Risk and Assurance Committee – Terms of Reference

Fields of Activity

The Risk and Assurance Committee is responsible for assisting Council in its general overview of financial management, risk management and internal control systems that provide:

• Effective management of potential risks, opportunities and adverse effects.

• Reasonable assurance as to the integrity and reliability of the reporting on financial performance of Council, including quality of audit services.

• Monitoring of Council’s requirements under the Treasury Policy.

• Monitoring of Council’s Strategic Risk Framework.

• Monitoring of Council’s legal compliance.

• Monitoring of Council’s health and safety compliance.

• Monitoring significant projects, programmes of work and procurement focussing on the appropriate management of risk.

• Oversight of preparation of the Long Term Plan, Annual Report, and other external financial reports required by statute.

In light of the impacts Cyclone Gabrielle has had on the communities in the district, the Committee will pay particular attention to activities affected within its Fields of Activity, including but not limited to and always in support of the work of Council and the Standing Committees:

• Oversight of cyclone-related insurance claims and issues.

• Monitor funding implications associated with recovery costs, including oversight of the process for recoveries from government.

• Monitor valuation process for cyclone-damaged assets, including impairments particularly relating to roading.

• Support post-cyclone expenditure planning by ensuring good process is applied.

Membership – 8 (including 5 Councillors)

· 5 Councillors - with one being the Chair of Performance and Monitoring and one being the Chair of Strategy and Recovery, or their equivalents.

· Deputy Chair appointed by Council.

· 2 external independent members appointed by Council, with one being appointed as the Chair.

· 1 Heretaunga Takoto Noa Māori Standing Committee Member appointed by Council

Quorum – 4 members

DELEGATED POWERS

Authority to consider and make recommendations on all matters detailed in the Fields of Activity and such other matters referred to it by Council.

Te Rārangi Take
Order of Business

1.0	Apologies – Ngā Whakapāhatanga At the close of the agenda no apologies had been received. At the close of the agenda no requests for leave of absence had been received.
2.0	Conflict of Interest – He Ngākau Kōnatunatu Members need to be vigilant to stand aside from decision-making when a conflict arises between their role as a Member of the Council and any private or other external interest they might have. This note is provided as a reminder to Members to scan the agenda and assess their own private interests and identify where they may have a pecuniary or other conflict of interest, or where there may be perceptions of conflict of interest. If a Member feels they do have a conflict of interest, they should publicly declare that at the start of the relevant item of business and withdraw from participating in the meeting. If a Member thinks they may have a conflict of interest, they can seek advice from the General Counsel or the Manager: Democracy and Governance (preferably before the meeting). It is noted that while Members can seek advice and discuss these matters, the final decision as to whether a conflict exists rests with the member.
3.0	Confirmation of Minutes – Te Whakamana i Ngā Miniti Minutes of the Risk and Assurance Committee Meeting held Monday 14 October 2024. (Previously circulated)
4.0	Insurance Update	7
5.0	Treasury Activity and Funding Update	11
6.0	Project Genesis - Supplier Technology1	15
7.0	Assurance Activity Update	19
8.0	Health, Safety & Wellbeing Update	47
9.0	Risk and Assurance Committee Status of Actions and Work Programme	51
10.0	Risk Deep Dive - Climate Action	57
11.0	Rates Update	61
12.0	2023/24 Audit Report on Control Findings and issues identified	67
13.0	Minor Items – Ngā Take Iti
14.0	Urgent Items – Ngā Take Whakahihiri

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Jeff Tieman, Management Accountant

Te Take:

Subject:

Insurance Update

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

Renewal

1.1 All terms for 1^st November renewal have now been received (at time of writing), except Personal Accident. Attached is the 2024/25 insurance renewal summary spreadsheet outlining the policy and premiums.

1.2 The Material Damage, Business Interruption (MDBI) policy saw a small reduction in premiums. This was a combination of a decrease in insure value ($716m in 2023 to $705m 2024). The lead NZ insurers were flat with their pricing at this renewal and the London markets reduced their pricing by 5%. The London markets cover 15% of the portfolio.

