Agenda of Risk and Assurance Committee - Thursday, 15 October 2020

Risk and Assurance Committee 15 October 2020

Recommendations in reports are not to be construed as Council policy until adopted by Council.

Agenda

1. Apologies

2. Public Forum

3. Items not on the Agenda

4. Order of Business

5. Declaration of Conflicts of Interest

6. Public Excluded Business to be Transferred into the Open

7. Minutes

Minutes to be Confirmed

7.1 Risk and Assurance Committee Minutes - 15 June 2020 1

8. Reports

Information Only

8.1 Committee Chairperson's Report 1

Attachment 1 - Risk & Assurance Work Programme 1

Attachment 2 - Risk & Assurance Completed Work Programme 1

8.2 Chairman's Discretionary Fund 2019/20 1

Attachment 1 - Regional Council RYDA Update 1

8.3 Expenditure and Koha Report for the year ended 30 June 2020 1

Attachment 1 - BOPRC Expenditure Report 1 July 2019 to 30 June 2020 1

Attachment 2 - BOPRC Koha Report 1 July 2019 to 30 June 2020 1

8.4 Setting audit fees for the upcoming LTP 2021-2031 audits 1

Attachment 1 - OAG Letter to local authorities on audit fees LTP 2021-2031 1

8.5 2019/20 Draft Annual Report review 1

Attachment 1 - BOPRC DRAFT Annual Report 2019-20 Summary - RAC October 2020 1

Supporting Document 1 - BOPRC DRAFT Annual Report 2019/20 - RAC October 2020

8.6 Local Government Official Information and Meetings Act 1987 - Annual Report 1 July 2019 to 30 June 2020 1

Attachment 1 - LGOIMA Requests 2019-20 1

8.7 Internal Audit Update and Audit Plan 1

Attachment 1 - Internal Audit Work Plan 2020-23 1

Attachment 2 - Executive Summary - Conflicts of Interest Management Internal Audit 1

9. Public Excluded Section

Resolution to exclude the public

Excludes the public from the following parts of the proceedings of this meeting as set out below:

The general subject 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(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

Item No.	Subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Grounds under Section 48(1) for the passing of this resolution	When the item can be released into the public
9.1	Public Excluded Risk and Assurance Minutes - 15 June 2020	As noted in the relevant Minutes.	As noted in the relevant Minutes.	To remain in public excluded.
9.2	IRD Risk Review of Bay of Plenty Regional Council	Withholding the information is necessary to maintain legal professional privilege.	48(1)(a)(i) Section 7 (2)(g).	To remain in public excluded.
9.3	Key Risk Register Update - September 2020	Withholding the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.	48(1)(a)(i) Section 7 (2)(j).	To remain in public excluded.
9.4	Annual Report on Legal Services & Legislative Compliance	Withholding the information is necessary to maintain legal professional privilege; Withholding the information is necessary to enable any local authority holding the information to carry out, without prejudice or disadvantage, commercial activities; Withholding the information is necessary to enable any local authority holding the information to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).	48(1)(a)(i) Section 7 (2)(g); 48(1)(a)(i) Section 7 (2)(h); 48(1)(a)(i) Section 7 (2)(i).	To remain in public excluded.
9.5	Rates Setting 2020/21 Update	Withholding the information is necessary to maintain legal professional privilege.	48(1)(a)(i) Section 7 (2)(g).	To remain in public excluded.

Minutes to be Confirmed

9.1 Public Excluded Risk and Assurance Minutes - 15 June 2020

Information Only

9.2 IRD Risk Review of Bay of Plenty Regional Council

Attachment 1 - BOPRC - Ernst & Young - Tax Risk Management Report October 2020

9.3 Key Risk Register Update - September 2020

Attachment 1 - Key risk register - September 2020

Attachment 2 - KRR - Heat Map Sept 2020

9.4 Annual Report on Legal Services & Legislative Compliance

9.5 Rates Setting 2020/21 Update

10. Public Excluded Business to be Transferred into the Open

11. Readmit the Public

12. Consideration of Items not on the Agenda



Report To:	Risk and Assurance Committee
Meeting Date:	15 October 2020
Report Writer:	Mat Taylor, General Manager, Corporate
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	To provide an update on individuals and/or organisations who required financial assistance using the Fund.

Chairman's Discretionary Fund 2019/20

Executive Summary

The Chairman’s Discretionary Fund has been operated by the Chairman of the Regional Council for the last three trienniums. The fund was establish to provide financial assistance for individual and/or organisations to participate in events/activities that meet certain criteria.

In the 2019/20 financial year one request totalling $5,000 was accepted.

· Rotorua Youth Awareness (RYDA)

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, Chairman's Discretionary Fund 2019/20.

1. Introduction

The Chairman’s Discretionary Fund has been operated by the Chairman of the Regional Council for the last three terms within parameters. The purpose of the fund is to:

· Assist an individual to participate in an event or activity that will further their personal development in their chosen field. The Fund provides financial assistance for registration, materials, flights and accommodation to help the individual achieve their goals. This is limited to $5,000.

· Assist an organisation to participate in an event or activity that has an alignment with Regional Council outcomes. This is limited to $5,000 per organisation.

· In exceptional circumstances, determined jointly by the Chairman and Chief Executive, funding can be provided to organisations above the $5,000 limit.

· All funding allocated from this fund must be consistent with the sensitive expenditure policy and directly link to Council outcomes.

The budget for this Fund is held by the Chief Executive. In 2019/20 the budgeted amount was $20,848.

