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AGENDA
Audit and Risk Committee Meeting Thursday, 15 December 2022
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Date: |
Thursday, 15 December 2022 |
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Time: |
1.00 pm |
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Location: |
Ngā Hau e Whā, William Fraser Building, 1 Dunorling Street, Alexandra
(A link to the live stream will be available on the Central Otago District Council's website.)
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Sanchia Jacobs Chief Executive Officer |
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15 December 2022 |
Notice is hereby given that an Audit and Risk Committee meeting will be held in Ngā Hau e Whā, William Fraser Building, 1 Dunorling Street, Alexandra and live streamed via Microsoft Teams on Thursday, 15 December 2022 at 1.00 pm. The link to the live stream will be available on the Central Otago District Council’s website.
Order Of Business
22.4.1 Declarations of Interest Register
22.4.2 Policy and Strategy Register
22.4.3 Legislative Compliance Report
22.4.5 Fraud, Bribery and Corruption Policy
22.4.6 Update on Three Waters Capital Work Program at 30 June 2022
22.4.7 Three Waters Depreciation Increase
22.4.8 Roading Depreciation Increase Impact on Annual Plan 2023-24
22.4.9 Financial Report for the Period ending 31 October 2022
22.4.10 Health, Safety and Wellbeing Report
22.4.11 Audit NZ and Internal Audit Update
22.4.12 Oversight by the Audit and Risk Committee in the Preparation of the 2024-34 Long-term Plan
22.4.15 December 2022 Governance Report
9 Resolution to Exclude the Public
22.4.16 Water Services Update on Compliance Status
22.4.17 GST Voluntary Disclosure Update
22.4.18 Cybersecurity, Information and Records Management, and Privacy Plan 2022-2025
22.4.19 Strategic Risk Register
22.4.21 December 2022 Confidential Governance Report
Members Ms L Robertson (Chair), Cr T Alley, His Worship the Mayor T Cadogan, Cr N Gillespie, Cr T Paterson
In Attendance S Jacobs (Chief Executive Officer), J Muir (Three Waters Director), L van der Voort (Group Manager - Planning and Infrastructure), S Righarts (Group Manager - Business Support), W McEnteer (Governance Manager)
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22.4.1 Declarations of Interest Register
Doc ID: 605497
1. Purpose
Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.
Appendix 1 - Declarations of Interest ⇩
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22.4.2 Policy and Strategy Register
Doc ID: 598616
1. Purpose
To consider the Policy and Strategy Register.
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That the report be received.
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2. Discussion
The Policy and Strategy Register has been updated to the new departmental structure, that became operational on 21 November 2022.
The November calculation was completed the same day. The organisation is performing well above the 80% target, with 91.75% of policy documents in date.
All five departments exceeded the 80% target.
Three Waters is now a separate division. It remains at 71.43%.
Business Support is sitting at 97.3%.
Five Governance policies were renewed through the election. The Governance Statement and Triennial Agreement are both on track to meet relevant timeframes.
The Annual Report has been drafted and will be finalised following feedback from Audit NZ in December.
The Fraud, Bribery, and Corruption Policy and Procurement Policy are both on this meeting’s agenda.
Community Experience
Community Experience is sitting at 87.5%.
The District Tree Policy was renewed in November.
No policies in the Community Experience portfolio are due for renewal in 2023, however work is underway on two new policies and three new strategies.
Community Vision is sitting at 100%.
The Destination Management Plan has been added as a new item.
Work is underway to renew the Media Policy for January 2023.
Planning and Infrastructure is sitting at 84%, with work underway to renew three expired policies.
No policies are due for renewal in the first quarter of 2023. Work is underway on both the Waste Management and Minimisation Plan and Gambling and Board Venue Policy – both due June 2023.
People and Culture is sitting at 100%.
The Health and Safety Policy Statement was renewed in September.
Work is underway on the Trespass Procedure and Vehicle User Policy for early 2023.
The Staff Interests Policy was mistakenly listed as due in December 2022. This is incorrect, it was due in December 2023. An early review was undertaken by People and Culture Advisor Kirsten Adams that found all legislation to be in date and the policy to be working well operationally. No changes are recommended. It has been attached for any feedback from the Committee.
Three Waters
Three Waters is sitting at 71.43% due to two bylaws that remain on hold during the transition to the new entity for the reform process.
Nine Water Safety Plans are now operational as a requirement of the Water Services Act – these items were in place before the legislative deadline.
Appendix 1 - Policy and Strategy Register ⇩
Appendix 2 - Staff Interests Policy ⇩
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Report author: |
Reviewed and authorised by: |
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Alix Crosbie |
Sanchia Jacobs |
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Senior Strategy Advisor |
Chief Executive Officer |
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21/11/2022 |
2/12/2022
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22.4.3 Legislative Compliance Report
Doc ID: 592446
1. Purpose
To consider the 2022 Legislative Compliance Report.
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That the report be received.
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2. Discussion
The legislative compliance report is an annual report provided to the Audit and Risk Committee. The report provides an overview of the laws and regulations that are relevant to Central Otago District Council and applies a framework to assess compliance against these requirements.
The primary purpose is to ensure the right policies and processes are in place to meet legal requirements. Where areas of non-compliance are identified, it seeks solutions to remedy the immediate occurrence and prevent future recurrences.
The report is now in its third year, and significant work has taken place to provide greater clarity and a higher degree of detail.
The report has three components:
· List of Public Acts with Regulatory Responsibilities for Local Government
· Mandatory Requirements Register
· Improvement Actions
List of Public Acts with Regulatory Responsibilities for Local Government
This item lists the most relevant public acts and provides a brief descriptor of each. Each Act on this list is checked for amendments that may have taken place since the last compliance report.
Mandatory Requirements Register
The Mandatory Requirements Register lists specific documents and requirements related to legislation.
Compiling the list of relevant legislation is a challenging task. The current list was developed from a range of sources including the List of Public Acts, the LGSectorGoodTookKit compiled by Taituarā, discussions with staff subject matter experts, and reporting from other councils.
That register is then compared against Council records, including the Policy and Strategy Register, and discussed with relevant officers to provide a comprehensive analysis of current performance, and identify any areas for improvement.
Improvement Actions
All improvements identified in the Mandatory Documents Register are assessed using the risk matrix and prioritised for improvement. Immediate action is undertaken on any action with a ‘high’ initial risk level.
2022 Report
The 2022 report identified eight areas for improvement:
· Record keeping for chemical storage
o Appropriate processes are now in place.
· Record keeping for emergency response planning
o New processes in place, with further action to follow to improve overall practices
· Improving understanding of the Health and Safety at Work Act 2015
o Further action programmed
· Renewal of the Protected Disclosures (Whistle-blowers) Policy
o This risk has now been managed
· Changes to management of policies with legislative requirements
o This risk has now been managed
· Long-term Plan to include references to the development of Māori capacity to contribute to decision-making process
o Action programmed
· Door to be widened to accessible toilet in William Fraser building
o Action programmed
· The full review of the District Plan is out of date.
o This has previously been mitigated to the extent possible, however will remain on the register
A full description of each area for improvement, and the actions taken, is attached.
There is ongoing and significant legislative change for the Three Waters division. A separate report will be provided in the first half of 2023 analysing council’s processes and workplans against these requirements, and the requirements of transition.
Some notes on compliance are included in the Annual Report. Since the 2021/2021 report was written, elements of the new Water Services Act have come into force. Council met deadline requirements for drinking water safety plans.
Appendix 1 - Improvement Actions ⇩
Appendix 2 - Mandatory Documents Register 2022 ⇩
Appendix 3 - List of Public Acts with Regulatory Responsibilities for Local Government ⇩
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Report author: |
Reviewed and authorised by: |
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Alix Crosbie |
Sanchia Jacobs |
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Senior Strategy Advisor |
Chief Executive Officer |
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15/11/2022 |
2/12/2022
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Doc ID: 601732
1. Purpose
To consider the Policies Policy before it is presented to Council for adoption.
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That the report be received.
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2. Discussion
Significant work took place in the 2019-2022 term with the Audit and Risk Committee to strengthen and develop policy systems and processes.
Outputs included:
· The creation of a Policy and Strategy Register with regular reporting to the Audit and Risk Committee
· The development of a legislative compliance register with regular annual reporting to the Audit and Risk Committee
· Lifting policy performance to improve compliance with targeted timeframes
· The development of a standardised policy template
· Redevelopment of the Policy and Strategy Register to provide clearer detail and accountability
· Setting targets for policies, including timeframes for renewal and compliance targets.
The Policies Policy formalises these arrangements to set expectations and provide a consistent approach to the development, approval, implementation, and revision of policy documents.
It is accompanied by further internal initiatives, including the creation of an intranet page, to ensure all staff are aware of policy expectations, and to support the approximately 32 staff whose roles require direct participation in the creation or maintenance of policy documents.
A separate policy or manual will be developed regarding bylaws.
Compliance target
The policy sets the ‘compliance target’ that measures the proportion of policies that are operational against those that have expired.
This performance is measured annually at the end of the financial year and reported on to external auditors through the audit process.
The performance is also measured prior to each Audit and Risk Committee for reporting within the Policy Register.
This target has previously been set at 80%.
Revision timeframes
The following timeframes are in place for the revision of the respective types of policy document:
· Bylaws – 5 years
· Policies – 3 years
· Plans – 5 years
· Strategies – 5 years
· Procedures, processes, and guidelines – 5 years
These timeframes are consistent with the previous term. The following exceptions apply:
· Longer timeframes may apply for policies tied directly to legislation
· Community-owned policy documents
· Plans and policies in joint administration with other councils
· Reserve Management Plans
Closing and archiving policies
No current process exists for retiring a policy that is no longer required. The Policy specifies that the body who approved a policy must approve its retirement.
Appendix 1 - Policies Policy ⇩
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Report author: |
Reviewed and authorised by: |
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Alix Crosbie |
Sanchia Jacobs |
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Senior Strategy Advisor |
Chief Executive Officer |
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8/11/2022 |
2/12/2022
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22.4.5 Fraud, Bribery and Corruption Policy
Doc ID: 603919
1. Purpose of Report
To consider recommending the Fraud, Bribery and Corruption Policy be adopted by Council for an additional two years, with a review after twelve months.
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That the Audit and Risk Committee A. Receives the report and accepts the level of significance. B. Recommends that Council adopt the Fraud, Bribery and Corruption Policy. |
2. Background
The Fraud, Bribery, and Corruption Policy sets a zero-tolerance approach to acts of dishonesty or unlawful gain and provides a framework outlining how any incidents will be managed.
