audit committee agenda - waverley council

AUDIT COMMITTEE

AGENDA

10.00AM, FRIDAY, 29 MAY 2015

Waverley Council

PO Box 9 Bondi Junction NSW 1355 DX 12006 Bondi Junction

Tel. 9369 8000 E-mail: [email protected]

AGENDA

AUDIT COMMITTEE MEETING A meeting of the Waverley Council Audit Committee will be held in the Bronte Room, Level 2, Waverley Council Chambers, Corner Bondi Road and Paul Street, Bondi Junction at:

10.00am, Friday, 29 May 2015 COMMITTEE MEMBERS:

Independent Members: Mr M Bass (Chair)

Mr N Hall Councillor Member: Cr B Mouroukas Cr T Kay (Alternate) ATTENDEES: Mr A Kyron – General Manager

Mr F Rombola – Executive Manager, Financial Waverley Mr S Helweh – Senior Internal Auditor

INVITEE: QUORUM: Two Committee members. APOLOGIES: By telephone or email to the following:

Cathy Henderson, Acting General Manager Ph: 9369 8056 or email [email protected]

Michael Simmons, Acting Governance Manager Ph: 9369 8121 or email [email protected]

Waverley Council Audit Committee Meeting - Friday, 29 May 2015 2

AGENDA A-1505.A Apologies A-1505.DI Declarations of Interest The Chair will call for Declarations of Interest. A-1505.1 PAGE 6 Confirmation of Minutes of Previous Meeting – 27 February 2015 Recommendation: That the Minutes of the Waverley Council Audit Committee Meeting of 27 February 2015; a copy of which was distributed to each Committee member, be received and that such Minutes be confirmed as a true record of the proceedings of that meeting. A-1505.2 PAGE 10 Internal Audit’s Progress Report (A10/0345) Report dated 19 May 2015 from Internal Auditor providing an update on progress with the FY15 Audit Plan. Recommendation: That the Committee receive and note this progress report. A-1505.3 PAGE 16 Audit Committee Performance Review (A09/1105) Report dated 8 May 2015 from Internal Auditor on the Waverley Council Audit Committee Self Evaluation Recommendation: That the Committee receive and note this progress report.


A-1505.4 ISSUED SEPARATELY CONFIDENTIAL REPORT – Internal Audit Report – DRAFT Strategic 3 Year Audit Plan FY 16-18 (A09/1105) This matter is classified as confidential under the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter. Confidential Internal Audit report issued May 2015 on the Strategic 3 year Audit Plan FY 16-18. Recommendation: That: 1. The Committee receive and note the Confidential Internal report on the Strategic 3 year Audit

Plan FY 16-18, which has been distributed separately with the agenda. 2. The Confidential Internal Report on the Strategic 3 year Audit Plan FY 16-18 be treated as

confidential in accordance with the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter for the following reasons:

(a). The report contains commercial information of a confidential nature that would, if

disclosed prejudice the commercial position of the person who supplied it.

(b). It is not in the public interest to reveal commercially sensitive information about Council’s internal operations and business interests, which if disclosed may prejudice Council’s effective operation of its functions.

3. The correspondence and reports relevant to the subject business be withheld from the public as provided by Section 6.4 of the Audit Committee Charter.

A-1505.5 ISSUED SEPARATELY CONFIDENTIAL REPORT – Internal Audit Report – DRAFT Annual Audit Plan 2015/2016 (A09/1105) This matter is classified as confidential under the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter. Confidential Internal Audit report issued May 2015 on the Annual Audit Plan 2015/2016. Recommendation: That: 1. The Committee receive and note the Confidential Internal report on the Annual Audit Plan

2015/2016, which has been distributed separately with the agenda. 2. The Confidential Internal Report on the Annual Audit Plan 2015/2016 be treated as

confidential in accordance with the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter for the following reasons:

(b). The report contains commercial information of a confidential nature that would, if



(c). It is not in the public interest to reveal commercially sensitive information about Council’s internal operations and business interests, which if disclosed may prejudice Council’s effective operation of its functions.


