Notice is given of an Audit and Risk Committee Meeting to be held on:
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Date: |
Tuesday, 28 February 2023 |
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Time: |
2.00pm |
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Location: |
Events Centre Lounge Twizel |
AGENDA
Audit and Risk Committee Meeting
28 February 2023
Note: This meeting will be digitally recorded by the minute-taker .
Audit and Risk Committee Membership:
Bruce Mincham (Chair)
Anne Munro
Murray Cox
Matt Murphy
Kerry Bellringer
Scott Aronsen
Karen Morgan
Phillipa Guerin
Rit Fisher
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The purpose of local government:
(1) The purpose of local government is—
(a) to enable democratic local decision-making and action by, and on behalf of, communities; and
(b) to promote the social, economic, environmental, and cultural well-being of communities in the present and for the future.
(Local Government Act 2002)
Audit and Risk Committee Meeting Agenda 28 February 2023
5.1 Minutes of Audit and Risk Committee Meeting - 13 December 2022
5.2 ANNUAL PLAN 2023/24 & LONG TERM PLAN 2024/34 UPDATE
5.3 Quarterly Report - Aged Receivables
6.1 Minutes of Public Excluded Audit and Risk Committee Meeting - 13 December 2022
5.1 Minutes of Audit and Risk Committee Meeting - 13 December 2022
Author: Arlene Goss, Governance Advisor
Authoriser:
Attachments: 1. Minutes of Audit and Risk Committee Meeting - 13 December 2022
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Recommendation 1. That the Minutes of the Audit and Risk Committee Meeting held on Tuesday 13 December 2022 be received. |
Audit and Risk Committee Meeting Minutes 13 December 2022
Unconfirmed MINUTES
Audit and Risk Committee Meeting
13 December 2022
MINUTES OF Mackenzie District Council
Audit and Risk
Committee Meeting
HELD AT THE Council
Chambers, Fairlie
ON Tuesday, 13
December 2022 AT 2.10pm
PRESENT: Mr Bruce Mincham, Cr Anne Munro, Cr Murray Cox, Cr Matt Murphy, Cr Kerry Bellringer, Cr Scott Aronsen, Cr Karen Morgan, Cr Phillipa Guerin, Cr Rit Fisher
IN ATTENDANCE: Angela Oosthuizen (Chief Executive), David Adamson (Acting General Manager Operations), Alexis Kereikeepa (General Manager People, Customer and Cultural Relationships), Chris Clarke (General Manager Information, Engagement and Community Development), Murray Dickson (General Manager Strategic Financial Management and Commercial Services), Wendy Thompson (Corporate Planner), Sandy Hogg (Finance Manager), Arlene Goss (Governance Advisor), Chris Genet and Anna Jones (Audit NZ)
1 Opening
The chairman welcomed everyone to the meeting.
2 Apologies
There were no apologies.
3 Declarations Of Interest
Bruce Mincham declared his involvement with a Twizel community organisation. And his wife’s involvement with the pony club in Twizel.
4 Visitors
Chris Genet and Anna Jones from Audit New Zealand were welcomed to the meeting. They attended on Teams from Wellington.
5 Reports
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5.1 Minutes of Audit and Risk Committee Meeting - 13 September 2022 |
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Committee Resolution AUD/2022/73 Moved: Mr Bruce Mincham Seconded: Cr Anne Munro 1. That the Minutes of the Audit and Risk Committee Meeting held on Tuesday 13 September 2022 be received. Carried |
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5.2 Finance Work Programme |
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The purpose of this report was to provide updated details of the proposed 2022-2023 finance team related work programme. Murray Dickson said there was not a work programme for the Audit and Risk Committee at present, so this would be drawn up with Mr Mincham. Sandy Hogg then went through the Finance Team Work Programme and timeline. Discussion took place on finance team projects and resourcing. |
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5.3 Quarterly Report - Aged Receivables |
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Sandy Hogg outlined the background to this report. It was to provide council with information about levels of debt and attempts to recover the money. A debt policy was available on the council’s website. She read out the figures in the report and broke down the balances. The large rates positive balance was due to the energy generators paying their rates in full at the start of the year. Dog fees were a bit late so were still coming in. Water balances were billed once a year. This will be done more regularly. She also planned to break down the sundry debtors further to pull out figures for rental debts and solid waste debts. Names of debtors would never be disclosed to the councillors or the public. The Mayor asked about dead dogs being included in the dog fee debtors. Customer services staff were contacting individuals to check this. |
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5.4 Annual Report 2022 Progress |
