Finance, Audit & Risk Committee FINANCE, AUDIT & RISK Agenda

Transcription

1 Finance, Audit & Risk Committee FINANCE, AUDIT & RISK Agenda 9.30am, Thursday, 13 December 2018 Council Chambers, 66 Carters Road, Amberley. Community partnership in growth and wellbeing.

2 Committee Membership: Cr Dick Davison (Chairperson) Mayor Winton Dalley Cr Marie Black Cr Vince Daly Cr Geoff Shier Quorum: The quorum of the Committee will be three (3) members. Secretary: Graham Sutherland *************************************************** The purpose of local government: (1) The purpose of local government is (a) to enable democratic local decision-making and action by, and on behalf of, communities; and (b) to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses. (2) In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are (a) efficient; and (b) effective; and (c) appropriate to present and anticipated future circumstances. (Local Government Act 2002 Amendment Act 2012)

3 FINANCE, AUDIT & RISK COMMITTEE MEETING 13 DECEMBER 2018 TIMETABLE & ORDER OF BUSINESS Time 9.30am 10.30am 10.45am 12.30pm Item Meeting commences. Morning tea. Presentation from the IT Manager on the GoCouncil Portal. Meeting concludes. ITEM ORDER OF BUSINESS SIGNIFICANCE PAGE Apologies: Urgent Business Conflict of Interest Declarations Recording Device 1 Minutes for confirmation 22 November 2018 (Ordinary). 29 November 2018 (Extraordinary). 2 Action Sheet 12 3 Forward Programme 13 4 Finance Items: 4.1 Financial Report as at the end of November 2018 (To be circulated).. Low 4.2 Rates Arrears as at the end of November Low 4.3 Treasury Position as at the end of November Low 5 Audit Items: 5.1 Audit New Zealand Management Report: Action Points - November Annual Report Status and Issues... Low Low 6 Risk Items: 6.1 Health and Safety Report.... High 6.2 Performance Report Low 6.3 Update on IT Issues..... Low 7 Public Excluded Items (See resolution next page.) Oral Report Oral Report

4 FINANCE, AUDIT & RISK COMMITTEE MEETING 13 DECEMBER 2018 TIMETABLE & ORDER OF BUSINESS 7 PUBLIC EXCLUDED SESSION THE GENERAL SUBJECT OF THE MATTERS TO BE CONSIDERED WHILE THE PUBLIC IS EXCLUDED, THE REASON FOR PASSING THIS RESOLUTION IN RELATION TO THE MATTERS 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: General subject of each matter to be considered Item 7.1 Request for Rates Postponement. Item 7.2 Abandoned Land. Item 7.3 Request for Rates Remission Ashley Water Item 7.4 Request for Rates Remission Hanmer Springs Reason for passing this resolution in relation to each matter The report contains information which if released would affect the privacy of natural persons. The report contains information which if released would affect the privacy of natural persons. The report contains information which if released would affect the privacy of natural persons. The report contains information which if released would affect the privacy of natural persons. Grounds under Pages section 48 (1) for the passing of this resolution Section 48(1)(a)(i) and 7(2)(a) Section 48(1)(a)(i) and 7(2)(a) Section 48(1)(a)(i) and 7(2)(a) Section 48(1)(a)(i) and 7(2)(a)

5 Significance Consideration (Guidelines from Hurunui District Council s Significance and Engagement Policy) The Council, in considering each matter, must be: a. Satisfied that it has sufficient information about the practicable options and their benefits, costs and impacts, bearing in mind the significance of the decisions. b. Satisfied that it knows enough about and will give adequate consideration to the views and preferences of affected and interested parties bearing in mind the significance of the decisions to be made. Questions a. Does the Council have sufficient information about the issue, proposal, decisions or other matter? b. Does the issue, proposal, decisions or other matter: Affect all or a large portion of the community in a far-reaching way? Have a potential impact or consequence on the affected persons (being a number of persons) that is substantial? Have financial implications on the Council s resources that would be substantial? Generate (or would be expected to generate) a high degree of controversy? Have any impact on Council s capacity to undertake its statutory responsibilities? Fail to flow logically or consequentially from a decision in the Council s Long Term Plan? Significance Evaluation Council officers preparing these reports will have regard to Council s policy on significance. Councillors will make the final assessment on whether the subject under consideration is to be regarded as being significant or not. Unless the Council explicitly determines that the subject under consideration is to be deemed significant then the subject will be deemed as not being significant. Engagement Consideration Council officers preparing these reports will also have regard to appropriate public engagement according to the level of significance. Officers will use the Engagement Spectrum shown in the table below alongside the Significance and Engagement Policy to help identify and recommend the engagement level. Engagement Spectrum Inform Consult Involve Collaborate Empower To provide the public with balanced and objective information to assist them in understandin g the problem, alternatives, opportunities and/or solutions To obtain public feedback on analysis, alternatives and/or decisions To work directly with the public throughout the process to ensure that public concerns and aspirations are consistently understood and considered To partner with the public in each aspect of the decision including the development of alternatives and the identification of the preferred solution To place final decision making in the hands of the public

