Agenda of Risk and Assurance Committee

Risk and Assurance Committee

Membership

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

Purpose

Monitor the effectiveness of Council’s funding and financial policies and frameworks to ensure the Council is managing its finances in an appropriate manner.

Monitor the effectiveness of Council's performance monitoring framework.

Ensure that Council is delivering on agreed outcomes.

Role

· Monitor the effectiveness of Council’s funding and financial policies and Council’s performance monitoring framework (financial and non-financial);

· Review Council’s draft Annual Report prior to Council’s adoption;

· Receive and review external audit letters and management reports;

· Approve and review the internal audit plan and review the annual programme report;

· Approve, review and monitor Council’s risk framework and policy;

· Review the risk register;

· Monitor Council’s legislative compliance and receive reporting on non-compliance matters as part of risk management reporting.

Power to Act

To make all decisions necessary to fulfil the role and scope of the committee subject to the limitations imposed.

Power to Recommend

To Council and/or any standing committee as it deems appropriate.

· The Risk and Assurance Committee is not delegated authority to:

· Develop, review or approve strategic policy and strategy.

· Develop, review or approve Council’s Financial Strategy, funding and financial policies and non-financial operational policies and plans.

The Risk and Assurance Committee reports directly to the Regional Council.

Recording of Meetings

Please note the Public section of this meeting is being recorded and will be uploaded Bay of Plenty Regional Council’s web site in accordance with Council's Live Streaming and Recording of Meetings Protocols which can be viewed on Council’s website. The recording will be archived and made publicly available on Council's website within two working days after the meeting on www.boprc.govt.nz for a period of three years (or as otherwise agreed to by Council).

All care is taken to maintain your privacy; however, as a visitor in the public gallery or as a participant at the meeting, your presence may be recorded. By remaining in the public gallery, it is understood your consent is given if your image is inadvertently broadcast.

Opinions expressed or statements made by individual persons during a meeting are not the opinions or statements of the Bay of Plenty Regional Council. Council accepts no liability for any opinions or statements made during a meeting.

Risk and Assurance Committee 10 June 2021

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 - 4 March 2021 1

8. Reports

Decisions Required

8.1 Internal Audit Update and Audit Plan 1

Attachment 1 - Internal Audit Work Plan 2021-24 1

Information Only

8.2 External Audit Plan and Audit Fees 2020/21 1

Attachment 1 - Audit NZ - BOPRC Audit Plan for the year ending 30 June 2021 1

Attachment 2 - Audit NZ - BOPRC Proposed Audit Fees 2021-2022 1

Attachment 3 - Audit NZ - BOPRC Signed Audit Engagement Letter for the financial years 2020, 2021 and 2022 - 11 May 2020 1

Attachment 4 - Audit NZ - BOPRC Signed Audit Proposal Letter for the 2020, 2021, and 2022 financial years - 11 May 2020 1

Attachment 5 - OAG - Responding to COVID-19 and Audit Fees Letter - 23 April 2020 1

8.3 External Audit: Report to Council on the Long Term Plan 2021 - 2031 Consultation Document 1

Attachment 1 - 2021 -2031 LTP - CD - Report to Council 1

8.4 Chairperson's Report 1

Attachment 1 - Appendix 1 - Risk & Assurance Work Programme September 2021 to December 2021 1

Attachment 2 - Appendix 2 - Risk & Assurance Completed Work Programme March 2021 1

8.5 Setting of Rates 2021/22 1

Attachment 1 - Draft Rates Setting memo 2021/22 - Public Excluded

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
8.5	Setting of Rates 2021/22 - Attachment 1 - Draft Rates Setting memo 2021/22 - Public Excluded	Withholding the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest.	48(1)(a)(i) Section 7 (2)(c)(ii).	On the Chief Executive's approval.
9.1	Public Excluded Risk and Assurance Committee Minutes - 4 March 2021	As noted in the relevant Minutes.	As noted in the relevant Minutes.	To remain in public excluded.
9.2	Cybersecurity Risk Management Update	Withholding the information is necessary to avoid prejudice to measures that prevent or mitigate material loss to members of the public; 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)(e); 48(1)(a)(i) Section 7 (2)(j).	On the Chief Executive's approval.
9.3	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.
9.4	Completed Audit Reviews (Q3 FY20/21)	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.
9.5	Key Risk Register	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.

8.5 Setting of Rates 2021/22

Attachment 1 - Draft Rates Setting memo 2021/22 - Public Excluded

Minutes to be Confirmed

9.1 Public Excluded Risk and Assurance Committee Minutes - 4 March 2021

Public Excluded Presentations

9.2 Cybersecurity Risk Management Update

Information Only

9.3 IRD Risk Review of Bay of Plenty Regional Council

Attachment 1 - BOPRC Tax Function Summary for IRD - Ernst Young

Attachment 2 - BOPRC final risk review letter

9.4 Completed Audit Reviews (Q3 FY20/21)

Attachment 1 - Fraud Risk Assessment Executive Summary

Attachment 2 - Air Quality Key Risk Review Executive Summary

Attachment 3 - Gravel Extraction Review Executive Summary

9.5 Key Risk Register

Attachment 1 - Key risk register - March 2021

Attachment 2 - KRR - Heat Map March 2021

10. Public Excluded Business to be Transferred into the Open

11. Readmit the Public

12. Consideration of Items not on the Agenda

Risk and Assurance Committee Minutes

4 March 2021

Risk and Assurance Committee

Open Minutes

Commencing: Thursday 4 March 2021, 09:30 am

Venue: Council Chambers, Regional House, 1 Elizabeth Street, Tauranga

Chairperson: Cr David Love

Deputy Chairperson: Bruce Robertson

Members: Cr Bill Clark and Chairman Doug Leeder (ex officio)