A-1505.6 Schedule of Meeting Dates for 2015 (A09/1105) At its last meeting the Committee adopted the following schedule of meeting dates for 2015. • 10.00am, Friday, 29 May 2015 • 10.00am, Friday, 4 September 2015 • 10.00am, Friday, 11 December 2015 Recommendation: That the Committee receive and note this information. A-1505.7 GENERAL BUSINESS


MINUTES OF THE WAVERLEY COUNCIL AUDIT COMMITTEE MEETING HELD AT THE WAVERLEY COUNCIL CHAMBERS ON FRIDAY, 27 FEBRUARY 2015

Voting Members Present:

Mr M Bass Independent Member (Chair) Mr N Hall Independent Member Cr B Mouroukas Waverley Council Also Present: Cr Kay Waverley Council Mr A Kyron General Manager Mr S Helweh Senior Internal Auditor Mr F Rombola Executive Manager – Financial Waverley Mr R Russo Governance Manager Mr R Coelho Governance Officer

Invitees: Nil At the commencement of proceedings at 10.15am, those voting members and those present were as listed above with exceptions of Cr Mouroukas and Mr Kyron who arrived at 10.35am and 10.47am respectively. At 11.26am Mr Kyron left the meeting and did not return. At 11.27am Cr Kay left the meeting and did not return. A-1502.A Apologies Late apologies were received and accepted for Cr Mouroukas and Mr Kyron. A-1502.DI Declarations of Interest The Chair called for Declarations of Interest and none were received.

Minutes of the Waverley Council Audit Committee Meeting – Friday, 27 February 2015 1

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A-1502.1 Confirmation of Minutes of Previous Meeting – 12 December 2014 DECISION: That the Minutes of the Waverley Council Audit Committee Meeting of 12 December 2014; a copy of which was distributed to each Committee member, be received and that such Minutes be confirmed as a true record of the proceedings of that meeting. A-1502.2 CONFIDENTIAL REPORT - Internal Audit Report – Off Street Parking (A15/0069) This matter is classified as confidential under the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter. Confidential Internal Audit report issued January 2015 on Off Street Parking. DECISION: That: 1. The Committee receive and note the Confidential Internal Audit Report on Off Street Parking,

which has been distributed separately with the agenda. 2. The Confidential Internal Audit Report on Off Street Parking be treated as confidential in

accordance with the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter for the following reasons:

(a). The report contains commercial information of a confidential nature that would, if


(b). It is not in the public interest to reveal commercially sensitive information about Council’s internal operations and business interests, which if disclosed may prejudice Council’s effective operation of its functions.


4. The draft brief of the Waverley Integrated Movement, Parking and Land Use Study is to

consider the outcomes of the Internal Audit Report regarding Off Street Parking, in particular, the observations listed in Part 1 of the report “Overall Strategy and Procedures”

5. Council reviews the process of enforcement at its off street car parks. A-1502.3 CONFIDENTIAL REPORT – Internal Audit Report – Section 149 Certificates (A15/0068) This matter is classified as confidential under the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter. Confidential Internal Audit report issued January 2015 on Section 149 Certificates.


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DECISION: That: 1. The Committee receive and note the Confidential Internal report on Section 149 Certificates,

which has been distributed separately with the agenda. 2. The Confidential Internal Report on Section 149 Certificates be treated as confidential in


(b). The report contains commercial information of a confidential nature that would, if


(c). It is not in the public interest to reveal commercially sensitive information about Council’s internal operations and business interests, which if disclosed may prejudice Council’s effective operation of its functions.