1.1 Alignment with Strategic Framework

1.1.1 Community Well-beings Assessment

Dominant Well-Beings Affected

þ Environmental

þ Cultural

þ Social

þ Economic

2. 2019/20 Chairman’s Discretionary Fund Activity

	Requests Accepted	Amount
1	Rotary Youth Driver Awareness (RYDA)	$5,000

2.1 Rotary Youth Driver Awareness (RYDA)

RYDA run workshops with high school students, educating them on driver safety and distraction. The programme focuses on cognitive development and is a risk awareness programme. Four hundred and eighty-five students in the Bay of Plenty region from 4 different schools, their families and friends benefited from the workshops held prior to COVID-19.

3. Considerations

3.1 Risks and Mitigations

3.2 Climate Change

3.3 Implications for Māori

3.4 Community Engagement

This item contributes to the ‘A Vibrant Region’ Community Outcome in the Council’s Long Term Plan 2018-2028.

3.5 Financial Implications

This work is being undertaken within the current budget held by the Chief Executive and will continue to be included in a budget held by the Chief Executive..

4. Next Steps

Attachments

Attachment 1 - Regional Council RYDA Update ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	15 October 2020
Report Writer:	Debbie Hyland, Finance & Transport Operations Manager
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	Provide supplier and koha expenditure for the twelve months ended 30 June 2020

Expenditure and Koha Report for the year ended 30 June 2020

Executive Summary

This report provides open and transparent financial information about Council’s supplier spend. The annual supplier spend report provides total spend per supplier where the total spend is greater than $50,000 (excluding goods and services tax) for the twelve months ended 30 June 2020. This report incorporates Council’s koha expenditure for 2019/20.

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, Expenditure and Koha Report for the year ended 30 June 2020.

1. Introduction

This annual supplier spend report provides open and transparent information of Council’s significant payments to third parties including suppliers, contractors and consultants for the year ended 30 June 2020. It also provides details of koha spend.

1.1 Alignment with Strategic Framework

1.1.1 Community Well-beings Assessment

Dominant Well-Beings Affected

þ Environmental

þ Cultural

þ Social

þ Economic

Council’s expenditure and koha report for the year ended 30 June 2020 covers all aspects of the Community Well-beings.

2. Information extraction

The expenditure information has been extracted from the Council’s financial management system. The annual supplier spend report (Appendix 1) and koha spend (Appendix 2) for the twelve months ended 30 June 2020 is provided.

The supplier spend report lists the total spend per supplier for the period stated, where the total is greater than $50,000 (excluding GST). This helps to keep the report length and detail within a manageable size.

This report provides information for expenditure values only, and it does not show where revenue has been received to offset payments. Statutory bodies e.g. Inland Revenue and ACC, are excluded from the annual supplier spend report. Some of the information is redacted where appropriate.

3. Considerations

3.1 Risks and Mitigations

The matters addressed in this report are of an informative nature and there is no need to consider the risks and mitigations.

3.2 Climate Change

The matters addressed in this report are of an administrative nature and there are no climate change impacts associated with this reporting.

3.3 Implications for Māori

The giving of koha is a cultural practice that is widely supported and implemented. Koha is a gesture of reciprocity, respect and manaakitanga. Koha can be expressed by way of gifts (financial or non-financial) or support in-kind. It is common to acknowledge cultural expertise via koha or to provide koha to grieving whānau during tangihanga. There are positive implications of the act of koha, particularly in demonstrating an understanding and appreciation of tikanga Māori.

3.4 Community Engagement

Engagement with the community is not required as the recommended proposal / decision relates to internal Council matters only.

The report provides information to Council relating to expenditure and koha. As such no community engagement is required.

3.5 Financial Implications

There are no material unbudgeted financial implications and this fits within the budget for 2019/20.

4. Next Steps

Staff will finalise the 2019/20 Expenditure and Koha Report following the completion of the external audit and the adoption of the Annual Report 2019/20 which is expected to take place at the end of October 2020.

Attachments

Attachment 1 - BOPRC Expenditure Report 1 July 2019 to 30 June 2020 ⇩

Attachment 2 - BOPRC Koha Report 1 July 2019 to 30 June 2020 ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	15 October 2020
Report Writer:	Debbie Hyland, Finance & Transport Operations Manager
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	Report on how audit fees will be set for the 2021-31 LTP audits

Setting audit fees for the upcoming LTP 2021-2031 audits

Executive Summary

The purpose of this report is to inform the Risk and Assurance Committee of the approach that will be taken by Audit New Zealand to set their audit fees for the Long Term Plan 2021-2031, as set out in the attached letter from the Office of the Auditor General.

Recommendations

That the Risk and Assurance Committee:

1. Receives the report, Setting audit fees for the upcoming LTP 2021-2031 audits.

1. Introduction

A letter from John Ryan, Controller and Auditor-General, outlines how audit fees will be set for the upcoming 2021-31 LTP audits. After three years, there are cost pressures that will be addressed in the setting of the 2021-31 LTP audit fees.

This report outlines the approach that Audit New Zealand will take in the setting of fees, cost recoveries and managing non-delivery.

1.1 Alignment with Strategic Framework

The Way We Work

We deliver value to our ratepayers and our customers.

1.1.1 Community Well-beings Assessment

Dominant Well-Beings Affected

þ Environmental

þ Cultural

þ Social

þ Economic

The delivery of the 2021-31 Long Term Plan covers all aspects of the community well-beings

2. 2021-31 Long Term Plan External Audit Fees

2.1 Audit fees

The 2021-31 LTP audit fees will be set on the fee established for the 2018-2028 LTP audit (excluding any additional fee recoveries) plus an increase of 7.5% (an inflationary increase of approximately 2.5% per annum).