Via Zoom: Cr Andrew von Dadelszen, Cr Stuart Crosby and Cr Te Taru White

In Attendance: Councillors: Norm Bruning, Stacey Rose

Councillors via Zoom: Jane Nees, Paula Thompson, Lyall Thurston and Kevin Winters

Staff: Fiona McTavish – Chief Executive; Mat Taylor – General Manager, Corporate; Sarah Omundsen – General Manager, Regulatory Services, Chris Ingle, General Manager Integrated Catchments; Debbie Hyland – Finance & Transport Operations Manager; Evaleigh Rautjoki-Williams – Business Engagement Manager; Steven Slack – Risk & Assurance Manager; Aaron Huggins – Principal Internal Auditor; Jessica Easton – Legal and Commercial Manager; Monique Brooks – Legal Counsel, Sumit Chopra – Security & Infrastructure Team Leader; Nolene Naude – Financial Accounting Team Lead and Merinda Pansegrouw – Committee Advisor.

External Presenters: Leon Pieterse – Audit Director, Audit New Zealand

Declaration of Public Recording

Committee members and the public were reminded that the public section of the meeting was being recorded and would be made available on the Bay of Plenty Regional Council website following the meeting and archived for a period of three years as noted on page 4 of the agenda.

1. Order of Business

Members agreed to the reordering of items to accommodate an external presenter for item 9.2 – “Update: Legal Risk Management”.

2. Declaration of Conflicts of Interest

· Independent Member Bruce Robertson - Appointed to an advisory role supporting the Reference Group reviewing the Jobs For Nature Programme

· Cr Te Taru White – Appointed as a member of the Rotorua Museum Heritage Trust

· Cr Stuart Crosby – Item 6.1 “Audit New Zealand Report to the Council for the year ending 30 June 2020” as a Director of Quayside Holdings Limited

3. Minutes

Minutes to be Confirmed

3.1

Risk and Assurance Committee Minutes - 1 December 2020

Resolved

That the Risk and Assurance Committee:

Confirms the Risk and Assurance Committee Minutes - 1 December 2020 as a true and correct record.

Clark/Robertson

CARRIED

4. Reports

Information Only

4.1

Audit New Zealand Report to the Council for the year ending 30 June 2020

Tabled Document 1 - Audit New Zealand Report to Council - Under Separate Cover - Risk and Assurance Committee 4 March 2021: Objective ID A3744817

Cr Stuart Crosby declared a conflict of interest in this item and abstained from discussion and voting.

Audit New Zealand (Audit NZ) Audit Director Leon Pieterse and Finance & Transport Operations Manager Debbie Hyland presented the report.

Key Points:

· Report to Council on the audit of Bay of Plenty Regional Council for the year ending 30 June 2020 set out the findings from the final audit performed in September 2020

· Audit NZ had identified areas where Council was performing well and recommended areas where improvements could be made and provided an update on actions taken by staff against previous recommendations

· Highlighted the following new recommendations, with priority as “necessary”:

o Council to provide group instructions to subsidiaries which should include accounting policies and disclosure requirements

o Review GST on payments made through the Lakes Enhancement Scheme

o Consider reviewing useful lives of the plant and equipment asset class

o Ensure compliance with sections 64, 66 and 67 of the Local Government Act

· Noted that staff was making good progress to address the recommendations highlighted by Audit NZ.

Key Points - Members:

· Noted that the main reason why Audit NZ had raised the issue of “uncorrected disclosure deficiencies” was to avoid future qualification issues; furthermore continued close liaison between Quayside Holdings Limited (QHL), the Port of Tauranga Limited (POTL) and KPMG was aimed at ensuring a better alignment across the group

· Acknowledged that the recommendation relating to the river and drainage flood damage item, as listed on page 26 of the report, had been closed.

Item for Staff Follow Up:

· “Treatment of GST on Lakes Enhancement Programme” (Page 13, item 4.1) – for clarity, the title to be expanded to include in brackets the words “Nitrogen Buy-Back Scheme”.

Resolved

That the Risk and Assurance Committee:

1 Receives the report, Audit New Zealand Report to the Council for the year ending 30 June 2020;

2 Notes the management actions set out in the report.

Robertson/Clark

CARRIED

4.2

Chairperson's Report

General Manager, Corporate Mat Taylor presented the report updating members on the Risk and Assurance Committee’s activities and the updated Risk and Assurance Work Programme for 2021.

Resolved

That the Risk and Assurance Committee:

1 Receives the report, Chairperson's Report.

Robertson/von Dadelszen

CARRIED

4.3

Internal Audit Status Update

Risk & Assurance Manager Steven Slack and Principal Internal Auditor Aaron Huggins presented the report.