1.3 The motor vehicle policy saw the NZ insurers offer the same pricing as last year for the Hawke’s Bay group. However, Hastings District council had an uplift in value within the group of 14%. It was agreed that the group premiums should be split based on vehicle values and this saw an increase of $16,000 for the council.

1.4 Professional Indemnity and Public Liability had already been confirmed and was reported on in the insurance update on the 14^th October.

1.5 Infrastructure policies in general have seen some large reductions on a like for like valuation. However, due to valuation changes (Bridge policy) and loss limit changes (3 waters with LAPP and Bridge policy) total premiums have gone up. The changes in valuation and loss limits were reported on in the insurance update on the 14^th October.

1.6 Other minor policies as per the attached schedule are either flat or had small premium increases.

1.7 The overall insurance budget for 2024/25 is $4,449,511. This compares to the final renewal program of $4,012,117. A savings of $437,394.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled Insurance Update dated 18 November 2024.

Attachments:

1 ⇩

Insurance Renewal Summary 2024/25

CG-13-7-00123

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Aaron Wilson, Financial Controller

Te Take:

Subject:

Treasury Activity and Funding Update

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to update the Risk and Assurance Committee on Treasury activity and Funding issues.

1.2 Since the last update on 5^th August 2024, Council has not needed to borrow any further funding. This is in line with the LTP Year One and current cash forecast, where it is expected, Council will need to borrow in December 2024.

1.3 Officers put a short-term deposit of $20m with BNZ for 1month at 4%, this earned interest of $86,858.59.

1.4 Council’s total external debt on 30^th October 2024 is $412.7m, with debt forecasted to rise to $489m by 30 June 2025. Based on the 2024-25 LTP budgets Council will need to increase the total borrowings by $96m this financial year.

1.5 Council has facilities of $45m with the cost of these facilities 0.3%.

1.6 As was reported at the last treasury update officers are intending to target further cover as it becomes financially efficient to do so. With the Reserve bank now in a cutting cycle and Council cover within policy, officers in conjunction with Council Treasury advisors Bancorp, watching the market pricing of swaps to ensure the purchasing of further cover is financially efficient to do so.

1.7 With this in mind, officers have not engaged in any further swaps at this time and are looking to take opportunities as they present themselves.

1.8 Council’s Treasury advisors will be attending the Risk and Assurance meeting and will be presenting to the meeting aspects of treasury that relate to debt and cover to enable a clearer understanding of Council treasury strategy and what the market looks like over the next 12 – 18 months.

1.9 Council is currently compliant with its existing Treasury Management Policy for the 2024-34 debt profile.

1.10 The Reserve Bank of New Zealand’s (RBNZ) Official Cash Rate (OCR) has now dropped to 4.75% which is a further drop from its review on 14 August 2024. Its next review is 27 November 2024. The following is a summary of the RBNZ’s points in arriving at the decision to cut rates further:

· Business investment and consumer spending have been weak.

· Excess capacity has dampened inflation expectations, and price and wage changes are now more consistent with a low inflation environment.

· Global economic growth remains below its long-run trend and is expected to remain so for the year ahead.

· The economic environment provided scope to further ease the level of monetary policy restrictiveness, consistent with its mandate of low and stable inflation.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled Treasury Activity and Funding Update dated 18 November 2024.

3.0 Background – Te Horopaki

3.1 The Hastings District Council has a Treasury Policy which is a summarised version of the Treasury Management Policy and forms part of the 2024-2034 Long Term Plan. Under these policy documents, responsibility for monitoring treasury activity is delegated to the Risk and Assurance Committee.

3.2 Council is provided with independent treasury advice by Bancorp Treasury Services and receives daily and monthly updates on market conditions.

3.3 Under the Treasury Policy, formal reporting to Council occurs quarterly and regular more in-depth treasury reporting is provided for the Risk and Assurance Committee. The Treasury Policy has been updated to reflect the current financial situation and in support of the 2024-34 Long Term Plan.

3.4 The following graph shows Council’s level of cover and is within the treasury policy bands for cover.

3.5 As was noted in the previous treasury update, Council remains fiscally constrained due to its forecasted debt profile in the coming years. June 2025 is forecasted to exceed the debt to revenue ratio limit as per the Treasury policy of 250%. As at 30^th October Council remains on track with the Net debt as a % of revenue.