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Chris Clarke introduced this report. He said there had been a large amount of work to bring Council on track with report deadlines, and we were about half way there. A timetable was drawn up and would also be re-used in later years. A draft copy of this year’s annual report would be supplied to the councillors before they left for the day. The chief executive agreed there was more work to do but things were much better than they used to be. She acknowledged a big push by corporate planning and finance to get this draft written. Wendy Thompson said there was still some editing required of the draft. She acknowledged Sue Wilkins for her publishing work on the document. Sandy Hogg suggested there would be changes to some of the numbers in the draft report. Bruce Mincham asked if the reconciliation of the special funds was complete. There were still a few that needed to be looked at. Otherwise most are done. Chris Genet was asked to speak about timing. Auditors would be on site on March 13th. In the September Audit committee meeting AuditNZ was asked to minimise the risk when deferring the audit. The two areas of risk were infrastructure valuations and drinking water standard reports. AuditNZ has looked at both of these and Mr Genet was comfortable with drinking water standards performance measures. Regarding the infrastructure asset valuations, he was comfortable with the methodology. Unit rates are at the lower end compared to what he was seeing nationally, but broadly they looked acceptable. The valuers had mentioned that possibly not all assets were included due to the delay in getting them into the asset management system. For roading, Mr Genet would like to have a closer look at roading flood damage. He has looked at the Alpine Energy valuation and is comfortable. The focus will be around cashflows when they come in to do the audit. Chris Genet said he would put what he has said in a letter to management, providing more detail, with a view to having any issues resolved before March 13th. The chief executive asked if there were any other items that might pose a potential risk to the audit. Three Waters reform was influencing all audits. The chairman thanked everyone for their contribution. |
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5.5 Annual Plan 2023/2024 & Long Term Plan Update |
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Chris Clarke said staff would be getting into the Annual Plan and Long Term Plan early next year. He was working on a timetable which was now signed off by management. It was likely that the adoption of the draft annual plan would take place on April 4 next year. This will be another team effort with the finance team taking a heavy work load. Sandy Hogg said managers were working on budgets and the aim was to have all the budgets in the system by Christmas. Rate requirements would be looked at by the end of January. By the end of January most of the documents would be ready to go to budget workshops. The timeframes are tight and staff are operating under pressure. Weekly meetings are being held to keep track of things and help when they slip. |
6 Public Excluded
RESOLUTION TO EXCLUDE THE PUBLIC
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Committee Resolution AUD/2022/74 Moved: Cr Anne Munro Seconded: Cr Murray Cox That the public be excluded from the following parts of the proceedings of this meeting. The general subject matter of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48 of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:
Carried |
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Committee Resolution AUD/2022/75 Moved: Mr Bruce Mincham Seconded: Cr Anne Munro That the committee moves out of closed meeting into open meeting. Carried |
The Meeting closed at 3.26pm.
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CHAIRPERSON
5.2 ANNUAL PLAN 2023/24 & LONG TERM PLAN 2024/34 UPDATE
Author: Wendy Thompson, Corporate Planner
Authoriser: Chris Clarke, General Manager, Information, Engagement and Community Development
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That the information be noted. |
ANNUAL PLAN 2023/2024 PROGESS UPDATE
The key workstream on the Annual Plan program to date has been completing the financial budgets. This has included internal review by the executive leadership team and two Council workshops during Feburary 2023 to present key information about the activity plans and financial impact of our key activity groupings.
The current economic environment with an annual inflation level exceeding 7.0% compares unfavourably to our 2021/31 Long Term Plan (LTP) assumption of a 2.97% Local Government Cost Index (LGCI). This has made it challenging to continue delivering the same operating service levels and projects outlined for 2023/24 (Year 3) in our LTP within the rates increase of 10.2% signalled for the same period.
The project team has completed the assessment of any budget or program delivery change that would trigger an amendment to the 2021/31 LTP or require a formal community consultation process in respect to Mackenzie District Council’s Significance and Engagement Policy. No significant change was identified so public consultation will not occur for the 2023/24 Annual Plan.
Our three Community Boards were given updates about key District and local Ward projects on their scheuled meeting days in late January/early February 2023. Council will also share information about key projects with our local rūnanga during our March hui.
Other upcoming milestones in early March include completing non-financial content and another Council workshop to outline any changes resulting from the February workshops, the review of funding, rating and debt impacts, and variations from the LTP Year 3.
We continue with weekly projects team meetings to monitor the 2023/24 Annual Plan workstreams alongside the 2024/34 Long Term Plan and 2021/22 Annual Report, and to review progress against agreed timetables.
2024/34 LONG TERM PLAN (LTP) PROGRESS UPDATE
This LTP is now a regular item on our weekly projects team meetings.
In February 2023 our broad timetable outline was reviewed in light of the capacity of in-house teams already committed to next financial year’s annual plan and the upcoming audit of our 2021/22 Annual Report. Some timing changes have been made but statutory deadlines remain acheivable.