Key Points

· Referred to the Internal Audit Work Plan on page 26 of the agenda, summarising the current status of internal audit reviews for 2020/21. The BOPRC Internal Audit team expected to complete the following internal audits by June 2021: Fraud Risk Assessment, Gravel Extraction process and the Mount Manganui / Rotorua Air Standards

· Completed the internal audit review of Climate Change Impacts Risks & Mitigations, as per the 2020/21 Internal Audit Work Plan. The scope of this audit was to provide assurance that mitigating actions and controls were operating as described and to evaluate their effectiveness in treating the key risks. Based on the results, the control environment relating to Climate Change Impacts Risks & Mitigations was rated as adequate.

Key Points - Members:

· Noted that the four open Health & Safety improvement actions listed at the start of the quarter (1 September 2020) had been incorporated into Council’s Health & Safety continuous improvement work programme, which was ongoing and involved the simplification and consolidation of risks within Council

· A measuring tool, currently used by Local Government New Zealand, was available to evaluate the effectiveness of mitigations in climate change (Councillor Crosby offered to provide further detail to staff)

· Noted that the scope for the Mount Manganui / Rotorua Air Standards audit would be to provide assurance that mitigating actions and controls were operating as described and to evaluate their effectiveness in treating the key risks.

Resolved

That the Risk and Assurance Committee:

1 Receives the report, Internal Audit Status Update.

White/von Dadelszen

CARRIED

5. Public Excluded Section

Resolved

Resolution to exclude the public

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

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
5.1	Public Excluded Risk and Assurance Committee Minutes - 1 December 2020	As noted in the relevant Minutes.	As noted in the relevant Minutes.	To remain in public excluded.
5.2	Update: Legal Risk Management	Making the information available would be likely to prejudice the maintenance of the law, including the prevention, investigation, and detection of offences, and the right to a fair trial; Withholding the information is necessary to maintain legal professional privilege.	48(1)(a)(i) Section 6 (a); 48(1)(a)(i) Section 7 (2)(g).	On the Chief Executive's approval.
5.3	Cybersecurity Risk Management	Withholding the information is necessary to avoid prejudice to measures that prevent or mitigate material loss to members of the public; 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)(e); 48(1)(a)(i) Section 7 (2)(j).	On the Chief Executive's approval.
5.4	Key Risk Register - December 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.

Love/Robertson

CARRIED

Confirmed

Cr David Love

Chairperson, Risk and Assurance Committee



Report To:	Risk and Assurance Committee
Meeting Date:	10 June 2021
Report Writer:	Aaron Huggins, Principal Internal Auditor
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	To provide an update on the 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 31 March 2021 and includes:

· The proposed Internal Audit Work Plan for the three years 2021/22 to 2023/24 (Appendix 1);

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

· The status of follow up of internal audit recommendations and management actions to 31 March 2021.

Recommendations

That the Risk and Assurance Committee:

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

2 Approves the Internal Audit Work Plan 2021/22, 2022/23, 2023/24, including the detailed work plan for 2021/22.

1. Introduction

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

· The Proposed Internal Audit Work Plan to 2023/24 (Appendix 1)

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

· The status of follow up of internal audit recommendations and management actions to 31 March 2021.

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 2023/24

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 2021, Internal Audit undertook a planning process to refresh the Internal Audit Work Plan for the three years 2021/22 to 2023/24 (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 March 2021, 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 and General Managers, reviewed prior plans and reviewed the ‘audit universe’ of other Councils.

The Internal Audit work programme for 2021/22 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 2021/22 is provided within the overall plan and is shown in the following table:

IA Ref	Description
1	Project management
4	Business continuity management
7	Pest management plan
9	Laboratory services – benefits realisation
10	Post-COVID funding readiness
17	Compliance process
21	Payroll
22	Sensitive expenditure

The Internal Audit Work Plan for the three years 2021/22 to 2023/24 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 the following table summarises the status of internal audit reviews for 2020/21.

Review	Field work	GM Sponsor	Status	Status of Internal Audit
Review	Field work	GM Sponsor	Status	Planning /Scope	Fieldwork	Draft Report	Mgmt Actions	Final Report
Internal Policy Framework	BOPRC	Corporate	In Progress	Complete	Complete	In Progress
Fraud Risk Assessment	BOPRC	Corporate	Complete	Complete	Complete	Complete	Complete	Complete
Conflict of Interest Management	BOPRC	Corporate	Complete	Complete	Complete	Complete	Complete	Complete
Consents Process	BOPRC	Regulatory Services	In Progress	Complete	In Progress
ICT Security	BOPRC	Corporate	In Progress	Complete	In Progress
Gravel Extraction process	BOPRC	Integrated Catchments	Complete	Complete	Complete	Complete	Complete	Complete
Climate Change Impacts	BOPRC	Science and Strategy	Complete	Complete	Complete	Complete	Complete	Complete
Mount Manganui / Rotorua Air Standards	BOPRC	Regulatory Services	Complete	Complete	Complete	Complete	Complete	Complete

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 resulting in control and efficiency improvements.

Internal audit has facilitated a review by Grant Thornton over BOPRC’s compliance with the Deed of Funding for the Rangitāiki River Wetland Restoration Fund, as granted by the Ministry for the Environment’s Freshwater Improvement Fund. The review covered the period May 2018 to June 2020, and found BOPRC to be compliant in all material aspects.