	Forecast Debt	Forecast Debt to revenue ratio
June 2025	$489m	251.84%
June 2026	$573m	256.94%
June 2027	$640m	251.10%

Attachments:

There are no attachments for this report.

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Maree Goldie, Senior Digital Project Manager

Te Take:

Subject:

Project Genesis - Supplier Technology1

1.0 Purpose and summary - Te Kaupapa Me Te Whakarāpopototanga

1.1 This report provides a brief overview of project Genesis progress.

Objective: Project Genesis aims to modernise and enhance the current digital platform by replacing the out of support Technology1 system (on premises) with Technology1 One Council (Cloud environment), streamlining processes by removing the 260 customisations and improving user experience.

This project intends to increase operational efficiency and future proof HDC with a modern system that can be built on later. HDC can become more customer centric and provide a more robust, secure, and user-friendly digital environment.

· Senior Project Manager – Maree Goldie – started late August 2024.

· Senior Change Manager – Janet Sullivan – started October 2024.

· The budget has been reviewed and finalised for the next 2 years.

· Staffing requirements have been reviewed. Internal staff will work on the project, with five to be backfilled and one Business Analyst to be advertised on fixed term 2-year contract. The team are enthusiastic and ready to help.

· The Project plans have been completed and updated as required.

· The communication and engagement plan, business readiness assessment, change impact assessment and training needs analysis are all underway.

· Agile Scrum methodology is being used for task planning and review. Training for the team is underway. This will run with a fortnightly planning meeting and daily standup meetings.

· The implementation will occur in two phases – Finance will move to the cloud first, completion estimated to be late May 2025. Property and Rating will then start and is a reimplementation to cloud Ci Anywhere. This is estimated to end in 2027.

· Technology1 has very recently been far more responsive; they have an experienced Technical Account Manager and Technical SaaS Manager assigned to Council’s finance move. The Project Manager is working closely with Council’s Project Manager and delivering on time.

2.0 Risk Register

HDC have registered via the Risk Quantate System several risks of which the following are at an extreme or high level with limited controls: (please refer to report via Quantate attached):

· Project Staff - The project staff may have existing challenges that could impact their health and wellbeing and hinder the project progress. Controls are limited due to confidential programs that individuals may not follow.

· Supplier lack of knowledge - Due to loss of staff and project fatigue the supplier may not have the configuration knowledge to support an effective implementation for HDC. Controls are limited due to the unknown internal workings of the supplier. CVs on the project staff from Techology1 does show several relatively new staff – however they do have extensive other experience.

· Budget/Scope - This is a project that has a high impact on people, process, and technology - any change to scope could impact one or more of the following: budget, staff, community, time and delivery. PM will be working very closely with the supplier to monitor all time spent on each issue, allocating an agreed number of hours to work. If work is shifted from one consultant to another HDC will not pay for the training of Technology1 staff.

3.0 Recommendation– Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled Project Genesis dated 18 November 2024.

Attachments:

1 ⇩

Attachment Risk and Compliance 7_11 Project Genesis

CG-17-6-00152

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Steffi Reeves-Bird, Risk Manager

Regan Smith, Chief Risk Officer

Te Take:

Subject:

Assurance Activity Update

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to provide the Committee with an update on the following assurance activities at Hastings District Council (HDC):

· Assurance Review Plan 2024-2027

· Fees & Levies Audit Report (undertaken by Crowe)

· Environmental, Social & Governance Review Report (undertaken by HDC’s internal assurance function)

1.2 Assurance Review Plan 2024-2027

· The Lead Team have approved the Assurance Review Plan 2024-2027 (Attachment 1) which outlines the audits and reviews proposed to be undertaken over the next three financial years, internally and by the externally appointed, internal auditor, Crowe.

· With a focus on assurance over the enterprise (tier 2) risks, this plan has been developed by the Risk Manager with consideration of HDC’s assurance map, discussions with management and Crowe, and trends observed in both the internal and external environments.

· The following reviews have been prioritised for completion during the 2024/25 financial year:

- Regulatory solutions review (led by HDC Risk & Assurance Team)

- Data analytics audit (led by Crowe)

- Procurement and contract management audit (led by Crowe)

· An executive report for each of these reviews and audits will be provided back to the Committee upon completion.

