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Audit and Risk Subcommittee Wednesday 29 September 2021 at 10.00am
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Audit and Risk Subcommittee Wednesday 29 September 2021 at 10.00am
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Audit and Risk Subcommittee
29 September 2021
Audit and Risk Subcommittee Agenda
Meeting to be held Remotely va Zoom
on Wednesday 29 September 2021, commencing at 10.00am
Recommendations contained in the agenda are NOT decisions of the meeting. Please refer to minutes for resolutions.
MEMBERSHIP OF THE Audit and Risk Subcommittee
Chairperson, Colin Kitchen
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Councillor Amy Macdonald |
Councillor Joce Yeoman |
Councillor Rick Stolwerk |
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Ex-Officio Penny Smart |
Independent Audit & Risk Advisor Danny Tuato'o |
Independent Advisor Stuart Henderson |
KARAKIA / WHAKATAU
RĪMITI (ITEM) Page
1.0 Ngā Mahi Whakapai/Housekeeping
2.0 Ngā Whakapahā/apologies
3.0 Ngā Whakapuakanga/declarations of conflicts of interest
4.0 Ngā Whakaae Miniti (Confirmation of Minutes)
4.1 Confirmation of Minutes - Audit and Risk Subcommittee 30 June 2021 3
5.1 HR Audit Results 8
5.2 2021 Annual Report and Deloitte Audit Report 11
5.3 Service delivery review update 203
5.4 Marine Safety Management System (SMS) 206
6.0 Kaupapa ā Roto (Business with the Public Excluded) 211
6.1 Confirmation of Confidential Minutes - Audit and Risk Subcommittee 30 June 2021
Audit and Risk Subcommittee item: 4.1
29 September 2021
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TITLE: |
Confirmation of Minutes - Audit and Risk Subcommittee 30 June 2021 |
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ID: |
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From: |
Judith Graham, Corporate Excellence P/A |
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Authorised by Group Manager: |
Bruce Howse, Group Manager - Corporate Excellence, on |
That the minutes of the Audit and Risk Subcommittee meeting held on 30 June 2021 be confirmed as a true and correct record.
Attachments/Ngā tapirihanga
Attachment 1: Audit and Risk
Subcommittee Minutes 30 June 2021 ⇩ 
29 September 2021
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TITLE: |
HR Audit Results |
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From: |
Beryl Steele, Human Resources Manager |
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Authorised by Group Manager/s: |
Bruce Howse, Pou Taumatua – Group Manager Corporate Services, on 06 September 2021 |
Whakarāpopototanga / Executive summary
As part of our risk assessment and continuous improvement programme it was decided to have HR audits carried out as it related to recruitment and induction, stress and workload, legislative compliance and employee relations. A wide range of staff members were interviewed to get a good cross-section of the organisation. It was positive to see that all of the recommendations were issues we were already aware of and had already started to put actions in place to remedy.
That the report ‘HR Audit Results’ by Beryl Steele, Human Resources Manager and dated 2 September 2021, be received.
Background/Tuhinga
As part of our risk assessment and continuous improvement programme, in January it was decided to have HR audits carried out as it related to the following areas.
· Recruitment/Induction and onboarding
· Stress / workload
· Legislative/employee relations (included privacy, harassment, bullying, etc)
We decided to use a consultant that had expertise in the HR field and who had an understanding of local government.
A wide range of staff members were interviewed to get a good cross-section of the organisation. The recommendations from the audit are outlined below. It was good to see that all of the issues we were already aware of and had already started to put actions in place to remedy.
Recommendations and actions:
Recommendation: That significant additional all organisation work is done on stress levels and mitigation of those as necessary as this was a theme across audits.
Action: This is an area that we continue to look at and improve in – manager conversations with their staff, stress/resilience training, time management training etc. The wellbeing group have support information for stress on the wellbeing hub and it is also a point of action for the Health and Safety Committee.
Recommendation: That training targeted to middle managers re specialist aspects of recruitment (particularly short-listing, making offers and on-boarding) is developed and presented.