It was adopted in May 2020 and is reviewed annually to ensure the content remains relevant and up to date.
The Policy was last adopted in January 2022. It will seek readoption at the January 2023 Council meeting.
Legal requirements for fraud prevention, drawn from Office of the Auditor General advice, include:
· A clear and visible commitment from senior management towards fraud prevention and a zero tolerance to fraud.
· A sound policy framework and, underneath this, policies that provide clear and concise guidance to all staff on fraud and fraud-associated matters and outline clear roles and responsibilities for fraud prevention.
· Established and well-controlled processes and systems that reduce the risk of fraud occurring to a minimum.
· Fraud specific procedures that allow for the identification, collation and reporting of instances of fraud and the ongoing monitoring of remedial actions arising from such instances.
· Fraud awareness-raising activities and training (in ethics or code of conduct, privacy principles, fraud control activities).
3. Discussion
The Policy was reviewed in November 2022 by the Senior Strategy Advisor. The review included consideration of the practical application of the policy, and legislative updates.
Minor updates have been made, including:
· Updating references to the Protected Disclosures (Whisteblowers) Act 2022
· Updating references to internal policy changes, most notably the Performance Management Policy that replaced House Rules
· Updating the Fraud Control Officer duties to sit with the General Manager – Business Support
· Changing the reporting requirements for suspected fraud to the General Manager – People and Culture or the General Manager – Business Support. The previous policy referenced ‘their manager’.
· The addition of the Procurement Policy as a related document.
· Simplifying some language changes.
The following additional recommendations have been made:
· General Manager – Business Support to undertake a review of the Fraud, Bribery and Corruption Process
· An internal update will be made to all staff as a reminder of the policy and the provisions contained within
Feedback is sought from the Audit and Risk Committee before the policy seeks readoption at the January Council meeting.
The policy will seek adoption for two years, with a review to take place after twelve months. This is to ensure the policy remains in place and active throughout the review process.
4. Financial Considerations
There are no budget or cost implications resulting from this decision.
5. Options
Option 1 – (Recommended)
Recommend to Council to adopt the updated Fraud, Bribery and Corruption Policy.
Advantages:
· Updated policy in place to provide appropriate guidance on managing dishonesty, and to protect both community assets and Council’s reputation.
Disadvantages:
· No disadvantages.
6. Compliance
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Local Government Act 2002 Purpose Provisions |
This decision promotes the wellbeing of communities, in the present and for the future by ensuring appropriate processes are in place to prevent and manage instances of dishonesty.
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Decision consistent with other Council plans and policies? Such as the District Plan, Economic Development Strategy etc. |
The Policy is consistent with all other plans and policies, including the Performance Management Policy, Procurement Policy, Protected Disclosures (Whistleblowing) Policy, and Sensitive Expenditure Policy.
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Considerations as to sustainability, the environment and climate change impacts |
No environmental or climate impacts.
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Risks Analysis |
There are no risks associated with the adoption of the Policy. There are significant risks to reputation an incident were to occur without the appropriate framework in place.
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Significance, Consultation and Engagement (internal and external) |
Consultation is not required under the Significance and Engagement Policy.
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7. Next Steps
The Policy will be updated with recommendations from the Committee and presented to the January Council meeting.
Appendix 1 - Fraud, Bribery and Corruption Policy ⇩
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Report author: |
Reviewed and authorised by: |
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Alix Crosbie |
Dylan Rushbrook |
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Senior Strategy Advisor |
Group Manager - Community Vision |
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21/11/2022 |
30/11/2022
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22.4.6 Update on Three Waters Capital Work Program at 30 June 2022
Doc ID: 595064
1. Purpose
To consider the status of the Three Waters capital work program at 30 June 2022.
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That the report be received.
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2. Discussion
The 2021/22 total revised capital budget for Three Waters was $40,294,901 including the stimulus grant. $30,145,550 of this budget was spent in the period to 30 June 2022. The $10,149,351 not spent was requested as a carry forward to 2022/23 as it relates to work that is not yet completed. This carry-forward was approved by Council on 28 September 2022.
While the carry forward was significant, it should be noted that spending $30 million in one year is a significant amount for Central Otago and far exceeds the capital expenditure on Three Waters infrastructure of prior financial years.
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2019/20 Actuals |
2020/21 Actuals |
2021/22 Actuals |
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Total Capital Spend |
$14,251,941 |
$7,171,235 |
$30,556,981 |
Significant challenges in delivering construction projects in the 2021/22 period have had an impact on the amount of work delivered. Some key challenges included:
· Covid-19 pandemic related lockdowns, shipping delays, and worker illness isolation periods.
· Supply chain issues causing increased costs and project delivery delays.
· Availability of materials
· Rising costs of materials and construction.
· Availability of skilled contractors and consultants to do the work in a market where these skills are in high demand.
· Resourcing issues in the local market.
These challenges have meant that council staff have had to adapt quickly in a rapidly changing environment and implement risk mitigation strategies to reduce cost increases and time overruns where possible.
One of these mitigation strategies included the implementation of new project management software, Sentient Portfolio Program Management in 2021. This software has significantly improved consistency in project management across the three waters activity, allowing real-time oversight of the large program of projects being delivered, including key risks, issues, financial forecasts compared to budgets, status reporting and more.
Update on the Stimulus Grant Projects
The full $9.46 million of stimulus grant funding was spent prior to 30 June 2022. The final status of the stimulus grant-funded projects is as follows:
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Project |
Spent |
Project Status |
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RFI Support |
$57,821 |
Completed December 2020 |
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Roxburgh Water Treatment Plant Erosion Protection |
$161,522 |
Completed June 2021 |
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Plant Asset Data Collection |
$84,370 |
Completed November 2021 |
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Regional Work Program |
$52,304 |
Completed May 2021 |
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Cromwell Wastewater Pump Station Storage Upgrades |
$702,681 |
Completed March 2022 |
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Operations Improvement Program (Staffing & Overheads) |
$820,000 |
Completed March 2022 |
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Alexandra Northern Water Reservoir |
$2,868,986 |
Completed May 2022 Final commissioning work to be completed alongside Lake Dunstan Water Treatment Plant. |
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Clyde Water Falling Main |
$1,079,223 |
Completed June 2022 |
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Naseby Water Treatment Plant Clarifiers |
$378,559 |
Completed June 2022 |
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Wrightson’s Wastewater Pump Station Emergency Storage Upgrade |
$1,535,960 |
Completed June 2022 |
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Roxburgh Water Falling Main |
$1,000,840 |
Completed June 2022 |
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Ripponvale Scheme |
$300,000 |
Completed June 2022 The remainder of the work which is not funded by the stimulus is to continue into 2022/23. |
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Contingency Projects: Wastewater Treatment Plant Screens, Wastewater Influent and Effluent Monitoring Devices |
$417,734
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Work was completed up to the value required to balance out the stimulus funding. Further work on these Long-Term Plan projects to continue into 2022/23. |
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Total Stimulus Grant Funding |
$9,460,000 |
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The contingency projects were already funded in the Council’s Long-Term Plan, so this additional funding remains as part of the carry forward. It has been identified that further influent and effluent monitoring devices may be required in the network which can utilise this additional funding.
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15 December 2022 |
Summary of Project Budgets Carried Forward to 2022/23
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Project |
Carry |
Project Status |
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Wastewater Improvements |
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Alexandra Wastewater Treatment Plant Upgrade |
$64,156 |
A business case is being developed considering the options for this upgrade. Further budget is in 2023/24 for a larger upgrade of this plant. |
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Cromwell Network Upgrades with Developments |
$3,539 |
An annual amount is set aside for network upgrades to be completed in conjunction with developments when they occur. This funding is expected to be required to meet demand in Cromwell. Uses for this funding can include upsizing pipes that developers are laying to future-proof the network for further growth. |
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Clyde Wastewater Reticulation |
$116,698 |
Construction of the Clyde Wastewater Reticulation is ongoing and had further budget in the 2022/23 period. This project is due to be commissioned in December 2022. |
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Clyde Wastewater Main Pump Station |
$188,088 |
Construction of the Clyde Wastewater Main Pump Station is ongoing and had further budget in the 2022/23 period. This project is due to be commissioned in December 2022 in line with the reticulation project. |
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Cromwell Wastewater Treatment Plant Screen |
$67,985 |
Cromwell Wastewater Treatment Plant Screen has arrived, and final installation works were completed in early 2022/23. |
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Cromwell Wastewater Treatment Plant Improvements |
$300,000 |
Trial aerators have been running at the Cromwell Wastewater Treatment Plant and if they effectively improve the pond operations. Other options for improving the plants’ performance are being investigated. |
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Districtwide Influent and Effluent Monitoring Devices |
$169,738 |
Six devices were ordered with three of these being installed prior to 30 June 2022. The remaining three devices were installed in early 2022/23. There are further sites requiring influent and effluent monitoring devices, the majority of the six devices were ordered and paid for under stimulus funding so the remainder will be completed using the original Long-Term Plan funding. |
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Districtwide Wastewater Pump Station Flow Meters |
$200,318 |
Flow meters have been installed on several pump stations and the remainder are on order and due to be delivered in early 2022/23. Once delivered, installation of the final meters can be completed. |
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Lake Roxburgh Village Wastewater Upgrade |
$100,000 |
This budget was for investigation and design, further budget for construction is in 2023/24. Resource consent from Otago Regional Council is required for this upgrade, once this is obtained a tender can be put to market for construction. |
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Omakau Wastewater Treatment Plant Improvements |
$286,309 |
Work will be further delayed by the flooding in July 2022 and immediate remediation work that was required. Aeration was installed on one of the ponds to improve the performance after the flooding event. Performance is being monitored and evaluated to determine the best value-for-money improvements until the business case is developed for the future of this site. |
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Roxburgh Wastewater Treatment Plant Improvements |
$1,734 |
The budget for this work is in 2021/22 and 2022/23 as this project was always expected to run over the two years. Connection to the electricity network has been delayed due to the requirement for an easement. Work has started pending the final connection to the electricity network in 2022/23. |