2.2 Approach to cost recoveries and managing non-delivery

We are expected to provide our auditors with appropriate quality information, to ensure our auditors can focus on carrying out an efficient and effective audit.

The fees that will be set by Audit NZ are on the premise that we perform to expectations in providing our LTP documents and supporting underlying information for audit.

If we do not perform to expectation, auditors will be able to seek reasonable additional fees to pay for the impact on their costs. Any additional fee recoveries would first be assessed by the Office of the Controller and Audit-General for reasonableness.

2.3 Additional information

Refer to the letter received from John Ryan (Appendix 1) dated 18 August 2020, which includes further guidance on:

- Expectation of what is included in the fee of the consultation document and LTP (complete information, appropriate levels of quality, number of draft documents to be reviewed by Audit NZ and no significant changes in structure or level of operation);

- Implications of non-delivery and additional cost recoveries; and

- Expected documentation to support consultation document.

3. Considerations

3.1 Risks and Mitigations

This report is for informative purposes only and there are no additional risks or mitigations to be considered.

3.2 Climate Change

The matters addressed in this report are of a procedural nature and there are no additional climate change impacts.

3.3 Implications for Māori

There are no direct implications for Māori arising as a result of this report.

3.4 Community Engagement

Engagement with the community is not required as the recommended proposal / decision relates to internal Council matters only.

3.5 Financial Implications

There are no material unbudgeted financial implications and this fits within the allocated budget. Based on 2018-28 LTP external audit fees of $79,000 (excluding GST), we can expect an approximate fee of $85,000 (excluding GST) for 2031-31 LTP. This will be accommodated within the overall audit fee budget of $138,450.

4. Next Steps

We expect Audit NZ to be in contact shortly to discuss the Audit Engagement Letter and audit fees for the 2021-31 LTP.

Attachments

Attachment 1 - OAG Letter to local authorities on audit fees LTP 2021-2031 ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	15 October 2020
Report Writer:	Nolene Naude, Financial Accounting Team Lead; Debbie Hyland, Finance & Transport Operations Manager and Graeme Howard, Corporate Planning Lead
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	Review of the 2019/20 Annual Report and presentation by Audit NZ

2019/20 Draft Annual Report review

Executive Summary

This report presents the Draft Annual Report 2019/20 and Draft Annual Report Summary 2019/20 to the Risk and Assurance Committee. These reports contain the draft financial and non-financial performance results of the Council for the year ended 30 June 2020. The draft Annual Report contains both Council (Parent) and Group results. The Council Group results include our 100 percent Council-owned subsidiary, Quayside Holdings Limited and majority owned Council-owned subsidiary, Toi Moana Trust. Quayside have provided Council with a final draft of the annual report. Staff have prepared a set of draft consolidated accounts for the Council Group for review by Audit New Zealand using the final draft set of accounts received from Quayside.

Council’s draft operating surplus for year two of the Long Term Plan 2018-2028 is $2.8 million which is $0.2 million higher than the budgeted surplus of $2.6 million. Council delivered its work programme through operating expenditure of $135.7 million (2019: $126.3 million) compared to a budget of $134.1 million; this is $1.6 million higher than budget. Total revenue is $138.5 million, this is $1.8 million higher than budget of $136.7 million (2019: $144.6 million). Council delivered a significant capital works programme with expenditure of $36.4 million (2019: $56.2 million) compared to a budget of $59.4 million; this is $23 million lower than budget partly due to the impacts of Covid-19.

Council’s Long Term Plan 2018-2028 includes 33 performance measures with targets for 2019/20. We achieved 28 (85%) of the targets that were set for the year ended 30 June 2020. The main reasons for financial and non-financial variations are outlined in sections 2.1 and 2.2 of this report. This external audit of the Council for the year ended 30 June 2020 is currently in progress. Staff anticipate that Council will receive verbal audit clearance from Audit New Zealand on 15 October 2020. The final 2019/20 Annual Report will be presented for adoption by Council on 29 October 2020.

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, 2019/20 Draft Annual Report review.

1. Introduction

This report presents the Draft Annual Report 2019/20 and Draft Annual Report Summary 2019/20 against the delivery of year two of our Long Term Plan 2018-2028, as updated through our Annual Plan 2019/20. These reports contain the draft financial and non-financial performance results of the Council for the year ended 30 June 2020.

The second half of 2019/20 saw the emergence of COVID-19 which has had an impact that is unprecedented in recent memory. While New Zealand has been spared widespread illness and death, we have not been spared significant economic harm. Council’s response has been shaped by a strong desire to recover from COVID-19 as quickly as we can.

Once the extent of COVID-19 started to become clear, the Regional Council undertook necessary preparations including the testing of our information technology capabilities to enable staff to work from home. When the Government shifted to Level 4 (Lockdown) on 26 March 2020, we restricted our service delivery to the essential and priority services we provide our community and increased resourcing where needed, for example by increasing the staffing of Civil Defence Emergency Management services. Due to the restriction of the services we could operate under Level 4 we were not able to perform all of the services we normally would and therefore some levels of service we committed to in our Long Term Plan were affected, both positively and negatively. Commentary describing the impact of COVID-19 on the Level of Service provided to our community is included in the draft Annual Report 2019/20.

The Council meeting on the 29 October 2020 is scheduled to receive and adopt the Annual Report and Annual Report Summary for the year ended 30 June 2020. The supporting documents, Draft Annual Report 2019/20 and Draft Annual Report Summary 2019/20, are provided to the Audit and Risk Committee in its role to receive and review the draft Annual Report.