6 3 Meeting Finance, Audit and Risk Committee Time and Date 2.45pm, 22 November 2018 Venue Council Chambers, 66 Carters Road, Amberley Members Present In Attendance Apologies Conflict of Interest Declarations Health and Safety Recording Device Urgent Business Cr Dick Davison (Chairperson), Mayor Winton Dalley, Councillors Geoff Shier, Michael Ward, Vince Daly and Marie Black. Jason Beck (Manager Support Services), Joanne Lapthorne (Team Leader Finance), Ben Du Mez (Financial Accountant), Michael Prisk (Team Leader Human Resources), and Tiffany Wafer (Council Secretary). Nil. Nil. The Chairperson advised of the exits and assembly point to be used in the event of an emergency. A recording device was used for the purpose of accuracy of the minutes. Nil. 1. Minutes THAT THE MINUTES OF THE FINANCE, AUDIT AND RISK COMMITTEE MEETING HELD ON 18 OCTOBER 2018 ARE CONFIRMED. Davison/Shier CARRIED Matters Arising The electricity account should include a competitive contracts process going forward. The Chair asked the Manager Support Services to action this. The committee discussed when more clarity on when the roll-out of fibre will occur within the district. Cr Ward advised the roll-out will not be until 2020, which Cr Shier advised is still ahead of the nationwide schedule. Cr Black highlighted the need by Council to communicate more clearly with its local communities regarding the process and management of footpath maintenance and the impact on local communities who may want to use local contractors for work on their driveways. If a ratepayer would like to source an individual contractor they can do so, on their own initiative. Cr Black asked whether the reference to possible double accounting in relation to Building Control income calculations requires a follow up. The Manager Support Services advised that during the preparation of the budgets for the Long Term Plan, the budget for Building Control Income was overestimated. This was the result of officers using an incorrect forecasting assumption for the level of activity planned for the 2018/2019 year. This will result in the Building Control Income for the 2018/2019 year being lower than has been budgeted for. As officers move into the preparation of the budgets for the 2019/2020 Annual Plan, the assumption for forecasting the level of activity in the Building

7 4 Control Department will be corrected. This may result in the level of income that was allowed for in Year 2 of the Long Term Plan being reduced accordingly. The Thermal Pools Chairman and General Manager will be attending a council meeting next Thursday and will provide an update at that time. In relation to the question regarding checking funding deadlines for Infrastructure work, the Manager Support Services advised there are still funds available from Lotteries and other funders for appropriate projects. Some projects will fall into the next financial year with the key to not losing any subsidies or funding for the work. The Annual Report postponement has been accepted by the Council with the Manager Support Services updating this committee on the current situation. The Audit Manager, Karina Page from Audit New Zealand has advised that the Annual Report is waiting on further information and a position paper from Kaikoura District Council. The Audit Report should have been received this week in order to sign off today. The Manager Support Services will chase up and voice his frustrations. THAT THE PUBLIC EXCLUDED MINUTES OF THE FINANCE, AUDIT AND RISK COMMITTEE MEETING HELD ON 18 OCTOBER 2018 ARE CONFIRMED. Davison/Shier CARRIED 2. Action Sheet The Action Sheet was provided for the information of the Committee. The Manager Support Services has provided Cr Davison and Cr Harris with a report on the Cheviot Medical Centre Upgrade project; they are yet to review this. The Chair would like to talk to the sub-committee from Cheviot regarding the process and receive their input before reporting back to this committee. Capital Programme (Accounting Package). The Chair would like to set aside time to learn how the Committee and Council can have a real time understanding of where the Council is at with the capital projects which may involve better calendarisation and more timely reporting processes. Cr Ward reiterated his thoughts on projects that are carried forward. THAT THE INFORMATION BE RECEIVED. Davison/Shier CARRIED 3. Forward Programme The Forward Programme was provided for the information of the Committee. THAT THE INFORMATION BE RECEIVED. Davison/Shier CARRIED 4. FINANCE ITEMS 4.1 Financial Report as at the end of October 2018 The Manager Support Services provided the Financial Report for the end of October 2018 and spoke briefly to the report. He advised that the Council is still behind on the Capital Programme as highlighted by Cr Ward. Waiau Pool was unbudgeted for hence the rising numbers. Community Services Employment Costs budgeted for in Amenities is down on budget as the costs have been coded to Township and Reserves. The Manager Support Services advised there is a recorded budget for amenities where the Finance Department allocates costs appropriately to the individual cost centres to ensure future budgeting is accurate. Cr Black felt the note was a little unclear.