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Total Wastewater Improvements |
$1,498,565 |
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Water Supply Improvements |
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Alexandra Network Upgrades with Developments |
$60,000 |
A nominal sum per annum is set aside for network upgrades to be completed in line with developments when they occur. With the amount of development occurring in Vincent this funding is expected to be required. |
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Districtwide Backflow Prevention |
$215,020 |
There was further budget in the 2022/23 period for this work. Investigation into key risk areas throughout the network requiring backflow prevention is ongoing and a program of work is being developed. |
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Bannockburn Reservoir Power Supply |
$75,000 |
An easement is required from Council, a report is due to go to the Cromwell Community Board for this. If approved, the electricity connection works can proceed. |
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Cromwell Pisa Reservoir and Rising Main |
$100,000 |
This project requires hydraulic modelling resources which are limited. Modelling has been prioritised on projects that require construction in the next 2 years of the Long-Term Plan. |
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Cromwell Rising Main |
$313,391 |
Initial scoping and investigation are completed. The design is expected to be completed in December 2022, and the construction tender to follow in early 2023. |
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Cromwell Water Treatment Plant Upgrade |
$1,049,773 |
Investigations, monitoring, and outline design are happening consecutively. A report is due to go up to council in early 2023 with construction commencing in the 2023/24 period. This project will span the transition period to the new water entity. |
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Dunstan Flats Reticulation |
$94,532 |
This project requires hydraulic modelling resources which are limited. Modelling has been prioritised on projects that require construction in the next 2 years of the Long-Term Plan. |
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Lake Dunstan Water Supply Water Treatment Plant |
$2,542,422 |
Lake Dunstan Water Supply Water Treatment Plant had further budget in the 2022/23 period and is due to be completed May 2023. |
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Omakau Water Treatment Plant Upgrade |
$1,728,586 |
A business case is being developed considering the options for this upgrade. Options for use of this funding will be provided to council in early 2023. |
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Patearoa Water Treatment Plant Upgrade |
$343,255 |
A business case is being developed considering the options for this upgrade. Options for use of this funding will be provided to council in early 2023. |
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Ranfurly Water Treatment Plant Upgrade |
$608,422 |
A business case is being developed considering the options for this upgrade. Options for use of this funding will be provided to council in early 2023. |
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Roxburgh Water Source Investigation |
$6,352 |
Investigation into a new water source for Roxburgh is in progress. |
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Districtwide Valve Upgrades |
$115,990 |
Several valves were ordered and installed in the 2022/23 year with some further work required to determine where further valves are needed to isolate sections of the network. |
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Water Demand Management |
$150,000 |
Investigation into ways to reduce demand on the treated water network by council facilities and parks is underway. |
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Total Water Supply Improvements |
$7,402,743 |
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Water Supply Renewals |
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Bridge Hill Falling Main |
$174,702 |
Hydraulic modelling has been completed and options have been provided. A report is due to go up to council in early 2023 with construction commencing in the 2023/24 period. |
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Point Renewals |
$211,968 |
A program for all renewals is being developed considering all renewals budget to 30 June 2024. This will prioritise renewals and will ensure renewals budgets are prioritised and spent on the most appropriate and cost-effective solutions. |
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Pipe Renewals |
$408,005 |
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Plant Renewals |
$651,032 |
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Total Water Supply Renewals |
$1,445,707 |
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Audit and Risk Committee meeting Agenda |
15 December 2022 |
Nil
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Report author: |
Reviewed and authorised by: |
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Chantal Green |
Julie Muir |
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Infrastructure Finance Officer |
Three Waters Director |
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30/11/2022 |
30/11/2022
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22.4.7 Three Waters Depreciation Increase
Doc ID: 600723
1. Purpose
To consider the recommendation to Council on the increase in depreciation expense relating to three waters assets.
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That the report be received.
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2. Discussion
Revaluation on 30 June 2022
The three waters network includes drinking water, wastewater, and stormwater infrastructure. The three waters asset revaluation on 30 June 2022 showed a large increase in asset values compared to the previous valuation on 1 July 2020. The total increase in gross replacement cost was $102,134,392, an increase of 40.1%. This has led to a corresponding increase in the valuation annual depreciation of $1,639,467 per annum, an increase of 44.5%.
The increase in depreciation is also driven by the relative life of new assets that have been either constructed by council or by developers and vested in council.
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Gross Replacement Cost |
Annual Depreciation |
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2020 |
2022 |
% Change |
2020 |
2022 |
% Change |
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Water |
$118,935,515 |
$170,671,125 |
43.5% |
$1,598,033 |
$2,368,557 |
48.2% |
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Wastewater |
$100,329,465 |
$138,107,399 |
37.7% |
$1,641,374 |
$2,352,109 |
43.3% |
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Stormwater |
$35,560,968 |
$48,181,816 |
35.5% |
$445,958 |
$604,166 |
35.5% |
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Total |
$254,825,948 |
$356,960,340 |
40.1% |
$3,685,365 |
$5,324,832 |
44.5% |
Several factors have driven this overall increase, including:
· A plant asset data collection project was completed using the stimulus grant funding over the 2021/22 period. This caused an increase in the quantity and detail of plant assets data held in the asset register.
· Addition of new assets constructed over the period between 1 July 2020 and 30 June 2022.
· Addition of vested assets from new developments over the period between 1 July 2020 and 30 June 2022.
· Increased actual cost of replacing infrastructure assets based on recent construction costs.
This valuation excludes all projects that were still considered work in progress on 30 June 2022. Work in progress included some of the stimulus projects, Clyde wastewater, Clyde main wastewater pump station, and Lake Dunstan water supply. This will likely lead to a further increase for the next valuation on 30 June 2023.
Comparison to Long-Term Plan Depreciation Budgets
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30 June 2022 Revaluation Annual Depreciation |
2022/23 LTP Budgeted Depreciation |
2022/23 Depreciation Funding Shortfall |
2023/24 Annual Plan (Draft) Budgeted Depreciation |
2023/24 LTP Budgeted Depreciation |
2023/24 Estimated Depreciation Funding Shortfall |
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Water |
$2,368,557 |
$1,733,887 |
$634,670 |
$2,712,454 |
$1,793,891 |
$918,563 |
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Wastewater |
$2,352,109 |
$1,258,498 |
$1,093,611 |
$2,517,786 |
$1,307,244 |
$1,210,542 |
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Stormwater |
$604,166 |
$380,369 |
$223,797 |
$611,802 |
$380,369 |
$231,433 |
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Total |
$5,324,832 |
$3,372,754 |
$1,952,078 |
$5,842,042 |
$3,481,504 |
$2,360,538 |
The total depreciation expense funding shortfall in 2022/23 is $1.95 million and $2.36 million in 2023/24. As discussed previously, the shortfall in 2023/24 is expected to increase with the next valuation on 30 June 2023 and can only be estimated at this time.
The below table compares the 2023/24 Long-Term Plan against the Draft Annual Plan 2023-24 renewals program along with the rate funded depreciation. The Annual Plan model starting point for the depreciation expense is the 30 June 2022 valuation.
The depreciation funding provided in the Draft 2023/24 Annual Plan is higher than the Draft 2023/24 Annual Plan budget for renewals. This means that funding in excess of the renewals cost would fall into reserves. If reform of delivery of three waters proceeds, then this would result in a lower debt transfer to the new water entity.
Based on the analysis below the draft 2023-24 Annual Plan renewals program less the depreciation funding results in an expected excess of rate funded depreciation of $2.19M. This additional funding is estimated to equate to 7.31% rates increase.
|
Planned Renewal Activities |
2023/24 Annual Plan (Draft) |
2023/24 LTP |
|
Water Supply Renewals |
$2,049,519 |
$2,049,519 |
|
Less Depreciation Funding |
($2,712,454) |
($1,793,891) |
|
Total unfunded/(funded) |
($662,935) |
$255,628 |
|
Wastewater Renewals |
$1,217,359 |
$1,217,359 |
|
Less Depreciation Funding |
($2,517,786) |
($1,307,244) |
|
Total unfunded/(funded) |
($1,300,427) |
($89,885) |
|
Stormwater Renewals |
$380,000 |
$380,000 |
|
Less Depreciation Funding |
($611,802) |
($380,369) |
|
Total unfunded/(funded) |
($231,802) |
($369) |
|
Total Planned Renewals |
$3,646,878 |
$3,646,878 |
|
Less Depreciation Funding |
($5,842,042) |
($3,481,504) |
|
Total unfunded/(funded) |
($2,195,164) |
$165,374 |
Funding Depreciation
Depreciation expense is an operating expense. It reflects the use of an asset over its useful life. Depreciation in most cases is fully rate funded with the rate funded depreciation being used to fund renewal capital works and for the repayment of loans used to fund capital works. Below are statements from the Local Government Act 2002 and the Council’s Financial Strategy 2021 that provide guidance on how this Council can address the increase in depreciation.
The Local Government Act 2002 section 100(1) states:
“A local authority must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses.”
Further in section 101(1):
“A local authority must manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community.”
Council’s Financial Strategy 2021 states (pages 167-168 of the Long-term Plan 2021-2031):
“Assets Replacement - Investment in the current asset base will continue with replacement of assets funded through depreciation reserves. Council rates for the majority of its depreciation, which is held in reserve to spend on replacement assets and the payment of borrowings required to fund these assets. All renewals are funded by depreciation.”
“Assets Increased Levels of Service – Increased level of service for significant capital works is to be primarily funded by loans. To ensure that today’s ratepayers do not pay for the building and using of the asset, loan repayment will be rate-funded. Council will rate-fund the depreciation collected on the asset and use these funds to pay the loan principal.”
Three waters assets typically have long lives and do not require immediate replacement even though they will have an immediate impact on depreciation. Insufficient funding for replacing assets over the long term would increase the potential for failure or lead to a decline in the level of service provided.
Ability to Spend Additional Renewal Budget
The revised capital budgets for the three waters activities in the 2022/23 financial year is $34.33 million and the Long-Term Plan budget for the 2023/24 financial year is $12.17 million. This is a total of $46.5 million to spend before 30 June 2024 when the three waters are expected to transition to the new Water Services Entity.
|
2019/20 |
2020/21 |
2021/22 |
Average |
|
14,251,941 |
7,171,235 |
30,556,981 |
17,326,719 |
Spending in 2021/22 was heightened by the Three Water Stimulus Grant funding of $9.46 million with tight deadlines for expenditure, alongside spending on two major capital projects (Clyde Wastewater and Lake Dunstan Water Supply). Both major capital projects had full investigations and designs completed prior to 2021/22.
It is normally very difficult to deliver this level of expenditure on water infrastructure projects in the short term. This is because the amount of time required to fully investigate, design and construct tends to be more than 12 months. This means that the additional depreciation funding is unlikely to be spent prior to 30 June 2024 on top of the existing $46.5 million capital work program.