The Audit New Zealand Director, Leon Pieterse, and senior audit manager Anton Labuschagne will be in attendance at the meeting to discuss the overall audit process.

1.1 Legislative Framework

The Draft Annual Report 2019/20 and Draft Annual Report Summary 2019/20 is prepared in accordance with the requirements of the Local Government Act 2002 and the Local Government (Financial Reporting and Prudence) Regulations 2014.

1.2 Alignment with Strategic Framework

The Annual Report 2019/20 provides a report on the financial and non-financial performance of Council as set out in its Long Term Plan 2018-2028 and Annual Plan 2019/20. As a result it supports the delivery of all four Community Outcomes and the Way We Work.

1.2.1 Community Well-beings Assessment

Dominant Well-Beings Affected

þ Environmental

þ Cultural

þ Social

þ Economic

The Annual Report 2019/20 provides a report on the financial and non-financial performance of Council and as such promotes all four aspects of community well-being.

2. Overview of performance for 2019/20

The Draft Annual Report 2019/20 contains both Council and Group results. Group results include our 100 percent Council-owned subsidiary, Quayside Holdings Limited. Quayside Holdings has a 54.14 percent share in the Port of Tauranga Limited.

Quayside’s Annual Report 2019/20 will be approved by its board of directors in October 2020. Quayside have provided Council with a final draft of the accounts that staff have used to prepare a set of draft consolidated accounts for the Council Group for review by Audit New Zealand.

2.1 Financial Performance

The following section provides a summary of financial results for the year ended 30 June 2020 as per the Draft Annual Report 2019/20.

Statement of Comprehensive Revenue and Expense	Annual Plan	Council	Budget v Actual Variance	Group
	2019/20	2019/20	2019/20	2019/20
	$000	$000	$000	$000
Operating Revenue	127,676	128,378	702
Capital Revenue	9,022	10,153	1,131
Total Operating Revenue	136,698	138,529	1,831 higher	465,105
Total Operating Expenditure	(134,051)	(135,740)	1,689 higher	(360,130)
Equity Accounted Investees	0	2	2	1,650
Income Tax				(29,982)
Total Surplus / (Deficit) After Tax	2,647	2,791	144 higher	76,643
Equity Holders of Parent	2,647	2,791		35,968
Non-Controlling Interest				40,675

2.1.1 Operating Revenue

Draft operating revenue is $138.5 million this is $1.8 million higher than budget of $136.7 million. The key budget variances are:

· Trading and other revenue - $5.5 million higher than budget of $18.0 million due to:

o Unbudgeted recoveries from the National Emergency Management Agency (NEMA) due to COVID-19 of $0.87 million, and White Island response costs of $0.38 million.

o Unbudgeted revenue received from members of the National Biocontrol collective of $0.48 million. This is fully offset by operating expenditure.

o Subvention (tax) payment from Quayside Holdings Limited to Council of $1.1 million which is unbudgeted due to the payment being reliant on the performance of Quayside and its subsidiaries.

o Reclassification of the movement in doubtful debts provision has resulted in additional revenue of $0.80 million.

· Lower fares from public transport - $1.6 million due to reduced patronage during Covid-19. Council received additional subsidies from NZTA to offset the majority of this variance.

· Subsidies and grant revenue - $2.9 million lower than budget of $23.0 million primarily due to slower than planned delivery on the Rotorua Te Arawa Lakes land use change incentives programme which impacts the timing of funding received from the Ministry for Environment.

· Finance revenue - $1.3 million lower than budget mainly due to low interest rates on term deposits and investment returns through Toi Moana Fund which is managed by Quayside on behalf of Council. This is partially due to the economic impacts associated with Covid-19.

· Revenue for capital projects - $10.2 million and this is $1.1 million higher than budget of $9.0 million mainly due to timing issues associated with flood repair capital works and the associated insurance recoveries.

2.1.2 Operating Expenditure

Draft operating expenditure is $135.7 million and this is $1.6 million higher than budget of $134.1 million. Key budget variance are:

· Integrated Catchments - $8.8 million lower than budget primarily due to Rotorua Te Arawa Lakes land use change incentives programme

· Resource Regulation and Monitoring - $1.7 million higher than budget due to additional work due to the National Biocontrol Collective and catfish control promotions, additional resource consent application costs, and higher legal costs in regulatory compliance

· Public Transport - $1.6 million lower than budget mainly due to lower than planned bus operational costs

· Regional Development - $2.9 million higher than budget due to the early payment to Whakatāne District Council for the Awatarariki Fanhead Managed Retreat and timing on the final milestone payment for the Tauranga Tertiary Campus

· Regional Planning - $1.4 million lower than budget mainly due to an $0.8 million underspend on planning resources, and $0.3 million in governance due to delaying the Representation Review and overall lower variable costs through Covid-19 response

· Emergency Management - $0.5 million higher than budget due to increased response costs offset by lower employee costs

· Corporate Services - Finance costs of $3.2 million is $0.4 million lower than budget, the lower interest rates experiences during the year has contributed to this variance.

· Other Losses - unbudgeted items totalling $5.6 million including $4.5 million expense relating to Impairment of Regional and Wallingford House, and loss on disposal of property plant and equipment. These are non-cash transactions.