8 5 Compliance & Regulatory Functions The basis for how the budget was set was not correct; this is being rectified for the next budget round. Thermal Springs Thermal Pools & Spa Overall year surplus of $137, YTD against a budgeted surplus of $359, Council will be receiving a full report next week. Governance and Corporate Coding of timesheets can be improved, particularly with Corporate Services. Earthquake Recovery A number of the grants received in the previous financial year are only just now being recognised; however the projects will be carried out this financial year and will balance out. The Mayor asked for clarification on Forestry Revenue proceeds of $58,508 received in October and whether this was a progress payment for Waikiki. The Manager Support Services advised he will provide a full break down on these proceeds. THAT THE INFORMATION BE RECEIVED. Black/Daly CARRIED 4.2 Rates Arrears as at the end of October 2018 The Manager Support Services provided a report scheduling how the collection of rates has occurred over time. As the second instalment of rates was invoiced at the start of October, with a due date of 20 November, the balance at the end of October should be at its highest point for the quarter. The amount owing at the end of October was its highest point for the quarter. The amount owing at the end of October was $5,790,936.58, which compared with the balance as at 30 October 2018 of $5,517, a 4.96% increase, which is lower than the rates increase charged for the 2018/19 year. As at 31 October 2018, there was a total of $488,459,47 (from 852 individual ratepayers) that was paid in advance. There are now 32 ratepayers (September 2018: 34) who owe a total $78, (September 2018: $78,788.39) from before 30 June In addition, 225 ratepayers (September 2018: 225) owe a total of $226, (September 2018: $250,458.96) from last year. At the start of November, eight individual ratepayers, who have long standing amounts of arrears, received a letter of demand via the Council s solicitors. The Manager Support Services advised letters of demand are sent on an annual basis to those who have long standing amounts of arrears. THAT THE INFORMATION BE RECEIVED. Shier/Davison CARRIED 4.3 Treasury Position as at the end of October 2018 The Manager Support Services provided the monthly treasury report to the Committee, pursuant to the policy, noting: A replacement page for Treasury Performance was tabled. Funding Strategy pre-funding debt requirement for the current financial year saw $7 million of Local Government Funding Agency (LGFA) debt being borrowed now, for use in mid-january Cr Shier asked why the money was borrowed now and not closer to the time required. The Manager Support Services advised the rates were favourable to action now and it worked to have

9 the debt in place for the immediate future. 6 THAT THE INFORMATION BE RECEIVED. Shier/Davison CARRIED 5. AUDIT ITEMS 5.1 Audit New Zealand - Action Points November 2018 The Manager Support Services provided the Action Point Report that was developed to provide a recording system to ensure that the recommendations that were made by Audit New Zealand as part of the Management Report are systematically dealt with. Any changes to the schedule were shown in red. If an action point has been closed off, it is struck through and then will be removed from the schedule completely in the following month. Many of the action points relate to the Annual Plan, these should reduce significantly once the plan is updated. It is hoped the new Audit Director will attend the next Committee meeting. Closed action points will be removed off the list. THAT THE INFORMATION BE RECEIVED. Daly/Black CARRIED 5.2 New Zealand Transport Agency Final Financial Audit Report The Manager Support Services spoke to the report prepared by the New Zealand Transport Agency (NZTA) Investment Audit Report Monitoring Investment Performance. The objective of this audit is to provide assurance that the NZTA s investment in Hurunui District Council s land transport programme is being well managed and delivering value for money. NZTA also seek assurance that the Council is appropriately managing risk associated with its investment and recommend improvements where appropriate. The Executive Summary stated that the Council encountered significant challenges in the wake of multiple natural events causing substantial damage to its network. Stretched resources resulted in administrative management practices faltering during this period. The Council s ability to successfully deliver its approved programme has not been operationally compromised. The Manager Support Services highlighted the following points: The Manager had highlighted to the auditor the significant issues the Council has had to overcome over the past two years. It is the Council s job to identify and implement areas of best practice, if these are not being adhered to then the Council needs to look at best practice and see how far away it is and make any improvements to comply as soon as possible, however the Manager feels the Council is not far away from operating at best practice. The Manager feels the Council is managing the contract retentions account well. The Committee felt an example of the audit that was slightly excessive was in relation to the documenting methodologies for determining administration costs including in-house services operations. There was some confusion over the flat rate for administration overheads on costs with the Team Leader Finance advising the NZTA set the administration overheads flat rate at 2.25% and to Council s knowledge has not been changed. It was noted that significant time could be spent on determining these costs to be slightly more accurate than using the supplied flat rate.

10 7 Documenting the management structure between Asset Management and Service Delivery has caused some misalignment to what the Council has previously been doing. The Manager feels confident the Council is doing most things well with just some slight adjustments required. The cost of the business unit is always discussed and reviewed to ensure the Council is following budgets. Cr Shier asked for clarification on what the umbrella New Engineering Contract is with the Manager Support Services advising the committee it is the contract set up with SICON, the Council s road maintenance contractor. The portion of professional fees applied to roading is on track with how the professional services are structured. THAT THE INFORMATION BE RECEIVED. Davison/Shier CARRIED 6. RISK ITEMS 6.1 Health and Safety The Team Leader Human Resources provided the monthly report for October 2018 to the Committee, which is to heighten the importance of health and safety in the workplace. The Team Leader Human Resources spoke to the report and advised there were no incidences reported and no working days being lost. THAT THE INFORMATION BE RECEIVED. Dalley/Davison CARRIED 6.2 Performance Report URGENT BUSINESS Meeting Ended A performance report was circulated with the agenda; however the Manager Public Services was not present to speak to the report. THAT THE INFORMATION BE RECEIVED. Davison/Shier Nil. The meeting ended at 3.55pm. CARRIED Next Meeting The next meeting is scheduled for 13 December 2018.