Recent Spend on Renewal of Assets
A significant program of investment on renewing existing assets is already underway using existing budgets.
Recent key renewals include:
· Clyde falling main renewal ($1.08 million, stimulus funded)
· Roxburgh falling main renewal ($1.01 million, stimulus funded)
· Lake Dunstan Water Treatment Plant ($16.12 million, replacing existing Alexandra and Clyde Water Treatment Plants)
Upcoming key renewals include:
· Bridge Hill falling main renewal
· Cromwell Water Treatment Plant (replacing existing Cromwell Water Treatment Plant)
· Remaining water and wastewater pipe renewals program to be tendered in 2023
· Fixture renewals including meter replacements program
· Plant renewals program
Recommendation to Council
The increase to fund the three waters depreciation shortfall is estimated to equate to 7.31% rates increase. This comes at a time when the community is already facing increased living costs. To promote the current interests of the community, while balancing the future interests of the community, it is recommended that Council continues to fund depreciation at the rate identified in the 2021 Long-term Plan. This would fund the renewals program as originally planned.
Council has already invested a large amount of money in the renewal or replacement of its aging assets and the short-term reduced depreciation funding is unlikely to have a significant impact on the three waters network. It should be noted that there is a risk to Council of not fully funding depreciation in the long term should three waters do not transition as expected on 1 July 2024.
A paper has been presented to the Council for the 14th December 2022 Council meeting with recommendations to:
a) Note the depreciation effect arising from the 30 June 2022 three waters asset valuation and
b) Adjust the depreciation expense to ensure rate funded depreciation only covers the three waters renewals program in the Draft 2023-24 Annual Plan as presented above. This will reduce the rate funded depreciation by approximately $2.1M and is consistent with the 2021 Long Term Plan.
Nil
|
Report author: |
Reviewed and authorised by: |
|
|
|
|
Chantal Green |
Julie Muir |
|
Infrastructure Finance Officer |
Three Waters Director |
|
30/11/2022 |
30/11/2022
|
|
|
22.4.8 Roading Depreciation Increase Impact on Annual Plan 2023-24
Doc ID: 604796
1. Purpose
To consider the increase in rate funded depreciation expense relating to roading assets.
|
That the report be received.
|
2. Discussion
Revaluation on 30 June 2022
The roading network includes roading, Alexandra airport, bridges, carparks, footpaths and streetlighting infrastructure. The roading revaluation for 30 June 2022 showed an increase in the depreciable replacement cost (DRC) of assets by 14% to $589.16M and annual depreciation (AD) by 19% to $7.29M, since the previous valuation on 1 July 2020.
The main reasons for the movement in this valuation are:
· A review of unit rates, resulting in large increases in unit rates for asphalt and eco seals.
· Inflation of 12.4%, in line with the road assessment and maintenance management (RAMM) road construction index for all other assets, except for bridges which have been inflated in line with Waka Kotahi’s bridge index, and land which has not been inflation-adjusted.
· Moderate asset quantity growth, primarily due to vested assets.
· Ongoing asset register updates.
Funding Depreciation
Depreciation expense is an operating expense. It reflects the use of an asset over its useful life. Depreciation in most cases is fully rate funded with the rate funded depreciation used to fund renewal capital works and for the repayment of loans used to fund capital works. Below are statements from the Local Government Act 2002 and the Council’s Financial Strategy 2021 that provide guidance on how this Council can address the increase in depreciation.
The Local Government Act 2002 section 100(1) states:
“A local authority must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses.”
Further in section 101(1):
“A local authority must manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community.”
Council’s Financial Strategy 2021 states (pages 167-168 of the Long-term Plan 2021-2031):
“Assets Replacement - Investment in the current asset base will continue with replacement of assets funded through depreciation reserves. Council rates for the majority of its depreciation, which is held in reserve to spend on replacement assets and the payment of borrowings required to fund these assets. All renewals are funded by depreciation.”
“Assets Increased Levels of Service – Increased level of service for significant capital works is to be primarily funded by loans. To ensure that today’s ratepayers do not pay for the building and using of the asset, loan repayment will be rate-funded. Council will rate-fund the depreciation collected on the asset and use these funds to pay the loan principal.”
Comparison to the Long-term Plan and the draft Annual Plan 2023-24
|
|
30 June 2022 Revaluation Annual Depreciation |
2022/23 Annual Plan Budgeted Depreciation |
2022/23 Depreciation Funding Shortfall |
2023/24 Annual Plan Budgeted Depreciation |
2023/24 LTP Budgeted Depreciation |
2023/24 Estimated Depreciation Funding Shortfall |
|
Depreciation Expense |
$7,291,741 |
$3,876,107 |
$3,415,634 |
$7,773,666 |
$4,290,568 |
$3,483,098 |
|
Depreciation Funding (49%)* |
$3,572,953 |
$1,899,282 |
$1,673,660 |
$3,809,096 |
$2,102,378 |
$1,706,718 |
*Subsidies roading activities are funded with a Waka Kotahi funding assistance rate (FAR) of 51%. This means that rate funding for the depreciation expense is set at 49% of the depreciation expense with the remaining funding for the capital expenditure program being 51% Waka Kotahi subsidies.
The total depreciation expense funding shortfall is estimated to be $1.67M in 2022-23 and $1.70M in the Annual Plan 2023-24. The shortfall in the Annual Plan 2023-24 can only be estimated as valuations for the roading assets are carried out annually, with the next valuation being 30 June 2023.
The below table compares the 2023-24 Long-term Plan against the Draft Annual Plan 2023-24 capital works programme along with the rate funded depreciation and the Waka Kotahi subsidies. The Annual Plan model’s starting point for the depreciation expense is the 30 June 2022 valuation. Based on the analysis below using the draft 2023-24 Annual Plan capital works programme less the Waka Kotahi subsidies and the depreciation funding there is an expected excess of rate funded depreciation of $1.22M. This additional funding is estimated to equate to 4.07% rates increase.
|
Roading Activity |
2023/24 LTP |
2023/24 Annual Plan (Draft) |
Change |
|
Renewals Local Roads |
$4,520,000 |
$4,520,000 |
$0 |
|
Subsidised Improvements |
$1,950,000 |
$250,000 |
($1,700,000) |
|
Total |
$6,470,000 |
$4,770,000 |
$0 |
|
Less Waka Kotahi Subsidies (51%)* |
($3,299,700) |
($2,432,700) |
$0 |
|
Plus District Unsubsidised Roading |
$250,000 |
$250,000 |
$0 |
|
Total depreciation funding required to meet Capital Programme |
$3,420,300 |
$2,587,300 |
($833,000) |
|
Less Depreciation Funding |
($2,102,378) |
($3,809,096) |
$1,706,718 |
|
Total unfunded/(funded) Capital Programme |
$1,317,922 |
($1,221,796) |
|
*Subsidies roading activities are funded with a Waka Kotahi funding assistance rate (FAR) of 51%. This means that rate funding for the depreciation expense is set at 49% of the depreciation expense with the remaining funding for the capital expenditure program being 51% Waka Kotahi subsidies.
A paper will be taken to the Council for the 14th December 2022 Council meeting with recommendations to:
a) Note the depreciation effect arising from the 30 June 2022 roading asset valuation and
b) Adjust the depreciation expense to ensure rate funded depreciation only covers the roading capital works programme in the Draft 2023-24 Annual Plan as presented above. This will reduce the rate funded depreciation by approximately $1.2M and is consistent treatment to previous years.
Nil
|
Report author: |
Reviewed and authorised by: |
|
|
|
|
Donna McKewen |
Saskia Righarts |
|
Accountant |
Group Manager - Business Support |
|
1/12/2022 |
1/12/2022
|
|
|
22.4.9 Financial Report for the Period ending 31 October 2022
Doc ID: 603703
1. Purpose
To consider the financial performance for the period ending 31 October 2022.
|
1. That the report be received. |
2. Discussion
The quarterly financial report is presented to the Committee as requested for awareness of the current financials.
3. Financial Reporting
Statement of Financial Performance for the period ending 31 October 2022
|
2022/23 |
4 MONTHS ENDING 31 OCTOBER 2022 |
|
2022/23 |
|||
|
|
|
YTD |
YTD |
YTD |
|
|
|
Annual Plan |
|
Actual |
Revised Budget |
Variance |
|
Revised Budget |
|
$000 |
|
$000 |
$000 |
$000 |
|
$000 |
|
|
Income |
|
|
|
|
|
|
36,238 |
Rates |
12,068 |
12,000 |
68 |
˜ |
36,238 |
|
6,062 |
Govt Grants & Subsidies |
1,883 |
2,189 |
(306) |
˜ |
6,552 |
|
8,161 |
User Fees & Other |
2,157 |
2,807 |
(650) |
˜ |
8,729 |
|
14,930 |
Land Sales |
- |
- |
- |
˜ |
14,930 |
|
2,233 |
Regulatory Fees |
1,053 |
744 |
309 |
˜ |
2,233 |
|
2,192 |
Development Contributions |
2,326 |
731 |
1,595 |
˜ |
2,192 |
|
500 |
Interest & Dividends |
58 |
167 |
(109) |
˜ |
500 |
|
- |
Reserves Contributions |
320 |
- |
320 |
˜ |
- |
|
- |
Profit on Sale of Assets |
169 |
- |
169 |
˜ |
- |
|
40 |
Other Capital Contributions |
83 |
10 |
73 |
˜ |
41 |
|
70,356 |
Total Income |
20,117 |
18,648 |
1,469 |
˜ |
71,415 |
|
|
Expenditure |
|
|
|
|
|
|
13,876 |
Staff |
4,719 |
4,677 |
(42) |
˜ |
14,207 |
|
603 |
Members Remuneration |
182 |
201 |
19 |
˜ |
603 |
|
8,918 |
Contracts |
3,548 |
3,008 |
(540) |
˜ |
9,185 |
|
2,735 |
Professional Fees |
1,057 |
1,045 |
(12) |
˜ |
3,304 |
|
10,857 |
Depreciation |
3,619 |
3,619 |
- |
˜ |
10,857 |
|
11,232 |
Costs of Sales |
4 |
1,339 |
1,335 |
˜ |
11,232 |
|
4,182 |
Refuse & Recycling Costs |
1,167 |
1,394 |
227 |
˜ |
4,182 |
|
- |
Cost Allocations |
(2) |
- |
2 |
˜ |
- |
|
1,799 |
Repairs & Maintenance |
672 |
629 |
(43) |
˜ |
1,911 |
|
1,433 |
Electricity & Fuel |
402 |
470 |
68 |
˜ |
1,421 |
|
- |
Loss on Sale of Asset |
146 |
- |
(146) |
˜ |
- |
|
636 |
Grants |
1,041 |
379 |
(662) |
˜ |
763 |
|
1,118 |
Technology Costs |
411 |
378 |
(33) |
˜ |
1,095 |
|
378 |
Projects |
176 |
441 |
265 |
˜ |
1,289 |
|
658 |
Rates Expense |
511 |
219 |
(292) |
˜ |
658 |
|
474 |
Insurance |
158 |
158 |
- |
˜ |
474 |
|
526 |
Interest Expense |
57 |
101 |
44 |
˜ |
526 |
|
2,133 |
Other Costs |
577 |
729 |
152 |
˜ |
2,243 |
|
61,558 |
Total Expenses |
18,445 |
18,787 |
342 |
˜ |
63,950 |
|
|
|
|
|
|
|
|
|
8,798 |
Operating Surplus / (Deficit) |
1,672 |
(139) |
1,811 |
|
7,465 |
This table has rounding (+/- 1)
Income of $20.117M against the year-to-date budget of $18.648M
Overall, income has a favourable variance against the revised budget by $1.469M. This is being driven by the timing of development contributions with a variance of $1.59M (F), offset by the timing of Waka Kotahi subsidies (U) and metered waters sales (U).