2.1.3 Capital Expenditure

Capital expenditure is $36.4 million and this is $23 million lower than budget of $59.4 million. The key budget variances within the capital projects are detailed below:

· Rivers and Drainage - $9 million lower than budget due to:

o Rangitāiki Floodway project delays resulting in a budget carry forward of $1.35 million.

o Engineering investigations during the year indicated that $1.5 million of work scheduled on the Duke Street pump station in Ōpōtiki was not required.

o April 2017 Flood Repair works are approximately $2.7 million lower than budget due to the restrictions on rock material during the summer construction season.

· Public Transport - $1.1 million lower than budget mainly due to Regional Integrated Ticketing Solution implementation delays. This project has been delivered in July 2020.

· Corporate Property - $6.5 million lower than budget mainly due to the adjusted delivery programme for the Buildings Upgrade Project and a change to the plans for Wallingford House in Tauranga and delays which occurred through the COVID-19 lockdown.

· Rotorua Te Arawa Lakes - $4.0 million lower than original budget, this is relating to the Tikitere Re-diversion project which did not progress.

2.1.4 Treasury

Total debt as at 30 June 2020 is $191 million from the Local Government Funding Agency, with $50 million on-lent to Quayside. $141 million was borrowed to fund capital expenditure across multiple years of the Long Term Plan, at 30 June 2020 $91.4 million of this is core debt. The average cost of debt at 30 June 2020 is 1.66%.

Total investments of $188 million plus $50 million on-lent to Quayside. The $45 million Toi Moana Fund was transferred to Quayside on 1 July 2019. These funds are attributed to general and reserves, as well as unspent funds borrowed from the LGFA to pre-fund capital expenditure two years in advance.

2.1.5 Council Group

Bay of Plenty Regional Council holds a 100 percent shareholding in Quayside Holdings Limited (Quayside). Quayside holds and manages a majority shareholding in the Port of Tauranga Limited. Quayside provides long term financial security to Regional Council through a diversified investment portfolio and by ensuring the Port of Tauranga shareholding is managed in an effective and commercial manner.

Quayside has continued to diversify its portfolio of assets to support shareholder growth and sustained benefits to the Bay of Plenty region.

COVID-19 has had a significant impact on the many segments of our local economy. The performance of the Quayside portfolio over this period to date has remained strong.

The Port of Tauranga had a solid year despite the impact of the first COVID-19 lock-down and changes in demand for logs. The Port showed a minor decline in profitability and distributions for the year.

Quayside showed strong financial performance across most of its portfolio, delivering on both its return and diversification expectations.

Quayside investments during the year included the joint venture Lakes Commercial Developments Limited, which completed of the Regional Council offices on Fenton Street, Rotorua.

Significant advances were also made by Quayside on its development project east of Tauranga, the Rangiuru Business Park.

Quayside provided a record dividend to shareholders - net distributions of $32.1 million to Bay of Plenty Regional Council and $5.6 million to Perpetual Preference Shareholders. Ratepayers continue to benefit from enhanced regional development and future-proofed investment returns - Quayside has provided distributions and capital worth over $500 million for the benefit of Bay of Plenty Regional Council and regional stakeholders.

2.2 Non-Financial Performance

Through the Long Term Plan 2018/2028, Council set the Levels of Service it will provide to the community for each of the nine Groups of Activities. Council also set performance measures and targets for those Levels of Service.

In 2019/20 Council achieved 28 out of 33, or 85% of targets for these measures. While COVID-19 has had an impact on a number of our services, we have still managed to see improvement in some of our levels of service, including resource consent processing times and the replacement of non-compliant burners in the Rotorua airshed.

By comparison, in 2018/19 Council reported on 32 KPIs and achieved 25 (or 78%) of the targets targets and did not achieve seven.

Of the 33 measures that Council used to track its performance in 2019/20, the summary graph below shows that:

- Council achieved the targets for 28 measures (85%)

- Council did not achieve the targets for three measures (9%)

- Two measures are no longer considered applicable (6%)

2.2.1 Performance Measures not achieved

Further detail on the measures where the target has not been met are provided in the table below.

Group of Activities	Performance Measure	Result	Target	Comment
Transportation	Number of passenger transport trips taken in the region	2,375,740	2,877,000	The target for 2019/20 was not achieved, largely due to the impact of COVID-19. At the end of quarter three, patronage was up 2.6 percent on the same period in the previous year, despite having operated for one week during COVID-19 Alert Level 4. Throughout Levels 3 and 4, a reduced level of bus services was operated with free fares to ensure access to essential services. A significant decrease in patronage was noted during this period. All services returned to normal when Level 2 was announced, resulting in a rebound in patronage. Fares continued to be free to the end of June. Overall, quarter four patronage was down 58 percent on the same period in the previous year. Council introduced a new ticketing system for bus services in June 2020. This resulted in a period where not all bus trips were recorded through ticket machines. This occurred during a period of zero fares, thereby having no impact on fare revenue and did not impact service levels. For the full year, patronage decreased by 12.5 percent, resulting in the target being missed.
Regional Planning and Engagement	Percentage of draft council and committee meeting minutes that are published on the council website within 10 working days after the meeting	89%	95%	The target for 2019/20 was not achieved. 57 out of 64 minutes of meetings were published on time, resulting in 89 percent achievement. Most of the late meeting minutes happened prior to COVID-19 and was due to seeking external input that could not be obtained in time. COVID-19 affected the result negatively by decreasing the number of planned meetings, making it more difficult to catch up with the target, and implementing new practises such virtual meetings which impacted on established routines and processes.
Emergency Management	Number of Council delivered initiatives to promote community resilience and safety	6	8	The target for 2019/20 was not achieved. Six community initiatives were completed and two were partially completed, which is due to operational commitments (Whakaari/White Island, COVID-19) being prioritised.
Regional Development	Sector strategies are reviewed and updated every three years	Not Applicable	1	This measure is no longer applicable so no data is available. Following a review and reset of the Bay of Connections framework in late 2018/19, which saw Council engage with more than 250 stakeholders, a shift in focus for Bay of Connections occurred which has meant this measure is no longer reported on. Changing from a sector strategy based approach, key priority areas were reset to include the Māori economy, infrastructure, workforce development and supporting the progression of a low carbon, circular economy
Regional Development	Percentage of industry stakeholders who are satisfied with Bay of Connections	Not Applicable	80%	This measure is no longer applicable so no data is available. Following a review and reset of the Bay of Connections framework in late 2018/19, which saw Council engage with more than 250 stakeholders, a shift in focus for Bay of Connections occurred which has meant this measure is no longer reported on. Changing from a sector strategy based approach, key priority areas were reset to include the Māori economy, infrastructure, workforce development and supporting the progression of a low carbon, circular economy