11 8 Meeting Finance, Audit and Risk Committee (Extraordinary meeting) Time and Date 10.55am, 29 November 2018 Venue Council Chambers, 66 Carters Road, Amberley Members Present In Attendance Apologies Conflict of Interest Declarations Health and Safety Urgent Business Presentation from the Chairperson and General Manager, Hanmer Springs Thermal Pools and Spa Management Committee Cr Dick Davison (Chairperson), Mayor Winton Dalley, Councillors Marie Black, Vince Daly and Geoff Shier. Councillors Nicky Anderson, Jason Fletcher, Julia McLean and Michael Ward. Hamish Dobbie (Chief Executive Officer), Jason Beck (Manager Financial Services), Judith Batchelor (Manager Environmental Services), Audrey van der Monde (Manager Community and Corporate Services) and Graham Sutherland (Council Secretary). Nil. Nil. The Chairperson advised of the exits and assembly point to be used in the event of an emergency. Nil. Grant Lilly, Chairperson of the Hanmer Springs Thermal Pools and Spa Management Committee and Graeme Abbot, General Manager, provided a presentation to the Committee. Grant Lilly thanked the Committee for the opportunity to present, gave a summary of the Thermal Pools financial position and said the presentation would provide an overview of the pools business. By way of introduction, Grant Lilly said he was confident that the Management Committee continues to run a safe, solidly performing, responsible and attractive business delivering good results across a range of criteria. He said the key themes were that over the last few years focus was about upgrading frameworks in business, operational and environmental areas and improving performance. He said this needed necessary re-investment in reinvigorating core parts of the business and he was excited to be shifting back to significant investment in improving the customer product in the next year as they will be improving facilities for the customers first-hand experience. The General Manager proceeded with the presentation which covered: the financial results for the 2017/18 Financial Year; the budget for the 2018/19 Financial Year; and project updates. He said 2018 was not the best year as there was a $2.8M budgeted surplus but it ended at only $2.5M, with the Pools overall down on revenue. He noted that the bore level dropped during the year and the complex was unable to get sufficient energy so over 6 months had to use a diesel generator to augment the heating of water, which was a significant cost. He said the business had subsequently established a deeper pump and had better controls in place with

12 9 the new Business Management System (BMS), so it is no longer in jeopardy in this respect. The General Manager said the Spa was down in surplus and revenue, the Tea Kiosk approximately on budget and the Artisan Spa below budget as well. He said the trend in terms of surpluses, was that over the last years since 2013, there had been incremental growth and this one year was a backwards movement, but the intention was to come forward again this year. With respect to the first quarter of this financial year, the General Manager said the numbers look worse than it is, as there was a lot of timing variance involved and repairs and maintenance are done in the period leading up to Christmas. He said the business was slightly down on budget but he was not concerned where it sits and the October figures were about where they should be. The General Manager said he was concerned that overall the village was a bit soft in visitor numbers and the whole Hurunui was experiencing this. He said it was difficult to identify a particular trend as some like the Top10 Holiday Park were fully booked over the holiday period but others were not. Customer numbers from Canterbury were fluctuating and after increasing while there was more traffic along the Lewis Pass route, it was starting to soften now. The General Manager said the Pools had seen good growth in the international market but some softening in the Chinese numbers due to Chinese government warnings after the earthquakes around Hurunui-Kaikoura. They were working on this now to get the numbers up again but he commented that patterns do change. He noted that the visitor numbers from Europe appeared to be stable. Grant Lilly spoke about the strategic focus and five areas that the Management Committee was looking at. He said Health and Safety was a key focus given the new legislation and there was a big emphasis on revamping staff engagement and he was mindful of key three groups that the business has responsibility for staff, customers and contractors on the premises. Grant Lilly said he was confident that the business has robust frameworks in place to meet all its obligations. Grant Lilly said the Committee reworked the strategic plan four years ago and then produced a master plan for development of the site. They were aiming to build a reworking of the strategic plan into the current business plan. With respect to the environmental plan, the business had done a number of things to improve the managing of its environmental responsibility and put cornerstones in place like the new BMS. He said there was a lot of focus on tourism businesses being responsible environmental managers now and the Pools had achieved many of the big targets and were now focusing on smaller things like phasing out plastic cups for example. In terms of drug and alcohol policy, management was doing testing and this was a significant part of the Pools responsibility. Grant Lilly spoke about the Queen Mary Hospital site, where they were working with the Council on efforts to develop the Soldiers Block and the wider site. They had spent some money on preparatory work, through a company called Select, with ideas to take to the next stage. Grant Lilly said the Pools interest was in two things; that the Reserve can be put to wider use which was better for business and the community that the Pools works and lives in; and secondly and more directly, that the Pools was starting to maximise its existing footprint and has flagged plans to look at how to develop a larger footprint for future growth. Grant Lilly said that the organisation also runs a risk register, which is reviewed regularly and comes to the Management Committee, so there was a good process