The main variances are:
· Government grants and subsidies ($306k) U - This is mainly due to the timing of the Waka Kotahi roading subsidy contributing an unfavourable variance of ($714k). Subsidies are claimed for both the operational and capital roading work programmes and fluctuate based on the work programme. Tourism Central Otago has brought forward from the prior year $489k of Strategic Tourism Assets Protection Programme (STAPP) funding from Ministry of Business, Innovation and Employment (MBIE) funding.
· User fees and other ($650k) U – Metered water sales have a variance of ($561k) and ($125k) relates to the contributions for the Otago/Southland Three Waters Director position. The first meter readings of the financial year have been carried out over October, November, and December 2022. This budget is split out over twelve months and will even out as the financial year progresses.
· Land sales no variance – These are programmed for later in the financial year and are recognised in tandem with costs of sales
· Regulatory fees $309k F – The majority of the dog registration revenue was received in July 2022 creating a favourable variance of $143k. This is due to the budget being spread over 12-months rather than the dog registration period. Building permit fees are also higher than budget by $154k.
· Development Contributions $1.59M F - This variance relates to the timing of development contributions which are dependent on the resource consent process and developer timeframes. Cromwell development contributions in wastewater, water and roading are higher than budgeted.
· Interest and dividends revenue ($109k) U - Large project costs are being managed within current cashflows rather than uplifting additional loan funding (this includes subdivision development costs which are held on the balance sheet). This results in less interest revenue due to low term deposit.
· Reserves contributions $320k F -These are difficult to gauge when setting budgets and are dependent on developers’ timeframes. As with development contributions above, these are mainly for the Cromwell area.
· Profit on Sale of Assets $169kF – This relates to the exchange of roading land at Loop road at Bendigo. This transaction is for the portion of land that the Council has sold and is offset by the loss on sale of assets being the cost of the land purchased.
Expenditure of $18.445M against the year-to-date budget of $18.787M
Expenditure has a favourable variance of $342k. The main drivers behind this are cost of sales, waste and recycling costs, other cost, and projects. Offsetting this favourable variance is contracts, staff, grants, and rates expenses
The main variances are:
· Costs of sales $1.35M F - Costs of sales is linked to the land sales mentioned earlier and reflect the development costs for subdivisions. The subdivision development costs are held on the balance sheet in ‘property intended for sale’ until each stage is complete and land sales are received. There have been no land sales in the first four months to allocate out development costs to costs of sales.
· Refuse and recycling costs $227k F – The waste management activity of $163k can fluctuate depending on the amount of waste being managed. The emissions trading scheme expense has a favourable variance of $112k with a total annual budget of $336k, and this is due for payment in March 2023.
· Loss on Sale of Asset ($146k) U - This relates to the exchange of roading land at Loop road at Bendigo. This transaction is for the portion of land that the Council has purchased and is offset by the profit on sale of asset being the cost of the land sold.
· Grants ($662k) U – This is predominately due to the Roxburgh Pool grant of $500k. This grant was recognised in the 2021/22 Annual Plan. The remaining variance is due to the timing of the district, ward and promotional grants.
· Projects $265k F -This is due to the phasing schedule of Tourism Central Otago projects and the costs incurred for the Southland Otago Three Waters Director position. The Southland Otago Three Waters Director position is a cost share arrangement with other councils in the area to assist with the Three Waters reform.
· Rates Expense ($292k) U – Central Otago rates expenses for 2022/23 on council owned property has been recognised in full in July 2022, while the budget has been recognised over 12-months.
· Other costs $152k F - A detailed breakdown for other costs is tabled below.
Other costs breakdown
|
2022/23 |
|
YTD Actual |
YTD Revised Budget |
YTD Variance |
2022/23 |
|
|
Annual Plan |
Other Costs breakdown |
Revised Budget |
||||
|
$000 |
|
$000 |
$000 |
$000 |
$000 |
|
|
625 |
Administrative Costs |
163 |
218 |
55 |
˜ |
678 |
|
673 |
Office Expenses |
215 |
226 |
11 |
˜ |
662 |
|
229 |
Operating Expenses |
75 |
73 |
(2) |
˜ |
229 |
|
352 |
Advertising |
23 |
125 |
102 |
˜ |
415 |
|
178 |
Valuation Services |
77 |
60 |
(17) |
˜ |
178 |
|
76 |
Retail |
23 |
28 |
5 |
˜ |
81 |
|
2,133 |
Total Other Costs |
578 |
730 |
152 |
|
2,243 |
This table has rounding (+/- 1)
· Only need-based charges are included in other costs, and these costs occasionally go beyond budget. Currently, there are no noteworthy significant variations to report on at present.
Capital Expenditure
|
|
|
|
|
|
2022/23 |
Progress to date against revised budget |
|
|
Annual Plan |
CAPITAL EXPENDITURE |
YTD Actual |
YTD Revised Budget |
YTD Variance |
|
Revised Budget |
|
|
$000 |
|
$000 |
$000 |
$000 |
|
$000 |
|
|
|
|
|
|
|
|
|
|
|
16,190 |
Council Property and Facilities |
865 |
6,802 |
5,937 |
˜ |
24,516 |
4% |
|
400 |
Waste Management |
26 |
302 |
276 |
˜ |
905 |
3% |
|
50 |
Customer Services and Administration |
9 |
32 |
23 |
˜ |
95 |
9% |
|
481 |
Vehicle Fleet |
- |
128 |
128 |
˜ |
597 |
0% |
|
58 |
Planning |
4 |
136 |
132 |
˜ |
407 |
1% |
|
260 |
Information Services |
109 |
439 |
330 |
˜ |
1,493 |
7% |
|
165 |
Libraries |
22 |
133 |
111 |
˜ |
492 |
4% |
|
1,482 |
Parks and Recreation |
244 |
736 |
492 |
˜ |
2,551 |
10% |
|
7,205 |
Roading |
835 |
3,312 |
2,477 |
˜ |
9,937 |
8% |
|
23,987 |
Three Waters |
8,297 |
11,445 |
3,148 |
˜ |
34,334 |
24% |
|
|
|
|
|
|
|
|
|
|
50,278 |
Grand Total |
10,411 |
23,465 |
13,054 |
|
75,327 |
14% |
This table has rounding (+/- 1)
Council Property and Facilities $5.937M F -This is mainly due to the timing of the Cromwell Town Centre Projects which is currently underspent by $5.2M. This includes the Memorial Hall, Cromwell Administration Buildings, grounds, paths and fences projects around the Town Centre. Other areas behind budget include airports $475k, community buildings $230k, and elderly person housing $34k.
Waste Management $276k F – Green waste processing project along with the Cromwell transfer station upgrade project has not yet started
Vehicle Fleet $128k F - Vehicle renewals and purchases are under budget. The vehicle renewals programme has started, however there are expected delays due to supply global issues.
Planning $132k F - This relates to the timing of the dog pounds and dog registration software projects. These were carried forward from the 2022/23 financial year and have not started yet.
Parks and Recreation $492k F - This is driven by a mixture of the timing of project budgets, work programmes and contractor’s availability to perform the work. Parks and reserves are favourable by $289, with major projects including: Alexandra River Park $89k, John Street playground $70k, Omakau Tennis courts resurface $47k, Molyneux Pool $35k, Cromwell Pool $96k.
Roading $2.477M F - This is due to the timing of the budget and work programme. Roading projects include Minor improvements $1.19M, gravel road renewals $540k, sealed road renewals $496k, footpath renewals $160k and drainage renewals ($70k). Minor improvements include Clyde Heritage precinct $889k, Alexandra cycle clip on $73k, Clyde bridge traffic lights $116k and LED lights ($95k).
Three Waters $3.148M F - This is due to the timing of construction projects. These can be ahead of budget or behind because of the project work programme. The main drivers include the Lake Dunstan water supply ($1.14M), Cromwell water treatment plant and capacity upgrades $1.63M, Clyde wastewater ($442k), Bannockburn pipeline $349k, Dunorling pumpstation upgrade $494k and Cromwell rising main $706k.