3. Considerations

3.1 Risks and Mitigations

There are no direct risk implications arising as a result of this report.

3.2 Climate Change

There are no direct climate change implications arising as a result of this report.

Climate Change is identified as a strategic challenge facing the Bay of Plenty Region. The Annual Report 2019/20 provides a report on the financial and non-financial performance of Council this includes work delivered through Groups of Activities to understand the implications of and to respond to the implications of Climate Change.

3.3 Implications for Māori

There are no direct implications for Māori arising as a result of this report.

The Annual Report 2019/20 provides a report on the financial and non-financial performance of Council. This includes reporting on work to support Māori participation in Council decision-making processes.

3.4 Community Engagement

Engagement with the community is not required as the recommended proposal / decision relates to internal Council matters only.

3.5 Financial Implications

This report and the supporting documents highlight a strong financial performance by Council despite the impacts of the Covid-19 pandemic on Council’s service delivery and in particular our capital works programme. The majority of the capital budget underspend in 2019/20 has been carried forward through to future years through the Annual Plan 2020/21 process. A further capital budget carry forward (into 2020/21) of approximately $6 million will be required as part of the adoption of the Annual Report 2019/20. Council has pre-funded its capital works programme through borrowings from the Local Government Funding Agency. These figures will be confirmed once the final audit is completed by Audit NZ.

4. Next Steps

At the time of this report, the external audit of the Bay of Plenty Regional Council for the year ended 30 June 2020 is currently being finalised and staff anticipate that Council will receive verbal audit clearance from Audit New Zealand on 15 October 2020.

As such, some minor changes to the Draft Annual Report 2019/20 and Draft Annual Report Summary 2019/20 may be required. A schedule of any such changes will be tabled at the Risk and Assurance meeting on the 15 October 2020.

Further changes, for example rounding, may be made for the final Annual Report. The final Annual Report and Annual Report Summary for 2019/20 will be presented for adoption by Council on 29 October 2020.

Attachments

Attachment 1 - BOPRC DRAFT Annual Report 2019-20 Summary - RAC October 2020 ⇩

Supporting Document 1 - BOPRC DRAFT Annual Report 2019/20 - RAC October 2020 ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	15 October 2020
Report Writer:	Jessica Easton, Legal and Commercial Manager
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	Report on requests for information from Council made under the Local Government Official Information and Meetings Act 1987 from 1 July 2019 to 30 June 2020.

Local Government Official Information and Meetings Act 1987 - Annual Report 1 July 2019 to 30 June 2020

Executive Summary

This report provides Council with information relating to the Local Government Official Information and Meetings Act 1987 for the period 1 July 2019 to 30 June 2020.

There were 75 requests for official information during the period.

Council has responded to three investigations of complaints to the Office of the Ombudsmen during the period.

Council has maintained high standards of service in responding to requests for official information with 100% compliance in meeting statutory timeframes.

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, Local Government Official Information and Meetings Act 1987 - Annual Report 1 July 2019 to 30 June 2020.

1. Introduction

The Local Government Official Information & Meetings Act 1987 (LGOIMA) established processes for the public to request and receive official information held by local government agencies.

The LGOIMA gives the public a right to official information and the grounds for withholding any official information are limited. Generally, a local government can only withhold official information on the grounds it is protecting a person’s privacy, commercial sensitivity, considered free and frank advice of officials, prejudicial to negotiations or commercial activity, or subject to legal professional privilege.

Part 2 of LGOIMA prescribes the processes, statutory timeframes and the duty to provide assistance for requests. There is an ability to charge the requester reasonable fees to cover the costs of researching, collating and providing official information.

1.1 Alignment with Strategic Framework

The Way We Work

We continually seek opportunities to innovate and improve.

2. Information Requests

Council received 75 requests for official information during the 2019/2020 financial year. There was a decrease in requests from the previous financial year.

FINANCIAL YEAR	NUMBER OF REQUESTS
2019/20	75
2018/19	132
2017/18	126
2016/17	80
2015/16	67

Table 1 – Number of requests

	Regulatory Services	Corporate	Strategy & Science	Integrated Catchments	CE Office	Total
No. requests	36	20	13	3	3	75
Percent of total	48%	27%	17%	4%	4%	100%
No. requests with charging	18	11	9	3	0	41
Group charging percent of their requests	50%	55%	69%	100%	0%

Table 2 – Group Breakdown of Requests

Almost half of the requests concerned Council’s regulatory activities.

When comparing our figures from the 2019/20 financial year, the deviations for the total percentage of official information requests were as follows - Regulatory Services down 47%; Corporate down 16%; Strategy & Science down 35%; and Integrated Catchments down 85%. Table 2 sets out the requests across the Groups and where charging was imposed.