Action: We have recently done recruitment training and it is now part of the management programme. We are also looking at what else needs to be provided as part of the management programme to support managers in this area. We have also reviewed and updated the recruitment process on Promapp and ensure that managers know we are there to guide them through the process as needed.
Recommendation: That in addition to noting the positive feedback about recruitment, thought be given to ways in which the duration of recruitment can be speeded up and further relevant support can be given to HR.
Action: In the recruitment training we have outlined ways in which people can improve the speed of the process and we are always looking at ways that things can be improved. We have also recently moved away from hardcopy sign off to electronic which appears to have sped up the recommendation sign off process. We hope that when the enterprise system is in place the process from start to finish will move a lot quicker and be relatively seamless.
Recommendation: That there is some training course provided that take in both bullying/ harassment and belongingness and which highlights bullying as a Health and Safety risk and that examples given in this audit are particularly considered. Along with regard to the recognition and handling of potentially negative situations.
Action: We are currently reinforcing our values and behaviours. Our trainer is investigating psychological safety training courses for our managers and then looking at how this can be rolled out to all staff. We have some form of bullying/harassment training on our radar, but we need to find something appropriate to us. Bullying and harassment are noted on our risk register.
Recommendation: That gender inequality is kept on the radar as an issue.
Action: We do a yearly diversity report which includes gender analysis and this is an issue that ELT is aware of. We are in the process of completing this year’s report which will include recommendations.
Although the appointments were made based on roles and skills brought to the ELT table, through the restructure there will be two females on ELT. In addition, we are currently recruiting for 3 GM roles which may bring further diversity to our executive team.
Recommendation: That some specialist planning and work be done in the multicultural field, alongside bicultural work and possibly with particular input from the Māori Engagement Team.
Action: We are working with the Maori Engagement Manager on what we can do to support our staff in this area. Additional work may come from the Treaty of Waitangi Health Check.
Recommendation: That thought be given to developing on-boarding methods particularly as they relate to Māori people joining the organisation.
Action: Our HR Advisor has been working with the Maori Engagement Manager on this.
Recommendation: Capability building for non-Maori or those not familiar with Maori culture and or the language. This relates to the question posed in this response … “Sometimes issues come through to us because of a Māori name or content but oftentimes the department concerned could sort the matter with [the Māori Engagement Team] us supporting rather than leading”.
Action: An area we are aware of and will work with our Maori Engagement Manager to address.
Recommendation: That the generally positive nature of responses be noted and the positive input of individuals like-wise, while ensuring areas of concern are addressed.
Recommendation: That the positive nature of responses about relationships, workplace culture and human resources delivery related to conditions be especially noted.
Attachments/Ngā tapirihanga
Audit and Risk Subcommittee item: 5.2
29 September 2021
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TITLE: |
2021 Annual Report and Deloitte Audit Report |
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From: |
Simon Crabb, Finance Manager |
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Authorised by Group Manager/s: |
Bruce Howse, Pou Taumatua – Group Manager Corporate Services, on 22 September 2021 |
Executive summary/Whakarāpopototanga
The Deloitte Audit Report on the matters arising from their 2020/21 end of year audit is attached as Attachment One. Peter Gulliver (Deloitte Audit Partner) will attend the September Subcommittee meeting to discuss this report.
The independent member of council, Stuart Henderson, has performed a review of the 2021 Annual Report and the related Audit process, and has provided a written report summarising his observations, attached as Attachment Two.
The Full 2021 Annual Report and the Summary Annual Report for 2021 are attached as Attachment Three and Four respectively. The final formatting and layout of these documents is still being performed, and the Summary Annual Report is subject to a final review by the CEO.
The final signed audit opinions will be released upon council’s adoption of the 2021 Annual Report on 19 October 2021, and Deloitte receiving the signed letters of compliance and representation.
1. That the report ‘2021 Annual Report and Deloitte Audit Report’ by Simon Crabb, Finance Manager and dated 13 September 2021, be received.