1.3 Fees & Levies Audit Report

· Crowe have undertaken an audit of the setting and administering of fees and levies in the Community Wellbeing & Services (CW&S) area (Attachment 2).

· The audit was based upon good practice guidance from the Office of the Auditor General, with a focus on the processes and principles applied when setting fees across a range of CW&S activities.

· The audit resulted in an overall control rating of Moderate, with three findings (all moderate) and four subsequent recommendations. All recommendations have been allocated to the responsible officer and have either been completed or are in progress.

Recommendation	Rating
Management needs to develop the operating framework to support the setting and management of the fees and levies. This should include developing documented operating procedures that outline roles and responsibilities and key tasks performed. An overarching methodology for setting fees and levies needs to be adopted by Council. (e.g. is the approach to be full or partial cost recovery, profit making, defined subsidy etc) This framework should be allocated a review period and be approved to ensure that the processes performed remain current and complete.	Moderate
Management to implement a process for monitoring, evaluating, and responding to OAG and other integrity agency reports that specifically relate to local government to ensure the council is informed about relevant findings and recommendations.	Moderate
A response to interagency reports relating to local government should be provided to Executive and the Audit Committee as appropriate.	Moderate
Management should implement a systematic approach for monitoring and reviewing changes to the master file. Evidence of this review to be maintained.	Moderate

1.4 Environmental, Social & Governance Review Report

· HDC’s Risk Assurance function has undertaken a review of Council’s current ability to achieve Environmental, Social & Governance (ESG) reporting requirements (Attachment 3).

· This review was carried out as a gap analysis and utilised Sustainability Standards from the Global Reporting Initiative (GRI), which are considered best practice globally for sustainability or ESG reporting purposes and are used by many large corporations already completing non-financial reporting each year. A copy of the full GRI Standards is provided (Attachment 4)

· Additionally, there are organisations voluntarily reporting on ESG standards already, which may include disclosures relating to climate risks and/or impacts, their workforce diversity, equity and inclusion (DE&I), impacts to the wider community, and a raft of other topics.

· HDC is not currently required to make non-financial disclosures, compared to other entities which are mandated to make climate-related disclosures under legislation. There are a small number of New Zealand Councils who are included in this group of entities already.

· Given the absence of any legislative requirement at this point in time, the focus of this review was to assess the ability of Council’s current operations in meeting ESG reporting requirements. The review did not assess whether the content of any such report would meet community expectations.

· The review resulted in an overall rating of substantially effective, with four low risk findings and five subsequent recommendations.

· These five recommendations are all associated with the collection and storage of relevant information at an organisational level, which would enable a centralised approach to compiling a potential ESG report, should it be either required or pursued voluntarily in future.

Recommendation	Rating
Consideration could be given to a central register for recording any known instances of non-compliance across the organisation.	Low
Consideration could be given to developing a mechanism which records membership associations of staff members and Council Groups (e.g. Taituarā, industry bodies).	Low
Consideration should be given to developing a mechanism that can capture all suppliers and contractors that Council engages with, including the nature of the engagement, to ensure that organisation-wide reporting can be compiled easily.	Low
Greater utilisation (through directive, or encouragement) of the myHR platform for recording training attendance and performance planning would result in increased accuracy of the reporting output.	Low
Consideration could be given to proactively seeking disclosure from elected members on any social or interest groups that they represent.	Low

· These recommendations have been allocated to the responsible officers for review of feasibility and priority. It is worth highlighting that the completion of these recommendations would be providing Council with a head start for future reporting.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled Assurance Activity Update dated 18 November 2024.

Attachments:

1 ⇩	HDC Assurance Review Plan 2024-2027	PMD-9-3-24-94
2 ⇩	Executive Summary - Fees & Levies Report (Crowe)	PMD-9-3-24-96
3 ⇩	Executive Summary - ESG&C Expectations Assurance Review Report	PMD-9-3-24-97
4 ⇩	Contents of the GRI Standards	PMD-9-3-24-98

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Jennie Kuzman, Health, Safety and Wellbeing Manager

Te Take:

Subject:

Health, Safety & Wellbeing Update

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to provide information to the Risk and Assurance Committee about the management of Health, Safety and Wellbeing risks within Council.