The ability to charge, when this is considered justifiable, is one tool to discourage potentially frivolous and multiple requests for information that would otherwise be a cost to ratepayers, and as a way of ensuring that third party costs incurred in collating information can be passed on to the requester.

For the 2019/2020 financial year, Council has charged for 54% of our requests (i.e. 41 out of 75 requests) with total invoicing of $16,692.11.

For the 2019/2020 financial year, Council has achieved 100% compliance in meeting statutory timeframes under LGOIMA. This was an improvement on last year’s 99% compliance rate.

Council has also received positive feedback from requesters on the standard of the information provided in its responses, including the following from the Royal Forest & Bird Protection Society of New Zealand “Great records – better than any other councils who have provided.”

Attachment 1 sets out the full list of LGOIMA requests and categories under each Group.

3. Office of the Ombudsmen

If a requester is not satisfied with how their request has been dealt with, the person has the right to seek an investigation by the Ombudsman under section 27(3) of LGOIMA.

The Ombudsman’s’ investigators are encouraging early resolution of a complaint through informal engagement and to avoid full-scale investigations.

We have been advised that from December 2018 the Ombudsman would begin publishing data of LGOIMA complaints received and completed every six months. This data can be found at http://www.ombudsman.parliament.nz/resources-and-publications/oia-complaints-data

For the 2019/2020 financial year, Council has responded to four investigations:

· Proposed charge for LGOIMA request (complaint 50603). K Stowers complained to the Ombudsmen following an email from Council staff that it intended to charge for the time to respond to her LGOIMA request. Following further consideration of the matter, Council advised Ms Stowers on 11 July 2019 that Council would not proceed with the charge and the matter was resolved.

· Request for information discussed at publicly excluded meeting regarding funding for the Awatarariki Managed Retreat during Council’s 12 December 2019 meeting (requested by R Whalley – complaint 522158 ground 522159). Mrs Whalley queried why the sentence ‘as circumstances have changed that require such a decision to be made’ was included in the resolution in the meeting minutes but not the agenda. This was a reference to the discussion in the publically excluded section of the meeting relating to “the change in circumstance for the affected property owners” which is recorded in the confidential meeting minutes above. This information was withheld on the grounds that it was legally privileged information.

Following notice that the Ombudsmen was investigating the matter, Council reviewed the nature of the information. The change in circumstance related to the increasing number of voluntary retreat packages that were being agreed between Whakatāne District Council and affected property owners which required funding from Council to be brought forward to address a funding short fall for the 2019/2020 financial year. Council decided that the information was no longer legally privileged and it was provided to R Whalley on 3 April 2020.

· Request for draft GHD technical assessment report and project brief for the Awatarariki Fanhead (requested by R Whalley – complaint 499033 ground 499034). Council withheld the draft report on the grounds of confidence, prejudice to the supply of similar information, damage to public interest and to avoid prejudice or disadvantage to commercial negotiations as the reports were in draft and the land acquisition negotiations were still ongoing. Council subsequently released the project brief to R Whalley. The Ombudsman released a decision on 14 April 2020 disagreeing that the circumstances met the threshold to withhold the technical report, noting that draft reports could have accompanying explanations and while it may be “unhelpful” to negotiations, it would not be prejudicial. The Ombudsmen recommended that the information be released in full by 29 April 2020, which Council proceeded to action.

· Request for further email in release of documents regarding Awatarariki Management Retreat (requested by R Whalley – compliant 499033 ground 522948). Council released information to R Whalley which was previously withheld under the LGOIMA. Ms Whalley subsequently raised concerns with the Ombudsmen about the completeness of one email that was disclosed. This email was sent from Gerard Willis of Enfocus to Julie Bevan of the BoPRC on 5 November 2019, and it lacks a formal sign off by its author. On 28 May 2020, Council provided the Ombudsmen with an electronic version of the email at issue. The Ombudsmen subsequently advised Ms Whalley that it was satisfied that the email released to her was complete.

The Ombudsmen also investigated a complaint by D Murray regarding his obligation to remove and replace his existing multi-fuel burner in order to comply with Council’s Rotorua Air Quality Control Bylaw 2017. The Ombudsmen gave its decision on 14 May 2020 that Council had engaged in appropriate administrative processes to create the legal provisions preventing Mr Murray from using his multi-fuel burner, including conducting public consultation, and that the Council had not acted unreasonably.

4. Considerations

4.1 Risks and Mitigations

There were no risks identified during the period.

4.2 Climate Change

There are no climate change implications arising from this report.

4.3 Implications for Māori

There are no implications for Māori arising from this report.

4.4 Financial Implications

There are no material unbudgeted financial implications and this fits within the allocated budget.

5. Next Steps

The Council has performed well in responding to LGOIMA requests in the 2019/2020 year and will continue to provide and maintain these high standards of service for the upcoming financial year.

Attachments

Attachment 1 - LGOIMA Requests 2019-20 ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	15 October 2020
Report Writer:	Steven Slack, Risk & Assurance Manager
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	To provide an update an internal audit program and the audit plan.

Internal Audit Update and Audit Plan

Executive Summary

This report provides an update on the status of internal audit activities as at 30 June 2020 and includes:

· The status of internal audit reviews in the current year;

· The status of follow up of internal audit recommendations and management actions to 30 June 2020;

· The proposed Internal Audit Work Plan for the three years 2010/21 to 2022/23 (Appendix 1).