Work has commenced on the strategic direction and themes for the LTP and the outcomes from recent executive and council workshops are being evaluated alongside our project priorities and relevant pre-existing documents.
Asset management plans(AMPs) have been commenced for the Transportation Activity to align with Waka Kohati July 2023 funding deadlines. AMPs for other activities including Solid Waste, Parks & Community Facilities and Commercial Property will also be completed leading into the LTP.
Concurrently improved financial modelling for use in the LTP is being tested by parallel processing the 2023/24 Annual Plan budgets and comparing outputs against our current financial templates.
Conclusion
Financial budgeting for the 2023/24 Annual Plan is progressing and the project is monitored on a weekly basis. Initial work on the 2024/34 Long Term Plan has commenced.
5.3 Quarterly Report - Aged Receivables
Author: Sandy Hogg, Manager - Finance
Authoriser: Murray Dickson, GM - Strategic Financial Management and Commercial Services
Attachments: 1. ARC Aged Receivables
December23 ⇩
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That the quarterly report on Aged Accounts Receivables for December 2022, be received. |
AGED RECEIVABLES
The Mackenzie District Council holds accounts receivable balances for Rates, Animals, Water Billing and Sundry receivables.
Sundry Debtors are broken down into further categories for Staff, Building Consents, Resource Consents and Pukaki Airport. Remaining Sundry Debtors are made up of Landfill, Rental and Other Sundry.
Accounts receivable balances include GST if applicable and so operating income has been grossed up to be GST inclusive for the following comparison.
The Council collects annual operating revenue of approximately $25 million, of which rates account for $14 million. At 31 December 2022 operating revenue was made up of the following:
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$000’s |
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Rates |
7,240 |
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Other Operating Revenue |
3,972 |
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11,212 |
The Council has a Debt Recovery Policy (adopted 29 June 2021) which provides a consistent approach to manage the collection of revenue in a legally compliant manner. The Policy is published on the Council website and held on the in-house document management system. It outlines methods to recover outstanding amounts and processes that trigger steps or actions in the recovery of debt.
A recent review of our aged receivables
processes has highlighted that the Council has not operated this as efficiently
and effectively as it could have. Changes have been put in place and with the
recent upgrade to MagiQ Cloud staff are now progressing to use the Debt
Management module within the system. As well as this, improvements are being
made to monthly trial balances circulated to module managers, an aged listing
is provided to the Executive Team and going forward this report will become a
regular quarterly report provided to the Audit and Risk Committee.
RECEIVABLES TRIAL BALANCE REPORT
The following dashboard triggers have been assigned on the report:
Rates
Outstanding rates are broken down by financial years. As per the Local Government (Rating) Act 2002 there is a limitation of time for the recovery of unpaid rates. Any rates older than 6 years can not be recovered and the Council is required to write off.
There are several processes available for Council to collect outstanding rates balances other than the normal debt management processes, ability to apply penalties on unpaid instalments and prior years balances, and the Act gives further powers to Council allowing rates to be recovered through rating sales. Also, outstanding rates on a property are required to be settled in full at time of change in ownership.
Rates receivables includes both district and regional rates. The Council has a contract with Environment Canterbury (Ecan) to manage their rates processing and collecting on Mackenzie District properties.
At 31 December 2022 the rates receivable balance (excluding credits) was $1,687,077 of which $1,529,164 relates to the 2022-2023 rating year (91%). As well there were future rates prepayments of $2,461,296. A number of ratepayers pay the full annual rates at instalment one, including the council for its properties and the electricity companies for the generators.
Total rates levied for the year were $19,385,315 (regional council $2,653,561, district council $14,549,351).
Other Receivables
All other receivables are broken down by months. 3+ months are further broken down. Active management includes those outstanding balances that have either payment arrangements in place, are in dispute, debt collection processes are in place, or have been referred to a debt collection agency.
Animal Control
Outstanding 3+ months animal control balances are $15,596 at 31 December. Animal registration is charged annually in July and is payable by the end of that month. Several of the outstanding balances relate to unpaid registrations from previous years and relate to deceased and transferred from the district animals.
Water Billing
Water billing was in the past only charged out once annually, in July for the previous year. This was due to the invoicing system unable to proportion the water allowance over multiple readings. We hope to change this moving forward.
Statements have not been produced although reminder letters have been sent.
Sundry Debtors
The large two month balance relates to an invoice raised for commercial residual waste and recycling from March to October 2022 disposed at Redruth Landfill, Timaru, as a result of a change in our waste management contract for commercial waste disposal.