4. Internal Audit Follow Up

Internal Audit has reviewed all open management actions as part of the follow up work in the 2020/21 Work Plan.

Management actions

At the start of the quarter (1 January 2021) there were 39 open management actions.

During the quarter nine actions were closed and sixteen actions were added. The total of actions open as at 31 March 2021 is 46, the majority of these relate to Asset Management (nine), Fraud Risk Assessment (nine), Conflicts of Interest (seven), Grants (six), and Gravel Extraction (six).

Figure 1 Open management actions (as at 31 March 2021)

Grants – the remaining actions are awaiting the final implementation in Tech 1 which forms part of the Technology roadmap. Part of the implementation is in place, with full functionality expected to be in place by the end of the financial year.

Asset Management – The Asset Management Steering Group (AMSG) was re-established in April 2020, currently the group meets fortnightly. The Asset Management Policy and Strategic Asset Management Plan were adopted by Council in December 2020, and are being reviewed by Audit New Zealand.

Conflicts of Interest – Workstreams to address the actions are underway, with the Standard Operating Policy having been updated and with the Legal team for review.

Fraud Risk, Gravel Extraction – these actions are newly raised in the quarter.

Of the open actions 26 are past their original due date. The overdue actions relate predominately to Asset Management (nine) and Grants (six).

Improvement actions

For framework reviews which have identified continuous improvement actions, these actions will be disclosed separately to give assurance to the Risk and Assurance committee that these actions continue to be monitored to ensure BOPRC’s frameworks improve and develop.

At the start of the quarter (1 January 2021) there were 4 open Health & Safety improvement actions. These were previously reported as ‘other’, and refer to recommendations made by KPMG in 2018 for BOPRC to incorporate into its Health & Safety continuous improvement work programme which is ongoing.

Figure 2 Open Health & Safety improvement actions (as at 31 March 2021)

5. Considerations

5.1 Climate Change

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

5.2 Financial Implications

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

6. Next Steps

To approve the Internal Audit Plan as per the recommendation.

Attachments

Attachment 1 - Internal Audit Work Plan 2021-24 ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	10 June 2021
Report Writer:	Debbie Hyland, Finance & Transport Operations Manager and Nolene Naude, Financial Accounting Team Lead
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	For the Risk and Assurance Committee to receive the audit plan and audit fees for the year ending 30 June 2021.

External Audit Plan and Audit Fees 2020/21

Executive Summary

This report provides the audit plan and audit fees proposed by Audit New Zealand for the external audit of the Bay of Plenty Regional Council and Group for the year ending 31 June 2021. The proposed audit fees for the 30 June 2022 financial year are also included.

Audit Manager Anton Labuschagne will attend the Risk and Assurance Committee meeting.

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, External Audit Plan and Audit Fees 2020/21.

1. Introduction

In May 2021 Audit New Zealand released its draft Audit Plan for the year ending 30 June 2021 (Attachment 1).

The draft Audit Plan presents the audit arrangements and discusses the audit risks and issues, the audit process, reporting protocols and audit logistics.

Audit Manager, Anton Labuschagne, will attend the meeting to discuss the draft Audit Plan. Audit Director, Leon Pieterse is unable to attend the meeting.

1.1 Legislative Framework

The audit of the Bay of Plenty Regional Council is carried out under Section 15 of the Public Audit Act 2001 (the Act) which states that “the Auditor General must from time to time audit the financial statements, accounts, and other information that a public entity is required to have audited”.

Fees for audits of public entities are set by the Auditor General under Section 42 of the Act. The Act requires the Auditor General to make sure that audit fees are ‘reasonable’ for both the auditors who complete the audits for the Auditor-General, and for each of the entities audited.

1.2 Alignment with Strategic Framework

A Healthy Environment
Freshwater for Life
Safe and Resilient Communities
A Vibrant Region
The Way We Work	We deliver value to our ratepayers and our customers.

1.2.1 Community Well-beings Assessment

Dominant Well-Beings Affected

þ Environmental

þ Cultural

þ Social

þ Economic

2. Audit Plan

The audit plan proposed by Audit New Zealand for the audit of the Bay of Plenty Regional Council and Group for the year ending 30 June 2021 is included as Attachment 1 to this report.

2.1 Audit Risks and Issues

Audit New Zealand has identified the following risks and issues which will be reviewed and tested during their audit:

· Revaluation of property, plant and equipment;

· Fair value assessment for property, plant and equipment;

· Valuation of the Put Option;

· Regional Infrastructure Fund;

· Consolidation of group financial statements;

· The risk of management override of internal controls; and

· Fraud risk.

2.2 Group Audit

Audit New Zealand’s audit approach is to ensure they have sufficient information to give an opinion on the Council Group, which comprises the Quayside Group and Toi Moana Trust.

The audit plan discusses the areas of focus relating to the audit of the Council Group as a whole.

2.3 Materiality

In performing their audit, Audit New Zealand will apply the following materiality settings:

Parent Financial Statements Materiality

· Overall materiality $55 million

· Specific materiality $3.9 million

· Clearly trivial threshold $195,000

Audit NZ has also identified several measures as material and assessed materiality for planning purposes.