13 10 for identifying and managing risk. The General Manager advised that there was a fraud incident in the I-Site which ended in a staff member being terminated. He said it was an isolated issue and it had been dealt with and recorded through normal processes. He said the matter was now closed. Grant Lilly discussed the significant development of the methane project, which was expensive, but the Management Committee decided to go ahead. They were now bettering the expected numbers regarding the annual saving and were looking to save $10-15k more in power each year, so it would have an earlier payback. The General Manager said another addition not identified in the original feasibility study, is adding some kit to use the generated heat and save on water coming out of the ground. He said the BMS system now runs the whole operation and to date has saved 66 million litres of thermal water being pumped, as it can move water into the heat exchangers more easily and make savings. The General Manager said the next target was potable water and trying to save on this as well. The General Manager said they were working on the challenge of the discharge bore and this was so far not successful, but they have drillers on site looking for an appropriate process. They are keeping ECan aware of what they are doing. The General Manager discussed the Hello Summer programme in Hanmer Springs this summer, with a number of activities planned, also in conjunction with other operators. He said the focus was to say there was more going on in Hanmer Springs than just the Pools. Grant Lilly said these were good initiatives over the period designed to maximise visitation. He said in terms of getting ready for 2019 the Management Committee had signed off on capital expenditure of $4M for two major enhancements. He said this was in the context of the masterplan, which had a large number of ideas looking at what things add most value to the business and customers. The two things supported were installing another activity slide and making it more exciting, as well as building a new signature pool to make a statement to be the most attractive pools. He said this was announced publicly a few weeks ago and got good promotional coverage nationally. Grant Lilly said the intention was for these to be in place for December The General Manager explained the design of the proposed cascade pools including beach access for people with mobility issues. He said half of the water will be using heat from the methane project and fresh water coming off the roof of the Tea Kiosk. The General Manager provided details of the new slide which will be an exciting ride and the combined rides will handle more people than just the current slide, with people buying a package for both rides for a certain period. Cr Davison noted that at the last Hurunui Tourism Board meeting, a local member was a bit pessimistic about the future regarding the tourism market, so asked if part of the thinking around the development projects was trying to maintain numbers and profitability in this context. Grant Lilly said the current plans were based on 2.5% annual volume growth, which he thinks is realistic, noting that some years it will be more, others less. He said the last two years had been fascinating in terms of influences on the business. He said there were two big trends, the first that when the road from Christchurch was so bad due to traffic increases, day trips from Christchurch people mostly stopped. That was starting to come back in 2018 but the other factor was that more international visitors were coming in and overall tourism into New Zealand was still growing at a good rate. The General Manager said when the Pools did its last major expansion, it had a good response, mainly

14 11 because of the profile generated and he thinks there will be a similar lift after these projects are completed. Cr Black asked about the markets the new proposed activities were pitched at as the high energy ride may not suit the international visitors, like Chinese wanting a more passive experience. The General Manager said there were two aspects to this, first and foremost the new cascade pool was very passive and they have deliberately delineated the complex, so there was some noise at one end and a focus on rest and quiet elsewhere. He said the Hanmer Springs village vibe is family based and a quieter environment and the biggest accommodation focus is around the family market. He said he was comfortable that the new projects would be in keeping with this. Grant Lilly said that by doing both projects, they will be catering for two important groups. Cr Fletcher said that information on social media suggests that all the interest was about the new slide, which is a long time coming and good news to have coming out of Hanmer Springs for all tourism businesses, as there was evidence of softer numbers in the accommodation sector at the moment. Cr Davison thanked Grant Lilly and Graeme Abbot for the presentation. Meeting Ended The meeting ended at 11.54am.

15 12 Finance, Audit & Risk Committee Action Sheet Item No Initiation Date Matters to be actioned Action by Action Due Date 1 15-Mar Review of the Cheviot Medical Centre Upgrade project to be reported to a subsequent meeting Aug (Council meeting) The Council asked the Committee to have a discussion at some stage about the discipline and monitoring of the capital programme, to avoid carried forwards as much as possible. The Chair would like to set aside time to learn how the Committee and Council can have a real time understanding of where the Council is at with the capital projects which may involve better calendarisation and more timely reporting processes Nov The electricity account should include a competitive contracts process. CEO Manager Support Services Manager Support Services Resolved at March meeting that the Cr Davison, Cr Harris and Manager Support Services have formed a working group to review the Cheviot Medical Centre project. As part of the Enterprise Software system, there is a module called Project Accounting. This is the key system that we are relying on to monitor projects. Initial information provided to the working group. Awaiting a meeting with the project manager to report back to the working group.

16 13 KNOWN FINANCE, AUDIT & RISK COMMITTEE FORWARD PROGRAMME 2019 Meeting Dates Report/Other Responsibility 21 February Financial Report MSS Treasury Position MSS Rates Arrears MSS Health & Safety MSS Performance Reporting MPS 21 March Financial Report MSS Treasury Position MSS Rates Arrears MSS Health & Safety MSS Performance Reporting MPS Acronym Key: CEO Chief Executive Officer MPS Manager Public Services MRS Manager Regulatory Services MSS Manager Support Services MISA Manager Infrastructure Services - Assets MISD Manager Infrastructure Services - Delivery CS Council Secretary