1.2 This issue arises due to the Health and Safety at Work Act 2015 and the requirement of that legislation for Elected Members to exercise due diligence to ensure that Council complies with its health and safety duties and obligations.

1.3 This report provides a summary update on the Health, Safety & Wellbeing activities, and initiatives underway or planned to be undertaken within the 2024/2025 financial year.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled Health, Safety & Wellbeing Update dated 18 November 2024.

3.0 Discussion – Te Matapakitanga

3.1 This report provides a summary update on Health, Safety & Wellbeing activities, and initiatives underway during the 2024/2025 financial year.

3.2 Policy Development / Review

HSW Policy	Status
Overarching Asbestos Management Plan	Completed. New version issued October 2024.
Rehabilitation & Fit-for-work Policy	Consultation with staff completed October 2024. Feedback being reviewed. Final version to be provided to Lead Team to review in December 2024
Impairment Policy	Consultation with staff completed October 2024. Feedback being reviewed. Final version to be provided to Lead Team to review in December 2024
Health, Safety & Wellbeing Policy	Draft Policy reviewed by Lead Team October 2024. Draft Policy to go to Performance and Monitoring Committee in 2025.
Mauri tū Mauri Ora (Wellbeing) Framework and Work-related Stress Policy	Scheduled to be reviewed following the receipt of the Psychosocial (Wellbeing) Assessment Report.
Health, Safety & Wellbeing Manual	Review Underway. Currently being reviewed by HSW team.
Respiratory Protection Policy and Programme	Scheduled to be reviewed in 2025
Hearing Protection Policy & Programme	Scheduled to be developed in 2025
Menopause Policy	Scheduled to be developed in 2025

3.3 Audits and Assessments

3.4 The Psychosocial Risk Assessment is currently being undertaken by an external party (Umbrella). The survey portion has been completed and focus group interview are in progress. A report is expected in December 2024.

3.5 Inspections are currently being undertaken by an external party (Envirohaz) for renewal of Council’s Hazardous Substances location test certificates at:

· Ōmarunui Landfill

· Clive Wastewater Treatment Plant

· Splash Planet

3.6 Exposure monitoring is scheduled to be undertaken by an external party (Air Matters) in November 2024 with the following teams:

· Ōmarunui Landfill

· Water Operations

· Tomoana Showgrounds

· Splash Planet

· Cemetery & Crematorium

Attachments:

There are no attachments for this report.

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Regan Smith, Chief Risk Officer

Te Take:

Subject:

Risk and Assurance Committee Status of Actions and Work Programme

1.0 Purpose and summary - Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to present the status of actions and a revise annual work programme to the Risk & Assurance Committee for feedback and adoption.

1.2 The Status of Actions is included for reference (Attachments 1 and 2). Updates on several items are included on the agenda for the current meeting. Since the last meeting the following actions have been progressed:

· Progress is being made on improving the timeliness of reporting financial information through to Performance and Monitoring Committee.

· An inventory of Council assets and infrastructure that may be affected by a subduction zone event has been complied. A summary is being developed for reporting to the Committee.

· The effects of a change in Council credit rating has been covered at a Council workshop.

1.3 A revised work programme has been developed that matches the Committee responsibilities under the Terms of Reference to the programme of activities planned for the year (Attachment 3).

1.4 The intention is to enable the Committee to verify the intended annual work programme covers a suitable range of activities to fulfil the Committee’s responsibilities.

1.5 Due to the Local Government election next calendar year, it will be necessary to adjust the standard meeting cycle to enable the out-going Council to adopt the Annual Report prior to the election. To achieve this the Finance team is working with the Council auditors to have the audit report completed in time for a meeting in late September or early October.

2.0 Recommendations - Ngā Tūtohunga

A) That the Risk and Assurance Committee receive the report titled Risk and Assurance Committee Status of Actions and Work Programme dated 18 November 2024.

B) That the Committee adopt the revised work programme (IRB-3-15-24-126) and Standing Agenda items.