2. That the Subcommittee endorse a recommendation to council that the 2021 Annual Report and the financial statements for the year ended 30 June 2021 be adopted.
Options
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No. |
Option |
Advantages |
Disadvantages |
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1 |
Adopt |
Facilitate the adoption and public availability of the 2021 Annual Report and 2021 Summary Annual Report within the statutory timeframes set out in the LGA 2002. |
None |
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2 |
Do not Adopt |
The annual report can be amended if required |
A special council meeting would need to be called before 31 October 2021 to adopt a revised 2021 Annual Report and comply with the Local Electoral Act 2001 and the Local Government Act 2002. |
The staff’s recommended option is 1
Considerations
1. Implementation issues
Should the 2021 Annual Report not be adopted at the 19 October 2021 Council meeting, then a special council meeting would need to be scheduled before 31 October 2021 to adopt a revised Annual Report and comply with the Local Electoral Act 2001 and the Local Government Act 2002.
2. Significance and engagement
In relation to section 79 of the Local Government Act 2002, this decision is considered to be of low significance when assessed against council’s Significance and Engagement Policy because it has previously been consulted on and provided for in council’s Long-Term Plan and/or is part of council’s day to day activities. This does not mean that this matter is not of significance to tāngata whenua and/or individual communities, but that council is able to make decisions relating to this matter without undertaking further consultation or engagement.
3. Policy, risk management and legislative compliance
Endorsement of the recommendations is consistent with sections 98 and 99 of the Local Government Act 2002 regarding the timeframes for adoption and public availability of the annual report and the requirement for an audit report to be included in both the full Annual Report and Summary Annual Report.
Further considerations
Being a purely administrative matter, environmental impacts, financial implications, community views, and Māori impact statement are not applicable.
Background/Tuhinga
2020-21 Financial Result
Council posted a total comprehensive revenue and expense surplus for the 2020/21 financial year of $33.465M. At the August 2021 council meeting, the draft net surplus after transfers from/(to) special reserves presented to council was $68K.
The movement from the draft result to the total comprehensive revenue and expense reported in the 2021 Report is explained in Table One.
Deloitte Audit Report
On page 9 of their report, Deloitte noted that the Ministry for the Environment (MfE) owed council $421k relating to the Dune Lakes project and the Waima Waitai Waiora project, and that MfE were waiting on council to supply them various supporting documents before they would pay this outstanding amount.
On 17 September 2021, MfE confirmed they had received all the necessary documents pertaining to the Dune Lakes Project, and that they would make payment of all but $4.57 of the outstanding amount in relation to this project ($153,282).
In relation to the Waima Waitai Waiora project, council staff are currently working with MfE to confirm the degree of supporting documentation that is required, with an undertaking that the necessary documents agreed upon are delivered to MfE by the end of September.
Attachments/Ngā tapirihanga
Attachment 1: Deloitte Report to the
Audit and Risk Subcommittee ⇩ 
Attachment 2: Stuart Henderson review
of the 2021 Annual Report and Audit Process ⇩ 
Attachment 3: 2021 Annual Report - Full
version ⇩
Attachment 4: 2021 Annual Report -
Summary ⇩
Audit and Risk Subcommittee item: 5.3
29 September 2021
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TITLE: |
Service delivery review update |
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From: |
Chris McColl, Organisational Projects Specialist |
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Authorised by Group Manager/s: |
Bruce Howse, Pou Taumatua – Group Manager Corporate Services, on 14 September 2021 |
Whakarāpopototanga / Executive summary
This report provides a summary outcome of the Service Delivery Review of the Planning and Policy service provided by council, and the schedule for upcoming reviews.
That the report ‘Service delivery review update’ by Chris McColl, Organisational Projects Specialist and dated 14 September 2021, be received.
Background/Tuhinga
Under Section 17A of the Local Government Act 2002, local authorities are obliged to carry out a review of the cost-effectiveness of current arrangements for delivering the services they provide, including infrastructure and regulatory functions.
Council started a process of rolling reviews in 2017, with staff systematically working their way through the suite of activities that council provides. This report provides a summary of the most recent review carried out, and the full schedule for delivery of the reviews.
