21 - Infrastructure Staffing	s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.2.22 - Ombudsman Investigation Outcome	s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.2.23 - Litigation Report	s7(2)(g) - the withholding of the information is necessary to maintain legal professional privilege	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7
21.2.24 - June 2021 Confidential Governance Report	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 otherwise to damage the public interest s7(2)(d) - the withholding of the information is necessary to avoid prejudice to measures protecting the health or safety of members of the public	s48(1)(a)(i) - the public conduct of 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 would exist under section 6 or section 7


AGENDA Audit and Risk Committee Meeting Friday, 4 June 2021
Date:	Friday, 4 June 2021
Time:	9.30 am
Location:	Ngā Hau e Whā, William Fraser Building, 1 Dunorling Street, Alexandra
(Unless Central Government changes COVID-19 meeting restrictions before then, in which case it will be held electronically using Microsoft Teams and livestreamed) Sanchia Jacobs Chief Executive Officer

Detailed Findings: Accounts Payable, Payroll and Information Security Risk Review
Description	Detail	Risk Rating	Recommendation	Status	Due Date	Person Responsible	Any additional Comments
Payroll
Enhancement required for manual timesheets	Central Otago District Council has both waged and salaried employees. Timesheets for waged employees are manually entered into the Pay Global system.	Moderate	Implementing an automated process of capturing the time worked by the waged staff will increase efficiency and reduce the possibility of errors.	In progress	1/03/2021 - move to 31 July 2021	Finance Manager	Libraries are up and running. . Pay Global, Payroll Software company has finished the summary report, which we needed to complete pools. Pools should be finalised end of July 2021 We will not be 100% automated because any salary staff that works extra hours is entered manually into the system.
Improvements required with respect to payroll guidelines	Central Otago District Council does not have an approved procedures manual in place.	Process Improvement	Consolidates and formalises the payroll procedures manual and the desk profile process document.	In progress	Jun-21	Payroll Officer	The Payroll Officer has created an informal step-by step guide, this needs to be consolidated.
Cyber Security Improvement Programme update
Implement a register of all cloud services and ensure termination of these services at the time of staff member leaves council.	Immediately implement processes whereby Human Resources are required to provide timely notice of staff enrolments and departures. In association with this, implement a register of all cloud services used by council staff members to ensure that access to these services is terminated at the time a staff member ceases to provide services to the council.	Process Improvement	Recommendation made as part of People and Protective Technologies roadmap to utilise the new firewall capability and monitor Cloud App activity.	In progress	Dec. 2021	Information Services Manager	Technology has been deployed. We are currently monitoring the Cloud services being utilised. To date, we have not found any unknown Cloud services. We have staff exiting processes in place for known Cloud services.

Implement information leakage controls and removable media	Implement controls to restrict the opportunity for information leakage via the internet and removable media including the locking down of USB devices.	Low	Implement controls to restrict the opportunity for information leakage via the internet and removable media including the locking down of USB devices.	In progress	Dec. 2021	Information Services Manager	This has been added to the people and protective technology roadmap for executive team decision.
Replace the current ad hoc procedures and processes within the Information Services Department	Establish a programme to formalise and document system procedures and processes to replace the current ad hoc processes that may exist in the Information Services Department.	Process Improvement	Establish a programme to formalise and document system procedures and processes to replace ad hoc processes.	In progress	Dec. 2021	Information Services Manager	These have started to be drafted and will be completed this year. These processes are already in place, just not documented.

Report author:	Reviewed and authorised by:

Saskia Righarts	Sanchia Jacobs
Chief Advisor	Chief Executive Officer
12/02/2021	15/02/2021

Report author:	Reviewed and authorised by:

Alix Crosbie	Saskia Righarts
Senior Strategy Advisor	Chief Advisor
26/05/2021	26/05/2021

Report author:	Reviewed and authorised by:

Dylan Rushbrook	Sanchia Jacobs
General Manager Tourism Central Otago	Chief Executive Officer
21/05/2021	24/05/2021

Report author:	Reviewed and authorised by:

James McCallum	Julie Muir
Roading Manager	Executive Manager - Infrastructure Services
20/05/2021	21/05/2021

Report author:	Reviewed and authorised by:

Rebecca Williams	Sanchia Jacobs
Governance Manager	Chief Executive Officer
1/05/2021	26/05/2021