Statement of Financial Position
The Statement of Financial Position (Balance Sheet) shows the movements in assets, liabilities, and equity. It allows the Council to measure the year-to-date movements by comparing prior year actuals and budget, along with the current year annual plan and revised budgets.
|
2021/22 Full Year |
2021/22 YTD Oct Actual |
STATEMENT OF FINANCIAL POSITION for the period ended 31 October 2022 |
2022/23 YTD Oct |
2022/23 Full Year Revised Budget |
2022/23 Full Year |
|
$000 |
$000 |
$000 |
$000 |
$000 |
|
|
|
|
EQUITY |
|
|
|
|
411,630 |
404,361 |
Ratepayers equity |
439,467 |
491,265 |
466,073 |
|
28,396 |
6,457 |
Surplus/(Deficit) |
1,402 |
7,465 |
8,798 |
|
281 |
7,450 |
Council Reserves |
846 |
(32,026) |
(45,313) |
|
654,513 |
487,465 |
Property revaluation reserve |
654,513 |
532,006 |
532,006 |
|
(14) |
(17) |
Investment shares fair value revaluation reserve |
(14) |
(20) |
(20) |
|
80 |
80 |
Restricted reserves |
80 |
80 |
80 |
|
1,094,886 |
905,796 |
Total equity |
1,096,294 |
998,770 |
961,624 |
|
|
|
REPRESENTED BY: |
|
|
|
|
|
|
Current assets |
|
|
|
|
3,735 |
11,127 |
Cash and cash equivalents |
6,825 |
11,972 |
11,972 |
|
3,000 |
5,000 |
Other financial assets |
- |
8,000 |
8,000 |
|
4,743 |
7,076 |
Receivables |
7,767 |
3,171 |
3,171 |
|
- |
- |
Non Current assets held for sale |
- |
- |
- |
|
5,119 |
5,824 |
Inventories |
6,861 |
1,509 |
1,509 |
|
- |
- |
Investment Bond |
125 |
625 |
625 |
|
16,597 |
29,027 |
Total current assets |
21,578 |
25,277 |
25,277 |
|
|
|
Less current liabilities |
|
|
|
|
273 |
285 |
Agency and deposits |
256 |
273 |
273 |
|
9,963 |
12,780 |
Payables and deferred revenue |
9,685 |
4,705 |
4,705 |
|
761 |
1,246 |
Employee entitlements |
1,301 |
1,010 |
1,010 |
|
- |
- |
Borrowings and other financial liabilities |
- |
- |
- |
|
10,997 |
14,311 |
Total current liabilities |
11,242 |
5,988 |
5,988 |
|
5,600 |
14,716 |
Working capital |
10,336 |
19,289 |
19,289 |
|
|
|
Non-current assets |
|
|
|
|
114 |
112 |
Available for sale financial assets |
114 |
109 |
109 |
|
231 |
264 |
Loans and receivables |
214 |
333 |
333 |
|
48,471 |
25,743 |
Work in Progress |
56,205 |
75,326 |
51,767 |
|
1,037,093 |
857,616 |
Property, plant and equipment |
1,036,048 |
943,560 |
929,973 |
|
1,351 |
989 |
Intangible assets |
1,351 |
937 |
937 |
|
291 |
431 |
Forestry assets |
291 |
469 |
469 |
|
6,735 |
5,925 |
Investment property |
6,735 |
6,452 |
6,452 |
|
1,094,286 |
891,080 |
Total non-current assets |
1,100,958 |
1,027,186 |
990,040 |
|
|
|
Less non-current liabilities |
|
|
|
|
- |
- |
Provisions |
- |
5 |
5 |
|
5,000 |
- |
Borrowings and other financial liabilities |
15,000 |
47,700 |
47,700 |
|
5,000 |
- |
Total non-current liabilities |
15,000 |
47,705 |
47,705 |
|
|
|
|
|
|
|
|
1,094,886 |
905,796 |
Net assets (assets minus liabilities) |
1,096,294 |
998,770 |
961,624 |
This table has rounding (+/- 1)
4. Accounts
Receivable
As at 31 October 2022, Council had $134k outstanding in accounts receivables greater than 90 days. The key contributors over $5k include:
· Sundry debtors of $49.3k for three debtors
· Resource consents of $26.1k for two debtors
|
Type of Debtor |
Current |
30 Days |
60 Days |
> 90 Days |
|
Other |
$ 384,207 |
$ 12,841 |
$ 22,262 |
$ 76,662 |
|
Building Consents |
$ 14,344 |
$ 863 |
$ 760 |
$ 8,907 |
|
Resource Consents |
$ 69,790 |
$ 8,150 |
$ 10,333 |
$ 48,514 |
|
TOTAL |
468,342 |
21,854 |
33,355 |
134,083 |
|
Type of Debtor |
Oct-22 |
Sep-22 |
Aug-22 |
Oct-21 |
|
Other |
$ 495,972 |
$ 289,536 |
$ 1,590,948 |
$ (209,244) |
|
Building Consents |
$ 24,874 |
$ (6,830) |
$ 61,643 |
$ (9,742) |
|
Resource Consents |
$ 136,788 |
$ 104,210 |
$ 1,546,604 |
$ 172,544 |
|
TOTAL |
657,634 |
386,917 |
3,199,195 |
$ (46,442) |
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.
There is a credit balance of ($63k) in current month outstanding invoices in “under 500”. This relates to building and resource consent debtors where payment has been made in advance of the invoice.
5. Investment
As at 31 October 2022, Council had cash balances of $6.8M. There are no term deposits as of 31 October 2022.To reduce the interest impact on external debt borrowing, projects are being managed through cashflows. This does mean that while there are less than planned external debt that there are limited cashflows to lock into term deposits.
6. Internal Loans
Forecast closing balance for 30 June 2023 is $4.14M.
|
OWED BY |
Original Loan |
1 July 2022 |
30 June 2023 Forecast |
|
Opening Balance |
Closing Balance |
||
|
Public Toilets |
670,000 |
468,048 |
443,899 |
|
Tarbert St Bldg |
25,868 |
11,574 |
10,019 |
|
Alex Town Centre |
94,420 |
44,545 |
39,117 |
|
Alex Town Centre |
186,398 |
79,921 |
68,342 |
|
Alex Town Centre |
290,600 |
139,137 |
122,048 |
|
Centennial Milkbar |
47,821 |
18,192 |
14,973 |
|
Vincent Grants |
95,000 |
9,500 |
0 |
|
Pioneer Store Naseby |
21,589 |
9,609 |
8,213 |
|
Water |
867,000 |
691,212 |
663,496 |
|
ANZ Bank Seismic Strengthening |
180,000 |
143,504 |
137,750 |
|
Molyneux Pool |
650,000 |
563,650 |
531,150 |
|
Maniototo Hospital |
1,873,000 |
1,723,630 |
1,670,314 |
|
Alexandra Airport |
218,000 |
197,216 |
189,584 |
|
Roxburgh Community Pool Upgrade* |
250,000 |
- |
241,384 |
|
Total |
5,469,695 |
4,099,738 |
4,140,288 |
This table has rounding (+/- 1)
*The Roxburgh Pool loan has no opening balance as it has been uplifted in the 2022/23 financial year.
7. External Community Loans
The total amount of external loans at the beginning of the financial year 2022-23 was $134k. As at 31 October 2022, the outstanding balance was $114k. Council has received $20k in principal payments and $2.5k in interest payments.
|
Owed By |
Original Loan |
1 July 2022 Opening Balance |
Principal |
Interest |
31 October 2022 |
|
Cromwell College |
400,000 |
95,351 |
12,272 |
1,767 |
83,079 |
|
Maniototo Curling |
160,000 |
21,910 |
4,738 |
336 |
17,172 |
|
Oturehua Water |
46,471 |
16,844 |
2,998 |
402 |
13,846 |
|
|
606,471 |
134,105 |
20,008 |
2,505 |
114,097 |
8. Reserve Funds table
· As at 30 June 2022 the Council had an unaudited closing reserve funds balance of $281k. This reflects the whole district’s reserves and factors in the district-wide reserves which are in deficit at ($27.814M). Refer to Appendix 1.
· Taking the 2021-22 unaudited Annual Report closing balance and adding 2022-23 income and expenditure, carry forwards and resolutions, the whole district is projected to end the 2022-23 financial year with a closing deficit of ($32.026M). This is dependent of all capital funding being expensed, and based on year-to-date and current comments, this is not a realistic expectation, meaning the reserves should finish with a more favourable result than currently forecast.
Appendix 1 - CODC Reserve Funds 2022-23 ⇩
|
Report author: |
Reviewed and authorised by: |
|
|
|
|
Donna McKewen |
Saskia Righarts |
|
Accountant |
Group Manager - Business Support |
|
24/11/2022 |
25/11/2022
|
|
|
22.4.10 Health, Safety and Wellbeing Report
Doc ID: 602759
1. Purpose
To provide an update on health, safety and wellbeing performance at Central Otago District Council.
|
That the report be received.
|
2. Discussion
2.1 Reporting period
This record covers the period 1 August – 31 October 2022.
2.2 Health, Safety and Wellbeing Advisor Summary
This period there was a decrease in incident reports. The severity rating for those incidents was generally low – negligible or minor on the risk consequence table.
There were no notifiable incidents during the reporting period.
Health and Safety completed chemical and hazardous substance management activities that were the focus of the previous reporting period. This included site inspections at Alexandra Waste Transfer Station. As a result, all hazardous waste was removed from council waste transfer stations in Alexandra and Cromwell, and safely disposed of. Robust guidance was provided by the incoming contractor that has allowed the solid waste team to begin preparing our sites for an improved waste disposal offer in 2023.
Contractor management and shared responsibilities is the next focus area for health and safety. Council has begun a soft review of the guidance available to its contract managers. Council employees who manage contracted work have requested more support about the health and safety requirements in contractor relationships. This review considers what safety documentation is being requested for work based on the level of risk associated with the work activities.
Council has selected an audit provider to undertake assurance review of Council’s Health and Safety Management Systems. The review will take place in March 2023.
2.3 Critical risk
This section sets out the steps taken to manage the risks that could cause serious harm or death during the reporting period.
|
Critical risk |
Existing controls |
New or upcoming controls |
|
Driving and vehicles |
· Vehicle user policy · E-roads in fleet vehicles · 5-star ANCAP rated vehicles · Driver licencing and approval · Driver training · Fleet inductions · Safe driver recognition |
· Role-specific risk assessments in progress |
|
Remote or isolated working |
· Working from Home Policy · Panic buttons and duress procedures · Work plans · Mobile phones · Buddy/pair working procedures • |
· Lone worker app procurement in progress · Lone, remote and isolated working policy in progress · Role-specific risk assessments in progress |
|
Psychosocial hazards |
· Employee Assistance Programme (EAP) · Wellbeing programmes (My Everyday Wellbeing) · Regular 1:1s and performance management guidance · Training and development · Equal Employment Opportunities (EEO), Discrimination, Harassment and Bullying Policy · Performance management Policy · Return to work/fit for work programme · De-escalation training • |
· CERT delivered tactical conversation training to employees in Planning and Regulatory teams · Role-specific risk assessments in progress
|
|
Biological hazards |
· High-risk vaccination programme · Physical barriers and work environment planning · Personal Protective Equipment (PPE) · Voluntary vaccinations • |
· Health monitoring and occupational vaccination policy in draft phase · Role-specific risk assessments in progress · Voluntary health checks scheduled for December
|
|
Hazardous substances |
· Safety Data Sheets (SDS) · Condensed SDS · Third-party reports for Aquatics plant room · On-site storage is kept at minimum · Pre-qualification checks for contractors · Records of training are maintained · Fire schemes updated with FENZ (chemical register) · Reviews of onsite storage of hazardous substances by external, qualified consultants · Chemical awareness and chemical handling training • |
· Reviewed the chemical registers at all sites · Scoping continues for updating Health and Safety Information System to allow centralised substance record keeping · Refreshing site-specific safety plans · Site-specific safety plan training held for three employees new to contract management · Hazardous waste removed from all waste transfer stations and safely disposed of · New onsite procedures for our waste transfer station contractors · Role-specific risk assessments in progress • |
Table 1. Critical risks register with new and current controls.