Group Financial Statements Materiality

· Overall materiality $200.7 million

· Specific materiality $10 million

· Clearly trivial threshold $500,000

2.4 Timetable

The key dates relating to the 2020/21 external audit are summarised in the table below.

Date	Description
27 April 2021	First interim audit commences (COMPLETED)
21 June 2021	Second interim audit commences
22 July 2021	Interim audit report
9 August 2021	Final audit commences
3 September 2021	Audit of consolidated accounts
10 September 2021	Verbal audit clearance
30 September 2021	Audit opinion issued
5 October 2021	Final audit report

3. Audit Fees

The audit fees proposed by Audit New Zealand for the audit of the Bay of Plenty Regional Council and Group for the year ending 30 June 2021 is included as Attachment 2 to this report. The proposed audit fees for the 30 June 2022 financial year are also included.

The approved Audit Engagement Letter and Audit Proposal to conduct the audit for the 2020, 2021 and 2022 financial years (dated 11 May 2020) are included as Attachments 3 and 4 to this report. The letter from the Auditor-General dated April 2020 which Audit New Zealand refer to, is also included as Attachment 5 to this report.

3.1 Proposed audit fees for the years ending 30 June 2021 and 30 June 2022

The following table summarises the prior year actual fee and the proposed audit fee for the next two years:

Structure of Fee	2020 Actual	2021 Proposed	2022 Proposed
Total audit fee	$134,147	$145,430	$156,713
Estimated disbursements	$8,544	$4,000	$4,000
Total billable audit fees and charges	$142,691	$149,430	$160,7136

4. Considerations

4.1 Risks and Mitigations

There are no significant risks associated with the Audit New Zealand 2020/21 external audit plan or audit fees.

4.2 Climate Change

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

4.3 Implications for Māori

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

4.4 Community Engagement

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

4.5 Financial Implications

There are no material unbudgeted financial implications and this fits within the allocated budget. The Annual Plan 2020/21 included a budget of $144,000 for the external audit.

5. Next Steps

Following this meeting, Audit New Zealand will undertake the second interim audit; following which staff will begin preparations for the final audit for the year ending 30 June 2021. This will include preparation of year-end guidance for the Council Group.

Attachments

Attachment 1 - Audit NZ - BOPRC Audit Plan for the year ending 30 June 2021 ⇩

Attachment 2 - Audit NZ - BOPRC Proposed Audit Fees 2021-2022 ⇩

Attachment 3 - Audit NZ - BOPRC Signed Audit Engagement Letter for the financial years 2020, 2021 and 2022 - 11 May 2020 ⇩

Attachment 4 - Audit NZ - BOPRC Signed Audit Proposal Letter for the 2020, 2021, and 2022 financial years - 11 May 2020 ⇩

Attachment 5 - OAG - Responding to COVID-19 and Audit Fees Letter - 23 April 2020 ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	10 June 2021
Report Writer:	Nolene Naude, Financial Accounting Team Lead and Debbie Hyland, Finance & Transport Operations Manager
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	Receive the Audit New Zealand Report to Council on the Long Term Plan 2021 – 2031 Consultation Document

External Audit: Report to Council on the Long Term Plan 2021 - 2031 Consultation Document

Executive Summary

Bay of Plenty Regional Council has received from Audit New Zealand, their external audit report for the Long Term Plan 2021-2031 Consultation Document (LTP CD). The audit report is based on a range of audit reviews of the Council’s LTP documents, plans, and processes. The full Audit New Zealand Report to Council is contained as an appendix to this report.

The Council’s LTP CD received an unmodified audit opinion on 18 February 2021. The audit report identified key issues and there were no recommendations for improvements.

Audit New Zealand commented that: “The Council’s quality review process was reflected in the high quality of the draft documents presented for audit….The Council produced a CD that fulfilled its primary purpose of providing an effective basis for public participation in decisions on the content of the LTP. The CD included all the major matters that we expected, provided preferred and alternative options to address these issues and encouraged the community to provide feedback.”

The Risk and Assurance Committee is asked to receive the audit report. Anton Labuschagne, Audit Manager from Audit New Zealand will attend the Committee meeting to present their report.

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, External Audit: Report to Council on the Long Term Plan 2021 - 2031 Consultation Document.

1. Introduction

In March 2021 Audit New Zealand released its final audit report to Council on Bay of Plenty Regional Council’s Long Term Plan Consultation Document for the period 1 July 2021 to 30 June 2031.

The report sets out the findings from their audit. The full report to Council is included as an Appendix to this report.

1.1 Alignment with Strategic Framework

A Healthy Environment	We develop and implement regional plans and policy to protect our natural environment.
Freshwater for Life	We listen to our communities and consider their values and priorities in our regional plans.
Safe and Resilient Communities	We work with our partners to develop plans and policies, and we lead and enable our communities to respond and recover from an emergency.
A Vibrant Region	We contribute to delivering integrated planning and growth management strategies especially for sustainable urban management.
The Way We Work	We deliver value to our ratepayers and our customers.

The Audit New Zealand report discusses the primary purpose of the Consultation Document, being the provision of an effective basis for public participation in decisions on the content of the Long Term Plan 2021-2031. As a result it supports the delivery of all four Community Outcomes.