A-1502.4 CONFIDENTIAL REPORT – Internal Audit Follow Up Report – General Insurance (A15/0067) This matter is classified as confidential under the provisions of Section 6.4(d) of Waverley Council’s Audit Committee Charter. Confidential Internal Audit Follow Up report issued January 2015 on General Insurance. DECISION: That: 1. The Committee receive and note the Confidential Internal Follow Up report on General

Insurance, which has been distributed separately with the agenda. 2. The Confidential Internal Follow Up report on General Insurance be treated as confidential in


(c). The report contains commercial information of a confidential nature that would, if


(d). It is not in the public interest to reveal commercially sensitive information about Council’s internal operations and business interests, which if disclosed may prejudice Council’s effective operation of its functions.



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A-1502.5 Schedule of Meeting Dates for 2015 (A09/1105) The Committee adopted the following schedule of meeting dates for the remainder of 2015. • 10.00am, Friday, 29 May 2015 • 10.00am, Friday, 4 September 2015 • 10.00am, Friday, 11 December 2015 DECISION: That the Committee receive and note this information. A-1502.6 GENERAL BUSINESS There was no General Business. THE MEETING CLOSED AT 11.52AM.


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Waverley Council Audit-in-Confidence

The Internal Audit vision is to provide a highly valued internal audit function that assists management to achieve their business objectives and discharge their responsibilities by working together to develop an efficient and effective system of internal control and processes.

Annual Audit Plan - Progress For the financial year 2015

Foreword

The Audit Plan has been constructed to: Establish the scope of activities of the Internal Audit function through consultation with senior management and risk assessment. Reflect a review and analysis of the organisation’s business activities and associated risks, and to align with organisations priorities. To take into consideration previous reviews and perform follow up reporting on implementation of management action plans.

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Audit in Confidence

Progress Reporting on Annual Audit Plan – FY15

Review

Prioritisation Factors Audit Coverage & Estimated Timelines

Comments Corporate

Risk Risk

Rating Priority of Audit

Common Business

Risk Proposed Coverage Days Qtr

Development Assessments – Sec 149

CR1, CR2, CR3, CR4, CR5,CR6,

CR7,CR8,CR9,CR10

H C BR2,BR4,BR5,BR7,BR9,BR

10,BR11

Review of the processes to manage development applications from end to end, considering assessment, communication, court appeals and legal costs, community consultation, complaints management, submissions and final determinations. Perhaps looking only at s149A reviews.

20 1 Completed

Procurement – Quotes (<$150,000)


CR7,CR8,CR9,CR10

H A BR2,BR4,BR5,BR7,BR9,BR

10,BR11

A review of the process on how goods and services are being purchased below the $150k tender value benchmark. To ensure the risk of undervaluation, split invoicing, overpayment, supplier management, quotation and documentation.

12 2

To be carried forward, to be discussed with

senior management

Off-street Parking


CR7,CR8,CR9,CR10

H B BR2,BR4,BR5,BR7,BR9,BR

10,BR11

Review of lease management including lease administration, pricing, market competitiveness, selection of tenants, repairs, valuation, and rent reviews.

14 3 Completed

Workers compensation CR1 M D BR12 Review of the processes to manage Workers Compensation Claims from end to end, considering assessment, claim management and return to work practices.

12 4

To be carried forward, to be discussed with

senior management

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Follow Up Reviews

Sub Program Review Scope Risk Rating Qtr Comments

Financial Procurement – Stores Review the end to end procurement processes undertaken at the Store Business Unit including review of supplier selection, performance management, ensuring VFM is obtained, compliance with delegations of authority, staff training and management of records, correspondence and communication with suppliers.

H 1 Reporting Phase

Performance General Insurance Review of the implementation status for the original review, that looked at the end to end review of the councils general insurance management process, currency, claims management, payments including motor vehicle, marine, contract, public liability, electronic, machinery and Ensure all council insurances are current, applicable and competitive / offer value for service.

H 2 Completed

Creating Asset Maintenance – Kerb & Gutter

Review the processes of the maintenance programs carried out on council assets by external service providers, internal staffing, service level agreements, authorisation and qualification of licences, works performed and pay rates.