Staff Debtors
Council staff are entitled to apply for a BP fuel card. The Council initially pays the bill and then on-charges via staff debtor accounts. Staff are also able to purchase personal goods via a number Council suppliers which are also paid by Council and then on-charged. Staff are required to have a deduction arrangement set up that regularly deposits to their staff debtor account.
Building Consents
Building consent fees are raised at the time of building consent application but are often not due until certain conditions or inspections have been met or completed. At 31 December the 3+month balances were made up of four large consents all with payment conditions in place. Memos are included on these accounts and staff regularly monitor the arrangements in place.
Resource Consents
Resource consent fees are raised at the time of application but are often not due until certain conditions have been met or completed. This can be up to five years after the consent was initially applied for. Also, resource consents include charges for financial and reserve contributions which are often given time allowance for payment due to the value of each contribution. At 31 December the 3+month balances were made up of four consents all with payment conditions in place. Memos in regards Council decisions on payment arrangements are loaded against each resource consent debtor and these are regularly monitored.
Pukaki Airport
Pukaki Airport debtors relate to landing fees at the airport. These are charged quarterly with a number of debtors paying in advance.
File Reference: NA
Author: Sandy Hogg, Manager - Finance
Authoriser: Murray Dickson, GM - Strategic Financial Management and Commercial Services
Attachments: 1. ARC Finance
WorkPlanFeb23 ⇩
2. National
3-Waters finance programme ⇩
Purpose of Report
To provide updated details of the proposed 2022-2023 finance team related work programme for Audit and Risk.
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1. That the report be received. |
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2. The Audit and Risk Committee notes the updated 2022-2023 Finance Work Plan, noting potential disruption from the national 3-Waters Programme requests. |
background
As part of a continuous development of good business practice, Council finance staff have commenced a finance team work programme relating to high level audit & Risk Committee responsibilities. This will be reported on at each Audit and Risk Committee meeting.
The work programme will be shown on a rolling twelve month period and each project will be reported on in relation to progress. As the programme is a “living” document, new projects will be added and existing projects reviewed.
Any additional programmes from the previous quarterly report are shown highlighted in green. Any changes to timelines are shown in orange with the original timeline crossed out.
Audit & Risk Committee Work Programme
There is currently no work programme for the Audit and Risk Committee (this finance related programme is a subset). The Chief Executive and the GM Strategic Financial Management and Commercial Services will work with the Chair of the Committee to develop one.
OVERVIEW OF FINANCE WORK PROGRAMME
Internal Reporting
Currently within the internal reporting area there are four identified projects of which two are reported to the committee each meeting - aged receivables report and risk register. The other projects relate to internal audit processes and Alpine Energy.
Within statutory reporting currently identified are the annual reports for 2022 and 2023, 2023-2024 annual plan, 2024-2034 long term plan and the Debenture Trust Deed (LGFA).
There are detailed timelines and project reporting for the annual report, plan and long-term plan, this work programme attached shows more of an overview on each rather than specific work streams.
Other Operational Projects
Four other projects have been identified and they include insurance, local body elections, rating review and tax governance framework – independent advice.
National 3-Waters Requests
As the National Transition Unit’s workplans have become clearer there is substantial work for the Council operational and finance teams – we are working trough resourcing including external assistance, however it is becoming clear that this may impact the attached workplan. Activities required prior to 30 June 2022 are concerning from a workload/prioritisation perspective. We will present further information of the latest 3waters programme at the meeting. In the interim a recent version of the NTU’s Finance workplan is in Attachment 2 to give the committee a high level view of the demands, and their importance to Council.
KEY CHANGES FROM PREVIOUS DRAFT PROGRAMME
Internal Reporting – Internal Audit
An additional review – of payroll processes is currently underway. Following its completion and sharing the recommendations with the business a report will come to the Committee.
Finance business process mapping is being undertaken for the Council’s budgeting model, although this was started in November the actual budgeting work has taken priority and completion of the mapping documentation will not occur until April 2023. Due to the delay with the audit of the 2021-2022 annual report the process mapping of building consents has been pushed out until April 2023 to allow staff to complete the annual report audit and the 2023-2024 annual plan and budgets.
A new task has been added in for end of year finance processes and this will be completed in June 2023.
Statutory Reporting – 2021-2022 Annual Report and Debenture Trust Deed
Audit NZ have informed the Council that the 2021-2022 annual report audit will not occur until the first quarter of 2023. They will commence on 13 March. As a result of the audit delay this also affects the assurance audit of Council’s debenture trust deed, this is completed by Audit NZ once the main audit is completed.
Other Operational Projects – Tax Governance Framework (PWC)
As a result of the delay in the Council’s 2021-2022 annual report, the annual report tax disclosures have been realigned to the audit timeline.
RESOLUTION TO EXCLUDE THE PUBLIC