1.1.1 Community Well-beings Assessment

Dominant Well-Beings Affected

þ Environmental

High - Positive

þ Cultural

High - Positive

þ Social

High - Positive

þ Economic

High - Positive

2. Content of the Report to Council

2.1 Findings from the Report to Council

The Audit New Zealand audit report provides assurance in the following areas:

· The external audit statutory audit opinion on the CD

· Audit scope and objectives

· Control environment

Following the comprehensive review, there were no recommendations for improvement highlighted in the report.

2.2 Areas of audit emphasis

During the planning stage of the audit, and during the review of the content of the LTP CD, Audit New Zealand identified the following areas of audit focus and issues. The key comments from the audit of these areas are set out below:

2.2.1 Climate change

Audit New Zealand was satisfied that assumptions and challenges associated with climate change have been disclosed within the consultation document.

2.2.2 Impact of Covid-19

Audit New Zealand was satisfied with the appropriateness of the COVID-19 assumption. They have considered that the impacts of Covid-19 do not pose a high risk for Bay of Plenty Regional Council and consider the assumption to be reasonable.

2.2.3 Capital programme delivery

Audit New Zealand confirmed that there is not a significant risk of under-delivery of planned capital expenditure.

2.2.4 Critical assets – Condition and performance

Audit New Zealand considers Council to have reliable asset data held in its asset management systems.

2.2.5 Regional growth and demographic changes

Audit New Zealand commented that

“We reviewed how this information flows through the underlying information and confirmed the Council is working with other Territorial Local Authorities to ensure a consistent approach. Growth has been included as a significant assumption and has been applied to the financial forecasts.

We also enquired with Council as to how they are meeting their obligations under the National Policy Statement on Urban Development (NPS-UDC) and how the Council will align the NPS-UDC process with the LTP. Council confirmed it will be providing support/peer review to territorial authorities who are responsible for producing Housing and Business Development Capacity Assessments.”

2.2.6 National Policy Standard for Freshwater Management (NPS-FW)

Audit New Zealand considers that Council has adequately disclosed the impacts of the NPS-FW in the CD and the underlying assumptions are adequately supported.

2.3 Other matters

Audit New Zealand completed the planned work on the areas detailed in the audit plan and identified the following other matters:

2.3.1 Content of the CD

Audit New Zealand commented that “The CD included all the major matters that we expected, provided preferred and alternative options to address these issues and encouraged the community to provide feedback.”

2.3.2 Adopting and audit the underlying information

Audit New Zealand commented that “The Council prepared and adopted the underlying information necessary to support the CD. These were adopted before the adoption of the CD as required by the Act on 18 February 2021.”

2.3.3 Quality of asset-related forecasting information

Audit New Zealand commented that “We have performed a review of the Council’s asset management plans and consider asset management processes appropriate to meet and support the Council’s level of service. The Council’s systems and methodology for establishing data reliability are robust.”

2.3.4 Project management, reporting deadlines and audit progress

Audit New Zealand commented that “The Council had detailed project plans and timelines for different parts of the LTP, plus overall project plans and timelines. This contributed to the Council being prepared for audit and meeting key LTP deadlines.”

2.3.5 Financial strategy

Audit New Zealand commented that “Overall the Financial Strategy was consistent with the Council’s underlying information and contained the key elements we expected to see. We believe the Financial Strategy is financially prudent and compliant with legislative requirements.”

2.3.6 Infrastructure strategy

Audit New Zealand commented that “We are satisfied that the Infrastructure Strategy is consistent with the Council’s underlying information and contains the key elements we expect to see. We believe the Infrastructure Strategy is compliant with legislative requirements.”

2.3.7 Flow of information between documents

Audit New Zealand commented that “We are satisfied the source information has flowed appropriately into the forecast model including the assumptions around inflation and growth.”

3. Considerations

3.1 Risks and Mitigations

No risks have been identified from the Audit New Zealand Report to Council on the Long Term Plan 2021 – 2031 Consultation Document.

3.2 Climate Change

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

3.3 Implications for Māori

Consultation and engagement incorporated a focus on iwi/Māori to ensure their views were incorporated into the Long Term Plan deliberations. The Audit New Zealand audit report to Council is of procedural nature and there is no need to specifically consider the implications for Māori.

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 additional financial implications. Receiving of the Audit New Zealand Report to Council on the Long Term Plan 2021 – 2031 Consultation Document has no financial implications for the current year’s budget.

4. Next Steps

Audit New Zealand commenced their final audit of Council’s Long Term Plan 2021 – 2031 on 24 May 2021, and expect to issue an audit opinion on 7^th June 2021.

Attachments

Attachment 1 - 2021 -2031 LTP - CD - Report to Council ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	10 June 2021
Report Writer:	Mat Taylor, General Manager, Corporate
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	Update on Risk and Assurance Committee Activities

Chairperson's Report

Executive Summary

This report provides the Committee with an update on Risk and Assurance Committee activities.

Recommendations

That the Risk and Assurance Committee:

1 Receives the report, Chairperson's Report.

1. Introduction

The report shows an updated Risk and Assurance Work Programme for 2021, and an updated Risk and Assurance Completed Work Programme.

1.1 Alignment with Strategic Framework

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.