Summary outcome – Planning and policy service
The review of the planning and policy function is being finalised this month. It found that Council manages planning and policy services in an effective manner with respect to governance and delivery.
A small, dedicated team runs the Planning and Policy service. Alignment of this team with the wider natural resources group may help in delivery of the service which is at times working towards the limit of its capacity. This change in alignment of the team has been addressed as part of the recent organisational structure changes.
Upcoming changes to the Resource Management Act (RMA) will have an impact on the planning function, where combined/centralised planning is proposed with the aim to simplify and reduce the time and cost involved, with more focus on climate change, biodiversity and water quality.
Section 17a Service Delivery Review Schedule
In order to ensure that all services are reviewed every six years, at its meeting on 19 April 2016 council adopted a rolling schedule of reviews to be completed by 8 August 2022. This is as follows:
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Activity |
Sub-activity |
Review |
Status |
In depth |
Next |
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Economic Development |
Northland Inc. |
2017 |
complete |
ü |
2023 |
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River Management |
River Management |
2017 |
complete |
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2023 |
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Hydrology |
2017 |
complete |
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2023 |
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Land and Biodiversity |
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2017 |
complete |
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2023 |
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Biosecurity |
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2017 |
complete |
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2023 |
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Natural Hazard Management |
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2017 |
complete |
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2023 |
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Civil Defence and Emergency Management |
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2017 |
complete |
ü |
2023 |
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Transport |
Regional Transport Management |
2017 |
complete |
ü |
2023 |
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Passenger Transport Administration |
2017 |
complete |
ü |
2023 |
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Economic Development |
Investments |
2018 |
complete |
ü |
2024 |
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Governance & Engagement |
Governance |
2018 |
complete |
ü |
2024 |
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Māori relationships |
2018 |
complete |
ü |
2024 |
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Communication & engagement (includes environmental education) |
2018 |
complete |
ü |
2024 |
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Economic Development |
Commercial Property
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2020 |
complete |
ü |
2026. |
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Oil Pollution Response |
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2020 |
complete |
ü |
2026 |
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Harbour Safety and Navigation |
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2020 |
complete |
ü |
2026 |
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Planning and Policy |
Review started July 2021 |
2021 |
finalizing |
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2027 |
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Consents
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Consent Applications |
2022 |
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2028 |
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Consents Advice and Information |
2022 |
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2028 |
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Monitoring |
State of the Environment Monitoring |
2022 |
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2028 |
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Compliance Monitoring, Environmental Incidents Response and Waste Management and Contaminated Sites |
2022 |
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2028 |
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Additional Reviews |
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Corporate Services |
Information Services & Technology; Service Levels / Service Model, Customer engagement, service delivery. |
2021 |
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2027 |
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Commercial Property; Investigate possibility / viability of establishing a CCO with other councils to manage commercial property prior to the next review. |
2023
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Flow – on investigations |
Biosecurity & biodiversity Investigate potential shared service agreements prior to the next review. |
2022 |
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Attachments/Ngā tapirihanga
Audit and Risk Subcommittee item: 5.4
29 September 2021
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TITLE: |
Marine Safety Management System (SMS) |
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From: |
Jim Lyle, Regional Harbourmaster |
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Authorised by Group Manager/s: |
Tony Phipps, Group Manager Advisor, on 24 September 2021 |
Executive summary/Whakarāpopototanga
The purpose of this report is to update the Audit and Risk Subcommittee on the management of marine safety risks associated with shipping on Northland’s coastline and harbours, and to seek the support of council for the continued use and ongoing implementation of the New Zealand Port and Harbour Marine Safety Code (the Code) compliant Safety Management Systems to manage those risks.
Safety Management Systems (SMS) are in place for Whangarei and Bay of Islands harbours, and risks are currently being actively managed in Northland in line with the Code. This is an active risk management-based system, operating in a dynamic and ever-changing environment. In the last year cruise ships have been banned from operating in NZ waters, the Marsden Point refinery has announced closure of refining operations and continued operations as a fuel transfer terminal only, and there has been an increase in large container ships visiting Northport.