17 14 To: Report Prepared By: Finance, Audit and Risk Committee Jason Beck, Manager Support Services Date: 13 December 2018 Significance: Low Financial Report for November 2018 Recommendation Executive Summary After considering all issues, options and the known views of those affected, as well as giving consideration to the level of significance and the legal and financial implications, the recommendation of this report is: THAT THE INFORMATION BE RECEIVED. Attached is the Financial Report for the Hurunui District Council for the five months ended 30 November The report is split into the key activities and then further broken down to the sub-activities. Report Overall Financial Report Group Activity Summary Water Supplies Group Activity Summary Sewerage Group Activity Summary Stormwater Group Activity Summary Roads and Footpaths Activity - Roading Activity Roadside Construction Group Activity Summary Public Services Activity Community Services Activity Property Activity Reserves Activity Emergency Services Activity Library Activity Waste Minimisation Group Activity Summary Regulatory Services Activity Resource management & Planning Activity Compliance & Regulatory Functions Group Activity Summary Hanmer Springs Thermal Pools & Spa Group Activity Summary Governance & Corporate Activity Governance Activity Treasury Activity Corporate Group Activity Summary Earthquake Recovery

18 15 Appendices Financial Report for November 2018 (To be circulated) Report Prepared by: Officer in Attendance: Jason Beck Manager Support Services An officer will be in attendance to speak to their report.

19 16 To: Report Prepared By: Finance, Audit and Risk Committee Jason Beck, Manager Support Services Date: 13 December 2018 Significance: Low Rate Arrears as at 30 November 2018 Recommendation Executive Summary THAT THE INFORMATION BE RECEIVED. The Rate Arrears report provides information about how collection of rates has occurred over time. During November, the second instalment of rates were due, so a significant amount of the rates was paid by the 20 th. The amount owing at the end of November was $1,038,152.50, which compared with the balance as at 30 November 2017 of $1,016, a 2.12% increase, which is lower than the rates increase charged for the 2018/2019 year. As at 31 October 2018, there was a total of $557, (from 1,127 individual ratepayers) that was paid in advance. There are now 29 ratepayers (October 2018: 32) who owe a total $76, (October 2018: $78,064.50) from before 30 June In addition, 178 ratepayers (October 2018: 225) owe a total of $198, (October 2018: $226,849.94) from last year. Rates Remissions for Earthquake Affected Properties The Rate Remission policy has been extended for a further year for those properties still subject to a Section 124 notice. The total remissions provided to date was $31, Appendices Rate Arrears as at 30 November Report Prepared by: Jason Beck Manager Support Services Officer in Attendance: The Manager Support Services will be in attendance to speak to his report.

20 17 HURUNUI DISTRICT COUNCIL RATES ARREARS REPORT AS AT 30 NOVEMBER 2018 Balance of Rates Owing 30 November October September August July June May April March February January December November 2017 Pre 1 July 2017 Rates Due 76, , , , , , , , , , , , , Due from 2017/ , , , , , , , , , , , , , /2019 Instalments Due 694, ,439, , , ,695, , , ,179, , , ,061, , , Penalties Due 67, , , , , , , , , , , , , Total Rates Owing 1,038, ,790, , ,017, ,143, , , ,358, , , ,374, , ,016, Less Rates Paid in Advance 557, , , , , , , , , , , , , Rates Control Account 480, ,302, , , ,997, , , ,290, , , ,095, , , Number of Properties Owing Rates 30 November October September August July June May April March February January December November 2017 Properties owing greater than $5, Properties owing between $1,000 and $5, Properties owing between $500 and $1, , , , , Properties owing between $100 and $500 1,437 4, ,489 4, ,501 4, ,402 4, ,490 Properties owing between $10 and $ Properties owing less than $ ,392 8,122 1,185 2,424 8, ,395 8,209 1,252 2,371 8, ,350 Number of Properties Paid in Advance 30 November October September August July June May April March February January December November 2017 Properties overpaid greater than $5, Properties overpaid between $1,000 and $5, Properties overpaid between $500 and $1, Properties overpaid between $100 and $ Properties overpaid between $10 and $ Properties overpaid less than $ , , ,124 1, , ,018 1, ,285 1,095

21 18 7,000, ,000, ,000, ,000, ,000, ,000, ,000, Total Rates Owing Total Rates Owing 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Number of Properties Owing Rates Number of Properties Owing Rates Rates Paid in Advance Number of Properties Paid in Advance 900, , , , , , , , , Rates Paid in Advance 2,500 2,000 1,500 1, Number of Properties Paid in Advance

22 19 To: Finance, Audit and Risk Committee Report Prepared By: Jason Beck, Manager Support Services Date: 13 December 2018 Significance: Low Treasury Report November 2018 Recommendation Executive Summary Treasury Policy THAT THE INFORMATION BE RECEIVED. The Treasury Report, pursuant to the Treasury Risk Management Policy, is attached. The monthly treasury report to the Finance Audit and Risk Committee, pursuant to the policy, consists of: Treasury Risk Management Policy compliance Borrowing limits Funding and Interest Position Profile Funding facility New treasury transactions Cost of funds vs. budget Cashflow forecast report Liquidity risk position Counterparty credit Treasury performance Funding and interest rate strategy commentary Treasury exceptions Appendices Appendix 1 - Treasury Report November 2018 Report Prepared by: Officer in Attendance: Jason Beck Manager Support Services The Manager Support Services will be in attendance to speak to his report.