· The Executive Summary for the Conflict of Interest (Appendix 2)

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, Internal Audit Update and Audit Plan;

2 Approves the Internal Audit Work Plan 2020/21, 2021/22, 2022/23, including the detailed work plan for 2020/21.

1. Introduction

This report provides the quarterly update on internal audit activity undertaken by internal audit staff and external internal audit specialists, KPMG, as part of Bay of Plenty Regional Council’s co-sourced internal audit approach. It includes:

· The status of internal audit reviews in the current year;

· The status of follow up of internal audit recommendations and management actions to 30 June 2020;

· The proposed Internal Audit Work Plan for the three years 2020/21 to 2022/23 (Appendix 1);

· The Executive Summary for the Conflict of Interest (Appendix 2).

1.1 Alignment with Strategic Framework

The Way We Work

We continually seek opportunities to innovate and improve.

2. Proposed Internal Audit Work Plan to 2022/23

The first Internal Audit Work Plan was approved by the Audit and Risk Committee in May 2014. This Work Plan is a rolling three-year plan which is reviewed annually.

During 2020, Internal Audit undertook a planning process to refresh the Internal Audit Work Plan for the three years 2020/21 to 2022/23 (provided in
Appendix 1).

A risk based approach has continued to be used to assess the internal audit needs of the Bay of Plenty Regional Council and audit priorities.

We reviewed the Key Risk Register at June 2020, and have incorporated several key risks into the ‘audit universe’ to ensure that the Risk and Assurance Committee has confidence that the mitigations and controls are in place and operating effectively. Once the LTP is finalised, we will revisit the key risks to ensure that they are robust and build these into our audit plans.

In addition, we also held discussions with the Chief Executive, General Managers and Mangers, reviewed prior plans and reviewed the ‘audit universe’ of other Councils.

The Internal Audit work programme for 2020/21 has been developed based on the level of resources currently available. This is primarily one full time Principal Internal Auditor and funding for consultancy services sufficient for two to three reviews – depending on scope.

The proposed detailed work plan for 2020/21 is provided within the overall plan and is shown in the following table.

The Internal Audit Work Plan for the three years 2020/21 to 2022/23 has been given management approval by the Chief Executive and is now provided to the Risk and Assurance Committee for its review and approval.

3. Internal Audit Work Plan 2020/21 Status

Based on the Internal Audit Work Plan 2020/21 as prescribed above, the following table summarises the status of internal audit reviews for 2020/21.

In addition as part of the continuous improvement model adopted by BOPRC, and for the CE, LT, Managers and Staff to engage Internal Audit as a partner in this improvement, within the audit plan is scope for ad hoc reviews at the request of management.

Internal audit has conducted a number of these reviews over the past year resulting in control and efficiency improvements.

4. Internal Audit Follow Up

Internal Audit has reviewed all open management actions as part of the follow up work in the 2019/20 Work Plan.

At the start of the quarter (1 April 2020) there were 59 open management actions.

During the quarter eight actions were closed. The total of actions open as at 30 June 2020 is 51, the majority of these relate to Asset Management (thirteen) and Grants (twelve).

Legislative Compliance – The solution has been purchased, ComplyWith, implementation has been delayed due to the COVID-19 restrictions.

Grants – Four actions were closed during the quarter, with the remainder awaiting the final implementation in Tech 1 which forms part of the Technology roadmap.

Asset Management – The Asset Management Steering Group (AMSG) was re-established in April 2020, currently the group meets fortnightly. The Group is working on the recommendations and building these into the Asset Management Plans that flow into the current LTP process.

Of the open actions 40 are past their original due date. The overdue actions relate predominately to Asset Management (thirteen), Grants (ten) and Legislative Compliance Framework (nine).

5. Completed Internal Audit Reviews

Since the Audit and Risk Committee meeting in June 2020, BOPRC Internal Audit team has completed the Conflict of Interest review.

Conflict of Interest

The overall objective of this Internal Audit was to assess whether BORPC has effective processes and controls surrounding conflict of interest management in place.

The Executive Summary for this review has been included as Appendix 2.

The review result was rated ‘Developing’ under the current rating scale:

The overall rating reflects that while robust processes were found to be operating with respect to identifying and managing potential conflicts of interest for Elected Members, improvements are recommended in how Staff conflicts of interest are managed.

In addition to the rating we identified good practices and processes within the Conflict of Interest processes, particularly:

· Elected Member conflicts of interest processes (including induction training, recording and publishing identified interests, and inclusion of disclosing potential conflicts of interest during Council meetings) were consistent with Office of the Auditor General guidance;

· A number of elements of the conflicts of interest management process for staff (standard operating procedure and disclosure process, additional guidance for Managers, interests registers) are in place.

6. Considerations

6.1 Climate Change

The matters addressed in this report are of a procedural nature and there is no need to consider climate change impacts.

6.2 Financial Implications

There are no material unbudgeted financial implications and this fits within the allocated budget.

7. Next Steps

To approve the Internal Audit Plan as per the recommendations.

Attachments

Attachment 1 - Internal Audit Work Plan 2020-23 ⇩

Attachment 2 - Executive Summary - Conflicts of Interest Management Internal Audit ⇩

Chairperson	Cr David Love
Deputy Chairperson	Bruce Robertson (Independent)
Members	Cr Bill Clark Cr Stuart Crosby Cr Andrew von Dadelszen Cr Te Taru White
Ex Officio	Chairman Doug Leeder
Quorum	Three members, consisting of half the number of members
Meeting frequency	Quarterly

A Healthy Environment
Freshwater for Life
Safe and Resilient Communities
A Vibrant Region
The Way We Work	We continually seek opportunities to innovate and improve.