An important part of Code compliance is demonstrating buy-in by all the responsible parties, including being able to show evidence of governance-level consideration of marine safety risks and support for Code-compliant SMS to manage the risks. The Code provides for a formal peer review of port and harbour risk assessments and SMS every three years. Northland’s SMS is scheduled for peer review in early 2022.
Thus, this report seeks the committee’s recommendation to council for formal support for the ongoing adoption of the Code, and associated Code-compliant Safety Management Systems.
1. That the report ‘Marine Safety Management System (SMS)’ by Jim Lyle, Regional Harbourmaster and dated 20 September 2021, be received.
2. That the Audit and Risk Subcommittee note the risks posed by shipping, and the management of these risks by New Zealand Port and Harbour Marine Safety Code-compliant Safety Management Systems.
3. That the Audit and Risk Subcommittee recommend to council that the council continues to have New Zealand Port and Harbour Marine Safety Code-compliant Safety Management Systems for Whangarei harbour and Bay of Islands harbour.
Options
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No. |
Option |
Advantages |
Disadvantages |
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1 |
Support the recommendations. |
Continues the risk management level and documents formal support for the Code-compliant SMS. |
None noted. |
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2 |
Do not support the recommendations. |
No advantage. |
No recent formal recognition and support for Code-compliant SMS in the NRC risk management system. |
The staff’s recommended option is Option 1.
Considerations
1. Environmental Impact
These recommendations support reducing environmental impacts. Code compliant SMS manage marine safety risks, including the risks of environmental damage from marine accidents such as pollution from damaged vessels.
2. Community views
The community and Māori expect the regional council to manage the risks posed by shipping.
3. Māori impact statement
The community and Māori expect the regional council to manage the risks posed by shipping.
4. Financial implications
There are no financial implications. This work is planned for and resourced in the LTP.
5. Implementation issues
This work is planned for and resourced.
6. Significance and engagement
This work does not trigger the significance and engagement policy.
7. Policy, risk management and legislative compliance
The Council has supported having Code compliant SMS since the first version of the Code was produced in 2004.
The
risks posed by shipping are recorded in the council risk register and currently
sit at number 17 in the rating of risks:
The Council having Code compliant SMS supports compliance with Council’s responsibilities and functions pursuant to the Maritime Transport Act 1994 for maritime safety within its region.
Background/Tuhinga
Northland has an extensive coastline, a number of ports and harbours including two used for commercial shipping and cruise ships (Whangarei and the Bay of Islands), and responsibility for waters out to 12 nautical miles.
The primary New Zealand
legislation covering coastal waters for maritime activities is the Maritime
Transport Act 1994 (MTA), which you can view here: https://www.legislation.govt.nz/act/public/1994/0104/latest/DLM334660.html
Regional councils’ responsibilities are set down in
section 33C:
33C Functions of regional councils
For the purpose of ensuring maritime safety in their regions, regional councils may regulate—
(a) the ports, harbours, and waters in their regions; and
(b) maritime-related activities in their regions.
Unhelpfully, maritime safety
is not defined in the MTA, however regional councils have long taken
responsibility for navigational safety and the environmental protection of the
coast, and the MTA does give the regional council the powers to appoint
harbourmasters with clearly defined powers to carry out the role.
Regional councils are also empowered to make bylaws for the purposes of
navigation safety regulation.
Northland regional council has a well-resourced maritime team and
harbourmasters in comparison to most regions, and this is needed to adequately
manage the risks associated with the wide variety of coastal activity from
tankers and container ships, large cruise liners, fishing ports, and one of the
most popular recreational boating coasts in New Zealand, and within a
days’ sail of Auckland.
The harbourmaster’s team consists of a team of 10, plus one contract deputy commercial harbourmaster based at Marsden Point. Apart from 2 admin staff, the rest of the team all hold maritime qualifications to an appropriate level. This team actively manages 2,800 moorings, 300 aids to navigation, recreational boating safety, navigation safety bylaw enforcement, maritime incident response, oil spill response and training, and the council’s roles and responsibilities for the Whangarei and Bay of Islands Code compliant SMS.