23 20 Hurunui District Council Treasury Report As at 30 November 2018

24 21 CONTENTS

25 Treasury Risk Management Policy Compliance Checklist Hurunui District Council Interest Rate Position Current Core Debt: Nov-18 Policy Limits 50% - 90% Overall Fixed:Floating Mix 61% Policy Compliance Y Liquidity Ratio: 110% Actual 128% Policy Compliance Y Fixed Rate Maturity Profile: Years 1-3 years 3-5 years 5 years plus Policy Limits 15% - 60% 15% - 60% 10% - 60% Actual Hedging 44% 18% 38% Policy Compliance Y Y Y Funding Maturity Profile: Years 0-3 years 3-5 years 5 years plus Policy Limits 15% - 60% 15% - 60% 10% - 60% Actual Hedging 39% 24% 37% Policy Compliance Y Y Y Weighted Average Duration: Funding 1.71 Years Fixed Rate Portfolio (swaps and fixed rate loans) 4.38 Years Weighted average fixed rate on current borrower swaps*: Swap Portfolio 4.39% * Note: non-active forward starts are not included. 2.0 Borrowing Limits Ratio Hurunui District Council LGFA Actual Lending Policy Covenants

26 Funding and Liquidity Risk Position Hurunui District Council 30-Nov-18 Committed Loan/Stock/Facilities/Investments $47m Current External Debt $32m Policy Liquidity Ratio >=110% Actual Liquidity Ratio 128% 0-3 years 3-5 years 5 years plus 15%-60% 15%-60% 10%-60% 39% 24% 37% Drawn Loans Commercial Paper Available Linked Deposits 4.0 Interest Rate Risk Position & Fixed Position Chart 30-Nov-18 Minimum 50% Maximum 90% Actual Floating Actual Fixed 39% 61% 1-3 years 3-5 years 5 years plus 15%-60% 15%-60% 10%-60% 44% 18% 38% Hurunui District Council 12 Month Debt Forecast $32m

27 24 Fixed Position Based on LTP Debt Forecast Fixed Position Based on Current Debt Forecast

28 25 Current Live Swaps Bank Start Date Maturity Date Amount Interest Rate Note TOTAL $14,000,000 Current Forward Start Swaps Bank Start Date Maturity Date Amount Interest Rate Note TOTAL $7,500,000 Current Options Bank Start Date Maturity Date Amount Interest Rate Note TOTAL $6,000,000

29 Interest Rate Markets

30 Funding Facility Debt Bank Maturity Date Drawdown Amount Facility Limit Call Term TOTAL $32,000,000 $41,000,000 Term Deposit Bank Start Date Maturity Date Amount Interest Rate Note TOTAL $9,000,000 Available bank facility capacity (liquidity This month Last month buffer)

31 New Treasury Transactions (November 2018) Interest Rate Borrower Swaps Bank Notional Amount (NZDm) Deal Date Start Date Maturity Date Swap Rate Interest Rate Options Bank Notional Amount (NZDm) Deal Date Start Date Maturity Date Option Rate Debt (LGFA) Bank Amount (NZDm) Borrower notes (NZDm) Deal Date Start Date Maturity Date Debt (Westpac) Bank Amount (NZDm) Borrower notes (NZDm) Deal Date Start Date Maturity Date Term Deposit 8.0 Cost of funds vs budget Month YTD Full Year Actual Budget Actual Budget Budget

32 Cash Flow Forecast 10.0 Counterparty Credit Counterparty Credit Risk (Interest Rate Risk Mgmt Instruments and investments) Policy Credit Limit (NZ$) per NZ Registered Bank (Interest rate risk management) $ 10,000,000 Policy Credit Limit (NZ$) per NZ Registered Bank (Investments) $ 10,000,000 Policy Credit Limit (NZ$) per NZ Registered Bank (Total maximum per counterparty) $ 20,000,000 Credit Exposure Credit Exposure (Swaps) (Investments) Compliance ($m) ($m) WPC Y ANZ Y 11.0 Treasury Performance

33 Funding and Interest Rate Strategy Commentary Funding Strategy Interest Rate Strategy 13.0 Policy exceptions Date Detail Approval Action to rectify

34 31 To: Report Prepared By: Finance, Audit and Risk Committee Jason Beck, Manager Support Services Date: 13 December 2018 Significance: Low Audit New Zealand Management Report Action Points December 2018 Recommendation Executive Summary THAT THE INFORMATION BE RECEIVED. Attached is the Action Point Report that was developed to provide a recording system to ensure that the recommendations that were made by Audit New Zealand as part of the Management Report are systematically dealt with. Note that any changes to the schedule have been shown in red. If an action point has been closed off, it is struck through and then will be removed from the schedule completely in the following month. Once the Annual Report has been completed, there will be an updated Management Report from Audit New Zealand. This will be coupled with an opportunity for the Committee to meet with the Auditors both with and without management being present. Appendices Audit New Zealand Management Report - Action Points December 2018 Report Prepared by: Jason Beck Manager Support Services Officer in Attendance: The Manager Support Services will be in attendance to speak to his report.