H 3 Pending Finalisation

Clean & Attractive Fleet Management Review of the processes to manage the council fleet operations end to end, to ensure all assets maintained regularly, skilled & qualified personnel operating vehicles and compliance with RTA. H 4

Not to be completed this

FY

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Proposed Timetable

Internal audit area Quarter

September 2014 December 2014 March 2015 June 2015

Development Assessments – Sec 149

Procurement – Quotes (<$150,000)

Off-street Parking

Workers compensation

Names & Address Register – Special Management Request

Delegations of Authority – Special Management Request

FOLLOW UPS

Procurement – Stores

General Insurance

Asset Maintenance – Kerb & Gutter

Fleet Management

Develop/Update Strategic Risk Profile – based on Waverley ERM framework.

Develop/Update Internal Audit Plan

Communication with Audit Committee

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Potential Strategic Risks in Local Government

# Description

SR1 Operational - Failure to adequately anticipate and deliver the strategic and operational plans leading to poor public infrastructure and community dissatisfaction. SR2 Financial - Loss of revenues, resources and assets due to inefficiencies in processes and inadequate financial management. SR3 Reputational - Incidences of corruption, public safety, wastage of resources and poor public relationship management leading to breakdown of community confidence SR4 Legislative - Failure to comply with legislative obligations leading to disputes/penalties SR5 Environmental - Environmental incidences leading to environmental impacts/pollution

Waverley Council’s Top Ten Corporate Risks The top ten corporate risks identified by the Executive and their team are tabulated below, and are reflected in the Audit Plan.

# Description of Corporate risks

CR1 Inability to manage community needs and expectations. CR2 Inadequate community services provided. CR3 Inadequate community consultation and consideration of community feedback. CR4 Failure to safeguard integrity of council data and financial resources. CR5 Failure of essential support systems. CR6 Inability to sustain and enhance a reliable infrastructure. CR7 Failure to maintain a safe environment for the community. CR8 Inability to deliver on major community projects. CR9 Inadequate planning, monitoring and environmental services in the deliverance of key projects to the community. CR10 Conflicts of interest and incidences of corruption within council.

Common Business Risks In undertaking the audits contained in the Annual Audit Plan, Business Risk focus has also taken into consideration thirteen of the most common business risks drawn from elements contained in the Guidance on Assessing Controls – the CoCo Principles (developed by the Canadian Institute of Chartered Accountants – Criteria of Control Board). These are summarised below.

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Audit in Confidence

# Description of Business risks

BR1 Inability to withstand unanticipated events such as natural disasters BR2 Unnecessary costs BR3 Revenue not maximised BR4 Internal and external information unreliable and / or irrelevant BR5 Inefficient use of resources BR6 Inability to take advantage of opportunities BR7 Non-compliance with laws and regulations. BR8 Failure to develop people BR9 Loss of reputation / credibility BR10 Quality of service or product not at acceptable standard. BR11 Assets not safeguarded BR12 Lack of safety of employees or customers or the environment

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Audit Committee Self Evaluation Measuring your performance Performance – how are we doing? To assess its effectiveness, the committee should review what it has accomplished and whether it has fulfilled its responsibilities. This questionnaire can give you a starting point in evaluating the performance and effectiveness of the audit committee. Follow-up questions are encouraged and the committee should plan for further action as appropriate. The results of the evaluation should be discussed with the board. Among the topics to consider are composition of the committee, meetings, activities, and relationships with auditors and management. Questionnaire The following questionnaire is provided for your use in assessing your audit committee’s performance. You may find it useful to rate the extent to which your committee complies with each statement, on a scale where 5 = outstanding (or yes, if applicable), 3 = satisfactory and 1 = unsatisfactory (or no, if applicable). If the practice is not being followed or if the rating is below what you consider acceptable, space is provided to note steps your committee should take to raise performance. You also might want to use it to record any personal actions you wish to take.