Attachments:

1 ⇩	Status of Actions from Risk and Assurance Committee meeting held on 5 August 2024	IRB-3-15-24-125
2 ⇩	Status of Actions from Risk and Assurance Committee held on 14 October 2024	CG-17-6-00156
3 ⇩	Committee Standard Work Programme 2024	IRB-3-15-24-126

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Graham Palmer, Climate Action Officer

Steffi Reeves-Bird, Risk Manager

Te Take:

Subject:

Risk Deep Dive - Climate Action

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of the report is to provide the Committee with an update and overview of the current risk profile for climate change risk, through a risk deep dive.

1.2 Council’s strategic risk register includes the identified risk of ‘Failure of climate adaptation’ and the attached deep dive is primarily focused on this risk, along with highlighting recent work led by Council’s Climate Action Officer.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled Risk Deep Dive - Climate Action dated 18 November 2024.

Attachments:

1 ⇩

Risk Deep Dive

CG-17-6-00149

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Megan Taylor, Finance Operations Manager

Te Take:

Subject:

Rates Update

1.0 Executive Summary – Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is for Officers to provide the Risk and Assurance Committee an update of the Hastings District Council’s policy on rates arrears, along with details of the total overdue rates and some trends over time.

1.2 Rates Update

Summary overview of rates

· Total rates charged for the 2024/25 financial year: $152,457,903.28

· Total properties 34,291

· Total rates left owing for the 2024/25 financial year as of 31st October $109,935,128.63 including rates arrears and instalments not yet due.

1.3 Below is a comparison of rates outstanding for July-December for the last four financial years. This year’s increase can be partly attributed to the rates increase; however, we have seen a significant increase in rate payers struggling to meet all their financial commitments.

1.4 Below is a comparison of the number of properties with rates arrears over $500.00 over a twelve-month period for the last four financial years. The number of properties in arrears increased in August however they have significantly decreased since our new Credit Controller has started.

1.5 Below is a comparison of the number of penalties that have been applied for each instalment over the last four financial years. We are hoping with the introduction of the bulk texting in the new year, we will see the number of penalties reduce.

Impact Of Credit Controller

1.6 The Credit Controller started on the 9th September and has already made a significant difference to overdue rates. Numerous rate payers have been contacted to discuss their overdue accounts.

1.7 Summary overview of what the Credit Controller has recovered

· By 31st October 115 accounts had been paid in full totalling $487,885.01 after being actively followed up by the Credit Controller.

· 77 Mortgage demands will have been sent by the end of February totalling $662,372.13 which will be paid by the mortgagees.

· 93 rates payers have had payment arrangements put in place totalling $698,247.13. We have a further 12 accounts totalling $110,592.64 which we have been advised will be paid within the next six weeks.

· A total of $445,046.04 is to be lodged with Council’s debt collection agency.

Below is a table showing what the Credit Controller has achieved so far:

2.0 Processes for collection and enforcement of rates

2.1 Rates Due Dates

Rating by Instalments - HDC provides for rates to be paid in four three-monthly instalments. The due dates for payment falling on the third Friday in August, November, February and May.

2.2 Penalties

Instalment penalties - are applied three working days after the due date.

Arrear’s penalties - are applied to arrears owing in July and January.

We are currently looking into a bulk e-text process that will be send out a txt to rate payers, who haven’t made payment by the due date. We will look to send these reminders one day before the penalty is applied as a reminder to those that have forgotten to pay.

2.3 Arrears on properties with a mortgage

Where a mortgage exists, Council can recover unpaid rates from a mortgagee under legislation. There is a minimum time in which this can be used, the earliest being the 1st November in the financial year after first assessment of the rates (e.g. rates first assessed in the 2023/24 financial year cannot be recovered from a mortgagee until 1st November 2024).

To collect from a mortgagee, Council must first send them a notice stating that the rates on the rating unit are unpaid, and the local authority has the power to recover the rates from them. Recovery cannot take place until at least three months after delivery of the notice (through the mortgagee can make a voluntary payment). These notices should be sent in July-September so that any collection can occur in November and December.

In cases where a local authority recovers from a mortgagee, the amount of the rates must be added to the mortgage and is subject to all of the terms of the mortgage, i.e. the mortgagee can charge interest on that amount.