During the reporting period 15 reported incidents (45%) related to an area of critical risk. Graph 1 below illustrates how the reports were distributed across critical risk areas.
The number of driving-related reports decreased as corrective actions are being put in place to address the speed in the Alexandra Service Centre carpark. The reports or biological and psychosocial hazards are proportionate to previous periods.
Graph 1. Incident reports relating to critical risk compared to the previous period.
Note: An incident report may be included in more than one critical risk area. Affected persons include employees, contractors and the public.
2.4 Occupational health
There were no new work-related ACC claims during the reporting period.
Voluntary health checks
Voluntary health checks are being held in December 2022. At the time of the report, 36 appointments (16% current head count) have been booked.
Early intervention
Voluntary workstation assessments are being held in December 2022 in the Alexandra Service Centre following the office move for several activities.
2.5 Incidents and injuries
There were 33 incident reports (-12) submitted during the reporting period. There were no notifiable events. All incident reports were rated as negligible or minor.
|
Severity rating |
Business as Usual |
Category 1 |
Category 2 |
Category 3 |
|
Risk consequence rating |
Negligible or minor |
Moderate |
Major |
Extreme |
|
No. of incident reports |
33 |
0 |
0 |
0 |
Table 2. Severity rating for incident reports submitted Aug-Oct 2022.
2.5.1 Employee incidents
Employees were the directly affected person in 51% (17) of incident reports. Graph 2 shows the areas of concern employees are reporting in.
Graph 2. Employee incident by report type. Total reports (n=17). Biohazards (6), observations (3), aggressive customer behaviour (2), first aid injury (1), medical treatment injury (1), near miss (1), non-treatment injury (1), pain or discomfort report (1), security (1)
Recordable injuries
Recordable injuries include all fatalities, lost time injuries (LTI), medical treatment injuries (MTI), restricted duties, first aid injuries (FAI) and non-treatment injuries.
There were three recordable injuries affecting employees during the reporting period.
|
Reporting period |
Non-treatment injury |
FAI |
MTI |
Restricted duties |
LTI |
Fatality |
Total recordable injuries |
|
July-Sept 21 |
2 |
1 |
0 |
0 |
0 |
0 |
3 |
|
Oct-Dec 21 |
5 |
1 |
2 |
0 |
0 |
0 |
8 |
|
Jan-Mar 22 |
1 |
0 |
0 |
0 |
0 |
0 |
1 |
|
Apr-Jul 22 |
1 |
0 |
0 |
1 |
2 |
0 |
4 |
|
Aug-Sept 22 |
1 |
1 |
1 |
0 |
0 |
0 |
3 |
Table 3. Recordable injuries (employees). Note: the reporting period Apr-Jul 22 is one month longer than previous reports.
Lost time injury frequency rate
Graph 3 shows the frequency of lost time injuries per 200,000 hours of work.
During the reporting period, Council’s LTIR decreased from 2.68 to 1.91. This is below the target of 1.95. Council was last below target in October 2021.
There were no lost time injuries during the reporting period.
Graph 3. Lost time injury trends (rolling YTD). Target line (1.95). Lost time injury frequency rates by month are Nov (2.50), Dec (2.27), Jan (2.26), Feb (2.22), Mar (2.18), Apr (2.07), May (2.05), Jun (2.02), Jul (2.68), Aug (2.67), Sep (2.56), Oct (1.91). There was 1 injury per month in Nov, Jun and Jul.
2.4.2 Public incidents
36% of incidents (12) affected members of the public. These incidents occurred in a council workplace or council operated facility.
Graph 4. Public incidents by business activity. Year to date: pools (65), roads (2), service centres (2), libraries (8), parks (2).
At Graph 5, below, safety violation means an unsafe behaviour by a member of the public that required intervention by a Council employee.
There were two dry rescues of children from pools. In both cases the supervising parent or adult was not within arms reach of the child. These circumstances are common in our pools, but do not always escalate to a rescue. Our Aquatics team leaders take these opportunities to speak to parents and caregivers about water supervision and our pool rules.
 |
Public injuries
During the reporting period there were three injuries to members of the public. Two trips/slips/falls and one cut/laceration.
|
Audit and Risk reporting period |
Non-treatment injury |
FAI |
MTI |
Fatality |
Total recordable injuries |
|
July-Sept 21 |
2 |
7 |
0 |
0 |
9 |
|
Oct-Dec 21 |
0 |
11 |
0 |
0 |
11 |
|
Jan-Mar 22 |
2 |
17 |
0 |
0 |
19 |
|
Apr-Jul 22 |
1 |
4 |
0 |
0 |
5 |
|
Aug-Oct 22 |
1 |
2 |
0 |
0 |
3 |
Table 4. Recordable injuries (public). The period Apr-Jul 22 is one month longer than other reporting periods.
2.5.3 Contractor incidents
There was one breach of traffic management reported during this period. This was identified by council staff, escalated to the contractor and they have shared their investigation report.
2.5.4 Other incidents
The remaining incident reports included three observations in Alexandra, Cromwell and Ranfurly Service Centres. All three centres experienced faults with their panic buttons during the monthly test in October. The contracted technician, Cougar Security, was contacted and repairs were completed.
2.5.5 Status of corrective actions
There is one open corrective action from July 2022. This relates to construction of two speed bumps in the carpark at the Alexandra Service Centre. Council employees reported concerns about the speed of vehicles moving through the carpark. A quote from Fulton Hogan has been accepted for this work.
Graph 6. Status of corrective actions. Jan 100% (18), Feb 100% (18), Mar 100% (15), April (100%) (13), May 100% (6), Jun 100% (13), Jul 92% (12 complete, 1 in progress), Aug 100% (13), Sept 100% (7), Oct 100% (13).
2.6 Contractor management
2.6.1 Health and safety plans received by council
This section shows the types of health and safety plans that are received by Council.
The plans submitted for public events at Council facilities allow Council to exercise due diligence over its hireable spaces.
Council is now receiving event plans for events in early 2023, but the overall workload from safety plans has decreased.
Council employees from solid waste, water services and information systems attended site-specific safety planning workshops in November 2023.
Graph 7. Health and safety plans received by council August-October 2022. Total safety plans received, last period (n=42), this period (n=15). Last period: Event management plans (26), safety plans for council work or events non-contracted (6), safety plans for contracted work (8), tenders or procurement plans (2). This period: event management plans (11), safety plans for contracted work (4).
2.6.2 Site observations and inspections
Council has completed 44 inspections or observations of contractor work during 2022.
The major projects team, part of the Three Waters Transition department, completed 36 inspections since beginning to use this system in March 2022.
The Solid Waste team began using the same system in September 2022. They have completed seven inspections including six audits based on requirements from the Otago Regional Council.
Graph 8. Number of site inspections or observations completed per month in 2022. Mar (9), Apr (3), May (10), Jun (2), Jul (3), Aug (3), Sept (4), Oct (10).
2.7 Training and competency
This section sets out the health and safety training completed during the reporting period and summarises the training and competency focus for the next quarter.
|
Regular training |
August-October 2022 |
|
New staff inductions |
4 |
|
First aid certificates (new and refresher) |
7 |
|
De-escalation / situational safety workshops |
17 |
|
Health and safety representative training |
2 |
|
Fire warden training |
12 |
|
Chemical awareness certificates |
1 |
|
LifeKeepers Suicide Prevention Training |
1 |
Table 6. Training register excerpt
2.7.1 Planned training
· Chemical handling and storage training for Aquatics team leaders and shift leader lifeguards has been identified for March 2023.
· Due diligence and health and safety senior leadership training has been identified and planned for the Executive Leadership Team. This is scheduled for January 2023.
· Site-specific safety plan training was completed in November 2023.
2.8 Wellbeing
2.8.1 Indicator 1: No. employee sessions with EAP
There were 14 EAP (-34) sessions in Q3. Since the previous report, Council has gathered data on the number of employees accessing the service. In Q3, 9 (-6) staff accessed the service.
The key work-related and personal themes are illustrated in graphs 9 and 10 respectively.
The top three work-related themes have changed. In Q3, managing change and communication/relationships replaced physical environment, health and/or safety and work pressure or stress. Job satisfaction and career development remains in the top three themes.
Personal themes were a balance of different themes; although stress remains the primary concern.
Graph 9. Key work-related themes from EAP sessions in Q3. Job satisfaction and career (10), managing change (9), communication/relationships (7), physical environment health (6), work pressure or stress (6), organisational culture and other (3).
Graph 10. Key personal themes from EAP sessions in Q3. Stress (10), relationships and family (7), health (7), personal development (6), grief/loss/bereavement (3), other (7).
2.8.2 Indicator 2: Employee attendance at wellbeing events and activities and feedback from post activity surveys.
Financial wellbeing seminars
Council partners with BNZ to deliver financial wellbeing webinars to employees. BNZ is reviewing their workplace programme in 2023. They have offered to arrange one-to-one financial wellbeing sessions for our employees at the BNZ office in Alexandra.
My Everyday Wellbeing
Council’s wellbeing self-service platform had over 3,500 page views in the six weeks between launching on 10 August and 30 September 2022. 85% (n=193) of the 229 users have opened at engaged with at least one piece of content on the platform during that time.
The digital platform is also paired with engagement ideas for activities and interventions that we run in the workplace. In December 2022, the Health and Safety Committee will promote 12-Days of Kindmas.
Employee awards
Scheduled for December 2022 the employee awards provide an opportunity for employees to acknowledge the work of their peers. This year the categories are rising star, health and safety ambassador, sustainability, enhanced customer experience, and living our values (individual and team).