1.1.1 Community Well-beings Assessment

Dominant Well-Beings Affected

¨ Environmental

¨ Cultural

¨ Social

þ Economic

2. Council Performance Monitoring Report – Detailed Briefings for Councillors

The following monthly financial monitoring meeting (detailed financial briefing) was held with Councillors since the previous meeting of the Risk and Assurance Committee:

Wednesday, 21 April 2021

3. Risk and Assurance Work Programme

Appendix 1 shows the Risk and Assurance Work Programme for 2021. This Work Programme sets out the planned and scheduled reporting to the Risk and Assurance Committee.

The appendix is categorised to identify the broad areas of responsibility for the Committee.

Other items may be added by councillors and staff should this be required to respond to issues as they occur throughout the year.

4. Risk and Assurance Completed Work Programme

Appendix 2 shows the Risk and Assurance Completed Work Programme for 2021.

5. Considerations

5.1 Risks and Mitigations

There are no significant risks associated with this matter/subject/project/initiative.

5.2 Climate Change

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

5.3 Implications for Māori

The matters addressed in this report are of a procedural nature and there is no implications for Māori.

5.4 Community Engagement

The matters addressed in this report are of a procedural nature and there is no community engagement.

5.5 Financial Implications

This work is being undertaken within the current budget for the Government Activity in Year 3 of the Long Term Plan 2018-2028.

6. Next Steps

The Work Programme will be updated following the meeting.

Attachments

Attachment 1 - Appendix 1 - Risk & Assurance Work Programme September 2021 to December 2021 ⇩

Attachment 2 - Appendix 2 - Risk & Assurance Completed Work Programme March 2021 ⇩



Report To:	Risk and Assurance Committee
Meeting Date:	10 June 2021
Report Writer:	Mereana Toroa, Finance Support Team Lead and Debbie Hyland, Finance & Transport Operations Manager
Report Authoriser:	Mat Taylor, General Manager, Corporate
Purpose:	Setting of Rates 2021/22

Setting of Rates 2021/22

Executive Summary

This report provides the draft Bay of Plenty Regional Council Rates Resolution, and its specific wording requirements to ensure continued statutory compliance for the Setting of Rates 2021/22.

Simpson and Grierson have been engaged to perform a review of legislative compliance for next year’s rate assessment processes. Some of their advice is still on-going and may be discussed at the meeting.

Council is scheduled to set rates on 24 June 2021. There is a possibility that some Territorial Local Authorities (TLA), who collect regional rates on behalf of Council, may need to delay adoption of their LTP or rates resolution into 2021/22.

If any TLA needs to set or change the relevant rates dates or penalty percentage rates after Council sets rates, it is possible for Council to amend its rates resolution through a full Council meeting as per section 24.6 of Council’s standing orders.

Recommendations

That the Risk and Assurance Committee:

1. Receives the report, Setting of Rates 2021/22.

1 Confirms the public be excluded on the grounds set out in the Local Government Official Information and Meetings Act 1987 from consideration of the following report attachment:

(a) Draft Rates Setting memo 2021/22 under Section 48(1)(a)(i) Section 7 (2)(c)(ii) as withholding the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest and that this attachment be released to the public on the Chief Executive’s approval.

1. Introduction

1.1 Legislative Framework

The Local Government Act 2002 (the Act) and more specifically the Local Government (Rating) Act 2002 (the Rating Act) sets out the process for setting rates for a property. This involves the preparation of four formal documents;

i. Funding Impact Statement;

ii. Rates Resolution; and

iii. Long Term Plan;

1.3 Alignment with Strategic Framework

A Healthy Environment
Freshwater for Life
Safe and Resilient Communities
A Vibrant Region
The Way We Work	We deliver value to our ratepayers and our customers.

Rates revenue supports the delivery of all of our work to achieve the Community Outcomes.

1.3.1 Community Well-beings Assessment

Dominant Well-Beings Affected

¨ Environmental

¨ Cultural

¨ Social

¨ Economic

Rates revenue supports the delivery of all of our work to improve the well-beings.

2. Rates Setting

2.1 Background

The Local Government Act 2002 (the Act) and more specifically the Local Government (Rating) Act 2002 (the Rating Act) sets out the process for setting rates for a property. This involves the preparation of four formal documents;

i. Funding Impact Statement;

ii. Rates Resolution; and

iii. Long Term Plan;

2.2 Funding Impact Statement

The Funding Impact Statement (FIS) is a detailed explanation to the community of what rates will be charged, how they will be calculated and what they will be used for. Ratepayers should be able to work out what they will pay from this document.

To prepare an Annual Plan (Schedule 10, part 2 Clause 20) and Long Term Plan (Schedule 10, part 1 Clause 5 and 15) in accordance with the Act, the plan must include a FIS for the year to which it relates. It must be in the prescribed form, and must identify:

a) The sources of funding to be used by the local authority;

b) The amount of funds expected to be produced from each source; and

c) How the funds are to be applied

2.3 Rates Resolution

The Rates Resolution is a local authority’s formal legal decision to impose specific rates on a community, and creates the obligation to pay. Each rate must be set in keeping with the relevant FIS and Long Term Plan.

The preparation of the Rates Resolution must be in accordance with section 23 of the Rating Act. The rates set in the resolution must;

d) Relate to a financial year;

e) Be set in accordance with the relevant provisions of the Council’s LTP and FIS for that financial year.