Before Council proceeds with recovering unpaid rates from a mortgagee, a phone call is made to the rate payers to discuss arrears owing from previous financial year/s. Officers will discuss payment options available and will offer payment arrangement if needed. If unable to get the rate payer to make payment in full or set up payment arrangement, then a letter of intention is sent.

2.4 Arrears on properties with no mortgage

If there is no mortgage on the property a phone call will be made to the property owner advising of arrears owing. The property owner will need to be make payment in full or set up a payment arrangement. The property owner will be advised of the consequences of non-payment and/ or sticking to the agreed payment arrangement. If they still don’t pay in the required time frame, then a letter will be sent to the property owner advising the debt has been lodged with a debt collection agency for further collections.

2.5 Judicial proceedings

To recover rates through the courts, proceedings for recovery this way cannot be lodged until the debt has been unpaid for at least four months. At the time you can also add any other rates that are overdue by at least one month.

2.6 Abandoned Land

Abandoned Land is any rating unit on which rates have not been paid for three years or more, and where the ratepayer:

· Is unknown, or

· Cannot be found after due inquiry and has no known agent, or

· Is deceased and has no known agent, or

· Has given notice that they have abandoned the land or intend to abandon the land

We currently have one property where both the owners are deceased, there is no probate. The site is vacant with no dwelling, HDC’s current debt collection agency has recommended treating this as abandoned land.

3.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee Meeting receive the report titled Rates Update dated 18 November 2024.

Attachments:

There are no attachments for this report.

Monday, 18 November 2024

Te Hui o Te Kaunihera ā-Rohe o Heretaunga

Hastings District Council: Risk and Assurance Committee Meeting

Te Rārangi Take
Report to Risk and Assurance Committee

Nā:

From:

Jess Noiseux, Strategic Financial Advisor

Aaron Wilson, Financial Controller

Te Take:

Subject:

2023/24 Audit Report on Control Findings and issues identified

1.0 Purpose and summary - Te Kaupapa Me Te Whakarāpopototanga

1.1 The purpose of this report is to present the Report on Control Findings for the year ended 30 June 2024 from Council’s auditors Ernst & Young (EY) from their audit of the Council’s controls and processes as well as the full 2023/24 Annual Report.

1.2 Attachment 1 (which will be circulated at the meeting) is the Report on Control Findings to Council for the year ended 30 June 2024 from Council’s auditors EY.

2.0 Recommendations - Ngā Tūtohunga

That the Risk and Assurance Committee receive the report titled 2023/24 Audit Report on Control Findings and issues identified dated 18 November 2024.

3.0 Discussion

3.1 Officers have received and made comments on the observations raised by EY for the 2024 audit. At the time of writing this report, EY were in the process of finalising the report. Officers will provide copies of this final report at the meeting.

3.2 There were four matters raised that were either a slight variation from the 2022/23 report or the matter has not yet been resolved. These issues included:

· Performance Information in relation to Customer Complaints

Council have been qualified on this matter since 2020. Officers have worked to significantly improve the reporting of customer calls received through Council’s internal Customer Call Centre and EY concluded last year that Council is collecting and recording customer calls correctly. There are still issues with the way the after-hours provider reports their data through to Council. Palmerston North City Council (PNCC) who provide the after-hour services, are moving to a new phone system which may provide different reporting options. Officers hope that this will resolve the issue going forward, however the change will not be in time for the full 2024/25 financial period.

· Tracking the cost to repair infrastructure

With the impact of Cyclone Gabrielle on the roading network, there were complex accounting difficulties that were encountered in both 2023 and 2024.

Last year the complexities lay in assessing the damage to the roading network, determining impairment values and classifying costs correctly in regard to restoration versus repair. Officers are pleased to report that these matters were materially resolved through the 2023/24 audit process.

In 2024, while it still remained difficult to ensure costs were correctly classified, Officers also had to ensure the costs were appropriately categorised for funding eligibility purposes (i.e. NZTA subsidies or Crown Infrastructure Partners).

Officers have been working closely with Council asset managers to ensure works are being appropriately coded based on the nature of those works, which in turn drives the recognition of those costs as either operational or capital in nature, as well as whether they are funded by NZTA subsidies (at various rates) or CIP at 100%.