Nil
|
Report author: |
Reviewed and authorised by: |
|
|
|
|
Rachel Ennis |
Louise Fleck |
|
Health, Safety and Wellbeing Officer |
Executive Manager - People and Culture |
|
28/11/2022 |
28/11/2022
|
|
|
22.4.11 Audit NZ and Internal Audit Update
Doc ID: 603769
1. Purpose
To consider an update on the status of the external and internal audit programme and any outstanding actions for completed internal and external audits.
|
That the report be received.
|
2. Discussion
Council has a legislative requirement to complete external audits of annual reports and the long-term plan through Audit New Zealand. Audit New Zealand complete a governance report on their findings and any recommendations for improvements. A schedule of actions is then created and allocated to staff to manage the completion of these recommendations.
The 2020-21 Audit New Zealand Management Report has been presented to the Audit and Risk Committee at an earlier meeting. There were six new recommendations, of which four are either in progress or pending Audit NZ to sign them off. In addition, Audit NZ identified four outstanding recommendations. All have now been completed.
In addition to external audits, council carries out several internal audits annually to provide assurance over compliance and to mitigate business risks. For the 2021-22 financial year three audits have been carried out – information and records management and cyber security, along with a procurement audit. The information and records management and cybersecurity audits are now completed (refer to ‘Audit NZ and Internal Audit Update’ paper in the agenda in for this meeting).
For the procurement audit staff are working through the draft recommendations. ELT are scheduled to discuss this audit at their 12 December 2022 meeting. A meeting has been scheduled with Deloitte on 14 December 2022 to finalise the recommendations. A final report will be presented to this Committee at their March 2023 meeting.
For the 2022-23 financial year, two audits are scheduled to be carried out during the financial year. These are in the areas of capital expenditure planning and monitoring and health and safety.
Capital expenditure planning and monitoring
A meeting will be held on 8 December with Deloitte to discuss the scope of this work and timing.
Health and safety
Council have signed with KPMG for an assurance activity due to begin in March 2023 and will end during the first week of May 2023. It is an audit of the health and safety management framework against best practice. It will involve a desktop review of the system, interviews with senior leaders and a focus group with nominated employees.
In addition to the areas listed in the table below, Council has independently reviewed its GST compliance. A draft GST compliance evaluation report has been received. The core findings of the report focused on the principal risk areas, that are;
· Review checks – visual trend analysis to spot any anomalies during the period.
· Access to transactional level data from the finance system to reconcile or check underlying system totals.
· Communication between finance and other areas of the business such as, those responsible for property transactions or negotiating resource consents. It is recommended council place a framework around when someone leaves the organisation, a clear directive for the new person to maintain the same line of communication and consultation.
•
This draft audit will be reviewed in the new year and an update provided at the March 2023 Committee meeting.
Appendix 1 lists the outstanding tasks and any progress with the Audit NZ recommendations. Once the Committee have viewed the completed tasks these are removed from the schedule.
In addition, the internal audit programme is reviewed every three years to provide assurance over compliance and to mitigate business risks. In August 2020, Deloitte’s recommended a four-year internal audit programme based on factors such as budgetary constraints, recently completed engagements and the current view of the risk landscape in the local government sector. This was then prioritised, and the Committee approved the programme of work as detailed below for the next four years (2021 – 2024) ending June 2024.
This programme will be reviewed at the December 2022 Audit and Risk Committee meeting, post the Council elections. This is to ensure this programme reflects the appropriate priorities, and to consider whether the remaining items in red should be included in the next three-year programme.
|
Internal Audit Review Programme |
FY 22-23 |
FY 23-24 |
|
Procurement (carried over from previous FY) |
ü |
|
|
ü |
|
|
|
Health & Safety |
ü |
|
|
Contract Management |
|
ü |
|
Recruitment Review |
|
ü |
|
Environmental Management (including Sustainability) |
|
|
|
Business Continuity / Disaster Recovery |
|
|
|
Asset Management |
|
|
|
Benefits Realisation |
|
|
|
Legislative Compliance |
|
|
Red – denotes suggested alternative audit review options
Appendix 1 - Audit New Zealand - Audit Action Register ⇩
|
Report author: |
Reviewed and authorised by: |
|
|
|
|
Saskia Righarts |
Sanchia Jacobs |
|
Group Manager - Business Support |
Chief Executive Officer |
|
1/12/2022 |
2/12/2022
|
|
|
22.4.12 Oversight by the Audit and Risk Committee in the Preparation of the 2024-34 Long-term Plan
Doc ID: 603749
1. Purpose of Report
To consider the role of the Committee in the oversight of the preparation of the 2024-34 Long-term Plan.
|
That the Audit and Risk Committee A. Receives the report and accepts the level of significance. B. Notes the draft timeline for the preparation of the 2024-34 Long-term Plan. C. Approves the level of oversight of the Committee in the preparation of the 2024-34 Long-term Plan as outlined in this paper.
|
2. Background
Under s93 of the Local Government Act 2002 local authorities are required to have a 10-year plan, which is renewed every three years. Work has begun on the 2024-34 Long-term Plan and it must be adopted by Council by 30 June 2024.
A draft timeline that includes the key milestones has been developed and approved by Council at their meeting on 9 November 2022 (refer to appendix 1). It was noted at this meeting the timeline has been drafted to have the Plan completed by May 2024. This enables some flexibility in the timeline if milestones are not meet by the scheduled date due to uncontrollable factors. The main foreseen risk at this stage is the availability and timing of the necessary audits. Audit New Zealand are experiencing significant resourcing challenges which is impacting on their delivery and this situation is likely to continue for the foreseeable future.
3. Discussion
Under the Registrar of Delegations adopted by Council at their inaugural meeting on 26 October 2022, the Audit and Risk Committee have ‘oversight on the preparation of the long-term plan’.
For the 2021-31 Long-term Plan it was agreed that the oversight included the following:
· Receiving a formal progress update at each scheduled meeting, including visibility on how the programme is tracking according to the agreed plan.
· Receiving for feedback the key policies that will be included as part of the Long-term Plan (including the Significance and Engagement Policy, the 30-year Infrastructure Strategy, the Revenue and Rating Policy and the Financial Strategy).
· Receiving the Consultation Document in advance of its public release.
· Receiving for feedback the full draft document
It is proposed the for the 2024-34 Long-term Plan the level of oversight is the same as it was for the 2021-31 Long-term Plan.
The key challenge experienced in the last Long-term Plan in delivering on the above bullet points was that some policies and strategies, and the full draft document, was sent to the Committee for review outside of a scheduled meeting. The timing of Audit and Risk Committee meetings (with four per year) poses some challenges in aligning the timeframes contained with the long-term plan draft timeline with the agreed Committee meeting schedule.
Officers will endeavour as much as they can to align the policy and strategy work for the long-term plan with the scheduled 2023 Audit and Risk Committee meetings, noting that some of the work (eg financial and infrastructure strategies) may not be finalised in advance of these meetings. The completion of the full draft document will also be highly dependent on the timing of the audit. It may be as the programme develops that an additional Committee meeting will need to be scheduled to align with the programme timeframes.
4. Financial Considerations
There are no financial considerations arising as a consequence of this paper.
5. Options
Option 1 – (Recommended)
Agrees that the Committee has oversight of the following in the development of the 2024-34 Long-term Plan:
· Receiving a formal progress update at each scheduled meeting, including visibility on how the programme is tracking according to the agreed plan.
· Receiving for feedback the key policies that will be included as part of the Long-term Plan (including the Significance and Engagement Policy, the 30-year Infrastructure Strategy, the Revenue and Rating Policy and the Financial Strategy).
· Receiving the Consultation Document in advance of its public release.
· Receiving for feedback the full draft document
Advantages:
· Ensures the appropriate level of oversight by the Committee in the preparation of the 2024-34 Long-term Plan.
· Provides clarity for staff and members of the Committee on what is expected by the ‘oversight’ role contained in the Registrar of Delegations
Disadvantages:
· None identified.
Option 2
Does not agree to the level of oversight by the Committee in the preparation of the 2024-34 Long-term Plan as outlined in this paper.
Advantages:
· None identified.
Disadvantages:
· A lack of clarity on the role of the Committee may cause confusion and could impact on the timeframes if expectations are not clear from the beginning.
· A lack of clarity may result in the Committee not fulfilling their oversight role as outlined in the Registrar of Delegations.
6. Compliance
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Local Government Act 2002 Purpose Provisions |
This decision enables democratic local decision making and action by, and on behalf of communities by ensuring appropriate oversight of the preparation of the 2024-34 Long-term Plan.
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Decision consistent with other Council plans and policies? Such as the District Plan, Economic Development Strategy etc. |
Yes the Plan will take into account the current strategic documents of the organisation. |
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Considerations as to sustainability, the environment and climate change impacts |
There are no immediate considerations as to sustainability, the environment and climate change. However, these factors are a key component in particular for the infrastructure strategy and will be considered throughout the development of this Plan.
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Risks Analysis |
There are no risks associated with this paper.
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Significance, Consultation and Engagement (internal and external) |
This paper does not meet the threshold for consultation outlined in the Significance and Engagement Policy. The Plan itself will be consulted on using the special consultative procedure as outlined in the Local Government Act 2002.
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7. Next Steps
The timeline will be updated to include the Audit and Risk Committee’s involvement in the development of the Plan.
Appendix 1 - LTP 2024-34 Timeline.pdf ⇩
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Report author: |
Reviewed and authorised by: |
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Saskia Righarts |
Sanchia Jacobs |
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Group Manager - Business Support |
Chief Executive Officer |
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18/11/2022 |
2/12/2022
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Doc ID: 605470
1. Purpose
To consider the Chair’s report.
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That the report be received.
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Nil
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Doc ID: 605471
1. Purpose
To consider the members’ reports.
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That the reports be received.
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Nil
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22.4.15 December 2022 Governance Report
Doc ID: 605462
1. Purpose
To report on items of general interest, consider the Audit and Risk Committee’s forward work programme and the current status report updates.
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That the report be received.
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2. Discussion
Forward Work Programme
The Audit and Risk Committee’s forward work programme has been included for information (appendix 1). A session with members to work out 2023 priorities will occur in the new year.
Status Report
The status report has been updated with actions undertaken since the last meeting (appendix 2).
Appendix 1 - Audit and Risk Forward Work Plan ⇩
Appendix 2 - Audit and Risk Status Update ⇩
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Report author: |
Reviewed and authorised by: |
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Wayne McEnteer |
Saskia Righarts |
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Governance Manager |
Group Manager - Business Support |
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5/12/2022 |
5/12/2022
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15 December 2022 |
The date of the next scheduled meeting is 3 March 2023.
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15 December 2022 |
9 Resolution to Exclude the Public