35 32 AUDIT NEW ZEALAND - MANAGEMENT REPORT - ACTION POINTS FOR HURUNUI DISTRICT COUNCIL DECEMBER 2018 Recommendations Current Status Management Response Action to Date Who When Roading Revaluation Open The points are noted. There will be a change in The full revaluation of roading has been MIS-A & 2019 Annual Review the processes around asset revaluations and put in place procedures to avoid this year s issues occurring in subsequent financial years. the roading section of the asset management team and that will also allow a full review of the valuation process. deferred until 30 June This is because there will be no gain in revaluing in 2018 as still reinstemnent work to be carried out and uncertainty around the Inland Road. MSS Report Customer Service Request (CSR) system Develop systems to accurately report information required to report against this measure. Bacterial compliance Investigate the reason for the data inconsistencies between the District Council s records, the WINZ database and the Ministry of Health (MOH) s annual compliance report. Perform regular reconciliations between the various sources of data. Open Open Council staff will continue to develop systems to accurately report this measure. A process to perform reconciliation between Council records and the WINZ database will be developed. None None Mgt Team MIS-A Asset Management Investigate options for an asset management system which can interface with RAMM to provide all the required financial information for the District Council s roading assets. Evidence of Independent review of the rates reconciliation and masterfile The Manager Support Services should independently review the rates reconciliation and masterfile changes made to the rates records by the Rates Officer. Fraud risk management Undertake an annual review of areas susceptible to fraud. Open Open Open The points are noted. Council staff have been reviewing options for the provision of the roading information to NZTA other than RAMM that is fully integrated with the Council s General Ledger system but are yet to find a cost effective solution. Further review will take place. We will implement the process of reviewing the reconciliations. The Finance Audit and Risk Committee has been scheduled to review the Fraud Policy in June There is currently no system that meets NZTAs's requirements that fully integrates with our software. As part of the revaluation process will be an assessment on how RAMM reconciles with the General Ledger. None MIS-A and MSS Updated Fraud Policy adopted by Council. MSS Managament Team will undertake an annual review of the areas suseptible to fraud in the new year. February Legislative compliance Develop a schedule of significant legislation. Using this delegate responsibility for ensuring compliance to appropriate senior managers. This schedule can be used as a basis for reporting to the Council, providing it with positive assurance that no legislation has been breached. Open The Council updated its Delegations Manual in Initial work has been undertaken to update November A schedule of the relevant the delegations. legislation that Council has been developed. The schedule will be reviewed by the Senior Management Team in March 2017 to ensure that all relevant legalisation has been complied with. Mgt Team February Reconciliation of the Fixed Asset Register (FAR) to General Ledger (GL) Perform regular reconciliations between the FAR to the GL to ensure that variances are followed up and corrected in a timely basis. Independently review the reconciliations on a one up basis. Open The reconciliations of the Fixed Asset Register and the General Ledger will be undertaken from December 2016 onwards. These will be reviewed and evidence will be provided of the review. This is now carried out MSS November

36 33 AUDIT NEW ZEALAND - MANAGEMENT REPORT - ACTION POINTS FOR HURUNUI DISTRICT COUNCIL DECEMBER 2018 Recommendations Current Status Management Response Action to Date Who When Assets recorded outside of the fixed asset register Add assets currently sitting outside the fixed asset register to the fixed asset register. Calculate depreciation through the fixed asset system. Roading asset additions Implement a regular reconciliation between roading additions capitalised in the GL to the roading additions capitalised in the RAMM. Capitalised work in progress (WIP) Project managers should review items coded as capital expenditure to ensure only appropriate costs are being capitalised. Finance should also review and confirm that the treatment of capital WIP is correct during the year. High annual leave balances Introduce procedures to actively manage and reduce high annual leave balances. Review of aged debtors Review debtors to ensure: - the provision reported complies with accounting standards; - the debt collection policies are appropriate and - the debt collection policies are followed. Management should also review the level of the doubtful debts provision to ensure that it remains at an appropriate level. A proposal to write off any debt that is unlikely to be received should go to the Council for approval. Open Open Open Open This will be completed as part of the reconciliations above. The review of the Finance Team Functions will identify resource requirements to undertake this process. The review of the Finance Team Functions will identify resource requirements to undertake this process. To be discussed by the Senior Management Team in February to formalise a policy. Regular reviews of the Debtors ledger have been scheduled. This is now carried out MSS November The capitalisation process is being finalised. MSS December The capitalisation process is being finalised. MSS December A discussion with the Management Team needs to be held. Work has been undertaken to identify doubtful debts as part of the Annual Report process. A further report to the Finance Audit and Risk Committee will be tabled recommending action. Mgt Team On-going MSS February Review of clearing accounts and debtor and creditor balances Regularly review receivables and payables balances paying particular attention to older items. In 2014, we identified building and resource consents bonds between one and four years old. Note that the older bonds are individually insignificant. Open Regular reviews of the Debtors ledger have been scheduled. Work has been undertaken to identify and to action bonds and credit balances in the debtors ledger. MSS Credit note system Open Create a credit note listing on a regular basis and independently review this for reasonableness before authorisation issuing credit notes. Review of Consent Bonds & Retentions Open Review outstanding balances for collectability and write off balances where appropriate. This process will be now undertaken with a review of all credit notes carried out by an independent person. A review will now take place as part of the monthly audit file review. The finance team is developing a process to independently review all credit notes. MSS A review of the Bonds and Retentions was MSS carried out during the annual report process. Further work will be undertaken to clear balances where appropriate. December