Throughout the year, there were changes to what was and wasn’t eligible under various funding streams for subsidies or reimbursements. This meant multiple journals in the finance system to ensure final costs ended up in the correct place from both an accounting treatment point of view, and a funding point of view. At times this was complex to detail to the auditors and Officers needed to work closely with them to show how the evidence tied in. Ultimately Officers were able to demonstrate that costs had been correctly categorised, coded and claimed under the correct funding streams, albeit in a roundabout way due to the changing environment.

As we progress through the recovery phase, Officers expect this to settle and that less re-coding will be required which reduces the risk for inaccuracies within the financial ledger and allows for an easier audit trail.

· Valuation of Three Waters assets

In 2023 EY raised an issue around how Councils Three Waters assets are valued. All prior valuations have been completed in house and then externally reviewed. EY recommended Council move to an external valuer given the scale of three water assets as well as the access that an external professional valuer has to full asset construction cost databases to give a wider view than just that of Council.

Officers are working with the Regional Recovery Agency to enable an external party valuation over all the Hawkes Bay Councils three water assets as part of the business case for Three Waters Done Well.

· Management of Accounts Receivable Utilising Systems Based Reports

This matter was first raised in 2023 and speaks to the shortcomings of the current Property & Rating system which includes Councils Accounts Receivable functions. EY raised the issue due to the limited reporting functionality within the system which requires significant management time and intervention to provide effective insights from the reporting available.

Council is the in the process of upgrading the finance system as part of Project Genesis, with the Property and Rating system to follow. Officers will work with providers to see what new reports may be available to address concerns raised.

3.3 EY also raised two new moderate matters, and three new low risk matters. With the EY report being finalised at the time of writing this report, Officers will speak to these new matters as part of the presentation of this paper.

Attachments:

There are no attachments for this report.

Te Rā Hui: Meeting date:	Monday, 18 November 2024
Te Wā: Time:	10.00am
Te Wāhi: Venue:	Council Chamber Ground Floor Civic Administration Building Lyndon Road East Hastings
Te Hoapā: Contact:	Democracy and Governance Services P: 06 871 5000 \| E: democracy@hdc.govt.nz
Te Āpiha Matua: Responsible Officer:	Chief Financial Officer - Graham Watson and Chief Risk Officer - Regan Smith

Mematanga: Membership:	Koromatua Chair: Graeme McGlinn – External Independent Appointee Nga Kai Kaunihera Councillors: Simon Nixon (Deputy Chair), Alwyn Corban, Tania Kerr, Michael Fowler (Chair of Performance & Monitoring Committee) and Councillor Schollum (Chair of Strategy & Recovery Committee) Mayor Sandra Hazlehurst External Independent Appointee: 1x Vacancy Heretaunga Takoto Noa Māori Standing Committee appointee: Tom Keefe
Tokamatua: Quorum:	4 members
Kaihokoe mo te Apiha Officers Responsible:	Chief Risk Officer – Regan Smith AND Chief Financial Officer – Graham Watson
Te Rōpū Manapori me te Kāwanatanga Democracy & Governance Services:	Christine Hilton (Extn 5633)

Item 4 Insurance Update
Insurance Renewal Summary 2024/25	Attachment 1

Item 6 Project Genesis - Supplier Technology1
Attachment Risk and Compliance 7_11 Project Genesis	Attachment 1

Item 7 Assurance Activity Update
HDC Assurance Review Plan 2024-2027	Attachment 1

Item 7 Assurance Activity Update
Executive Summary - Fees & Levies Report (Crowe)	Attachment 2

Item 7 Assurance Activity Update
Executive Summary - ESG&C Expectations Assurance Review Report	Attachment 3

Item 7 Assurance Activity Update
Contents of the GRI Standards	Attachment 4

Item 9 Risk and Assurance Committee Status of Actions and Work Programme
Status of Actions from Risk and Assurance Committee meeting held on 5 August 2024	Attachment 1

Item 9 Risk and Assurance Committee Status of Actions and Work Programme
Committee Standard Work Programme 2024	Attachment 3

Item 10 Risk Deep Dive - Climate Action
Risk Deep Dive	Attachment 1