Whangarei harbour risks and SMS are relatively complex due to the multiple parties involved. There are four main facilities: Northport, Refining NZ, Golden Bay Cement, and Port Whangarei. The marine services are supplied by a separate towage/pilotage company NorthTugz, who up until recently were mainly funded by a collective of the oil companies via the refinery. With the refinery closing down refining and bulk crude imports, the long-term funding of NorthTugz is not assured, making investment in new plant such as tugs and pilot vessels unlikely in the short term. Northport plays an active part in the Safety Management Systems managing the port’s aids to navigation, the local port information services (harbour radio) and owning an onsite ship simulator.
To add to the complexity, Northport is part-owned by Port of Tauranga and Marsden Holdings Ltd (which is 54% owned by NRC) and NorthTugz are 50% owned by Northport and Ports of Auckland.
The harbourmaster chairs a Whangarei Harbour SMS Stakeholders group that meets regularly and oversees and ensures the implementation of the SMS. A structure diagram of the Whangarei SMS is attached.
The Bay of Islands is a more straightforward situation with one main facilities operator, Far North Holdings, and the NRC harbourmaster also manages the schedule, anchorage and provision of pilotage services for the cruise ships and any other large vessels.
New Zealand Port and Harbour Marine
Safety Code
https://www.maritimenz.govt.nz/commercial/ports-and-harbours/port-and-harbour-safety-code.asp#the_code
The New Zealand Port and Harbour Marine Safety Code (the Code) provides national best practice guidance to port operators and councils to manage the safety of marine activities in their ports and harbours.
The objective of the Code is to ensure the safe management of ships navigating in New Zealand ports and harbours, including the prevention of injury to people, loss of life and damage to the marine environment (including property). The Code is a voluntary national standard. It supports national and local legislation.
While support for and use of the Code is voluntary, all regional councils and all port companies and Maritime NZ are signatories of the Code Implementation MOU. If a serious incident occurred in a port, the risk and safety management regimes being operated by the responsible parties at the time would be judged against the Code. Council, and the harbourmaster functions, are insured for a significant sum, and the insurance comfort level for the council factors in having the active Code compliant Safety Management Systems in place.
Attachments/Ngā tapirihanga
Attachment 1: Attachment 1 - 2021 09 20
Extract from Northport Safety Management System: Diagram of Whangarei Harbour
SMS ⇩ 
Audit and Risk Subcommittee ITEM: 6.0
29 September 2021
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TITLE: |
Whakarāpopototanga / Executive Summary
The purpose of this report is to recommend that the public be excluded from the proceedings of this meeting to consider the confidential matters detailed below for the reasons given.
1. That the public be excluded from the proceedings of this meeting to consider confidential matters.
2. That the general subject of the matters to be considered whilst the public is excluded, the reasons for passing this resolution in relation to this matter, and the specific grounds under the Local Government Official Information and Meetings Act 1987 for the passing of this resolution, are as follows:
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Item No. |
Item Issue |
Reasons/Grounds |
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6.1 |
Confirmation of Confidential Minutes - Audit and Risk Subcommittee 30 June 2021 |
The public conduct of the proceedings would be likely to result in disclosure of information, as stated in the open section of the meeting -. |
3. That the Independent Financial Advisors be permitted to stay during business with the public excluded.
Considerations
1. Options
Not applicable. This is an administrative procedure.
2. Significance and Engagement
This is a procedural matter required by law. Hence when assessed against council policy is deemed to be of low significance.
3. Policy and Legislative Compliance
The report complies with the provisions to exclude the public from the whole or any part of the proceedings of any meeting as detailed in sections 47 and 48 of the Local Government Official Information Act 1987.
4. Other Considerations
Being a purely administrative matter; Community Views, Māori Impact Statement, Financial Implications, and Implementation Issues are not applicable.