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Principal components of effective audit committees Your Audit Committee… Rating

Charter, roles and responsibilities 1 2 3 4 5 N/A

1. Operates pursuant to a written charter and assesses its charter annually, suggesting required updates to the council for its approval

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Future Actions:

2. Has a clear understanding of the roles and responsibilities of the committee as a whole and of its individual members

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3. Ensures that it obtains the information required to carry out all the responsibilities outlined in its charter � � � � � � Future Actions:

4. Operates in an atmosphere of openness and trust, where members feel free to speak their minds and pursue issues to a conclusion

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Future Actions:

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5. Reports regularly on its activities, key issues and major recommendations to the General Manager � � � � � � Future Actions:

Committee composition 1 2 3 4 5 N/A

6. Is the right size, bringing requisite knowledge, abilities and skills to the table � � � � � � Future Actions:

7. At least one member possesses requisite level of financial reporting knowledge, or acquires such knowledge soon after joining the committee


8. Is satisfied it has a sufficiently independent voice and is consistently ready to constructively challenge the management team


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Meetings 1 2 3 4 5 N/A

9. Holds a sufficient number of meetings, scheduled at appropriate points to address its responsibilities on a timely basis


10. Meetings are of adequate length to allow the committee to accomplish its agenda, with time to fully discuss issues � � � � � � Future Actions:

11. Meetings are effective, with advance buy-in on the agenda, and the right amount of quality advance material distributed in a timely manner, which members review before meetings

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Future Actions:

12. Makes sure the right individuals attend, particularly those with meaningful input on agenda items � � � � � � Future Actions:

Interaction with management and auditors 1 2 3 4 5 N/A

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13. Maintains a productive relationship with management, with open lines of communication and ongoing dialogue � � � � � � Future Actions:

14. Reviews internal audit plans, ensuring appropriate internal audit coverage of key control systems, and proper degree of coordination of work with external auditors

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Future Actions:

15. Reviews the external audit scope and approach, ensuring members understand and are satisfied with the extent of audit work anticipated and the level of assurance obtained

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Future Actions:

16. Builds constructive professional relationships with both internal and external auditors, putting them at their ease when bringing up sensitive issues

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Future Actions:

17. Discusses performance of auditors, encouraging candid discussions with them based on clear criteria, including further improvements, in order to be in a position to recommend the auditors for re-election

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Future Actions:

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Financial statements 1 2 3 4 5 N/A

18. Discusses with management and the external auditors any significant accounting and reporting issues during the period, and concurs with their resolution

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Future Actions:

19. Challenges areas involving management judgment, significant accounting accruals, provisions or other estimates that have a material impact on the financial statements

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Future Actions:

20. Discusses audit results with the external auditors and considers management’s handling of proposed audit adjustments

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Future Actions:

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21. Oversees the periodic financial reporting process and reviews interim and annual financial statements, in order to be in a position to recommend to the Council the release of these financial statements

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Future Actions:

Risk, control and compliance 1 2 3 4 5 N/A

22. Clearly understands and agrees with the board the scope of the oversight responsibility in the areas of internal controls including fraud and compliance with laws and regulations

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Future Actions:

23. Discusses the audit results with the external auditor, assesses how management handles weaknesses identified and recommendations made by the external auditor

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Future Actions:

24. Obtains understanding of the extent of control testing by internal and external auditors and considers whether internal control recommendations made by internal and external auditors have been implemented by management

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Future Actions:

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25. Has sufficient time and resources to carry out the responsibilities delegated to the audit committee by the council

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Future Actions:

Evaluation and future 1 2 3 4 5 N/A

26. Regularly evaluates performance of the committee as a whole and its individual members, and takes decisive corrective action

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Future Actions:

27. Considers whether there are emerging issues that will demand its attention going forward, and is proactive in positioning itself to deal with them

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Future Actions:

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Personal information

Last name/first name:

Function:

Company:

Date:

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audit committee agenda - waverley council

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