2.4 Long Term Plan

The Long Term Plan (LTP) sets out what the Council intends to do and how it will go about it for the next ten years. It is finalised after consulting the community.

The detailed legal requirements on what is to be included in the LTP is set out in schedule 10, part 1 of the Act. This includes the FIS, a policy governing Council’s financial strategy for the next three years, Council’s revenue and financing policy and Council’s Rates Remissions and Postponement Policies. This ensures prudent financial management by providing a guide for the Council to consider proposals for funding and expenditure against.

It also provides the basis for Council’s funding mix, including the source of funds.

2.5 Annual Plan

The Annual Plan shows what the Council intends to do and how it will go about it for the next year.

The detailed legal requirements on what is to be included in the Annual Plan is set out in schedule 10, part 2 of the Act. This includes the FIS and rating database information. This ensures prudent financial management by providing a guide for the Council to consider proposals for funding and expenditure against.

3. Local Government Rate Setting Reviews

3.1 Audit New Zealand Review

Council has consistently complied with the rate assessment and setting requirements as established by the Act. Audit New Zealand is reviewing in depth Council’s Long Term Plan 2021-2031 rates resolution with no changes being required as this stage.

3.2 Legal Review

Simpson and Grierson have been engaged to perform a current review of statutory compliance for this year’s rate assessment and collection processes. This review is still on-going and will be discussed at the meeting.

Management will ensure any recommendations from the review are included in the final Council resolution for 2021/22.

In order to ensure that the Council’s rates documentation continues to be legally compliant it is considered prudent to conduct an annual review of the documents and ensure all relevant points are incorporated.

4. Draft Rates Setting 2021/22

4.1 Changes from 2020/21

There may be process changes in 2021/22 due to the potential delay in rates setting by the Territorial Local Authorities (TLAs), resulting in potential future rates dates changes to be adopted by Bay of Plenty Regional Council.

The draft rates resolution includes setting a new targeted rate for Regional Safety and Rescue Services.

4.1.1 Instalment and penalty dates

Council’s rates resolution 2021/22 must include the dates for each district’s rates instalments, penalty assessments and penalty applications; and the penalty percentage rate. If the dates and penalty percentage do not match with the TLAs, there could be a technical issue with collection. Council has received the draft dates of rates instalments, penalty assessments and penalty applications from all TLAs.

Council is schedule to set rates on 24 June 2021. There is a possibility that some TLAs may need to delay adoption of their LTP or rates resolution.

If any TLA needs to set or change the relevant dates or penalty percentage rate after Council sets rates, it is possible for Council to amend its rates resolution through a full Council meeting, as per section 24.6 of Council’s standing orders. Staff have been in touch with the TLAs in regards to changes in instalment and penalty dates. At the time of writing this report Council has received updates from all seven TLAs with proposed instalment and penalty dates.

It should be noted that Kawerau District Council, Tauranga City Council and Whakatāne District Council do not intend to adopt their Rates Resolution until July 2021.

5. Considerations

5.1 Risks and Mitigations

The main risk relating to the process of setting rates are that the rates strike and resolutions may not be legislatively compliant. This risk has been mitigated via audit and external legal reviews as discussed in section 3.

In addition, as our rates are currently collected by the TLAs, we must match a number of details for each of their collection systems and dates as discussed in section 4.

We have confirmed proposed dates at a staff level, however there is some scope for misalignment if there are changes to their expected rates resolutions after our rates are set.

This risk is exacerbated because several TLAs are adopting their LTP and Rates Resolutions later than normal.

5.2 Climate Change

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

5.3 Implications for Māori

Māori are ratepayers and are affected in the same way as any other member of the community in the same situation as them in terms of property ownership and ability to pay. Māori freehold land may, in certain circumstances, we eligible for rates remissions.

The Local Government (Rating of Whenua Māori) Amendment Act 2021 comes into force on 1 July 2021. This will change several aspects of the Local Government (Rating) Act, and other Acts, to facilitate the principles set out in the Preamble to Te Ture Whenua Maori Act 1993.

The next reviews of the Revenue and Financing Policy, the Policy on Development Contributions or Financial Contributions, and the policy on the Remission and Postponement of Rates on Māori Freehold Land are required to support the principles set out in the Preamble to Te Ture Whenua Maori Act 1993.

5.4 Community Engagement

CONSULT

Whakauiuia

To obtain input or feedback from affected communities about our analysis, alternatives, and /or proposed decisions.

The Consultation Document for the Long Term Plan 2021-2031 set out all of the legislatively required information on forecast rates. This included an outline of the rates impact for each consultation topic.

Council heard and considered all submissions prior to making decisions on final levels of service, budgets, and rates requirements.

All of policies that affect rates were available during consultation and able to be submitted on.

5.5 Financial Implications

This work is planned under the Finance Activity in the Long Term Plan 2021-2031.

6. Next Steps

The next steps for this process are to receive the final legal review, incorporate feedback from legal review and Audit and Risk Committee as required, recommend that Council adopts the Long Term Plan and Financial Polices, recommend that Council adopts the rates resolutions, and provide final rates resolutions to the TLAs.

After adoption staff will check that any subsequent TLA rates resolutions are as expected.

Attachments

Attachment 1 - Draft Rates Setting memo 2021/22 (Public Excluded) ⇩