audit committee notice of meeting...agenda for audit committee meeting monday 17 august 2015 63 mt...

AUDIT COMMITTEE

NOTICE OF MEETING

To: Presiding Member Peter Brass

Members

Peter RobertsonPaula DaviesCr Malcolm HerrmannCr John Kemp

Notice is hereby given pursuant to the provisions under Section 88 of theLocal Government Act 1999 that the next meeting of the Audit Committee willbe held on:

Monday 17 August 201563 Mt Barker Road, Stirling

6.00pm

A copy of the Agenda for this meeting is supplied under Section 88 of the Act.

Meetings of the Council and Committees are open to the public and interestedmembers of this community are welcome to attend.

Andrew AitkenChief Executive Officer

AGENDA FOR AUDIT COMMITTEE MEETINGMonday 17 August 2015

63 Mt Barker Road, Stirling6.00pm

ORDER OF BUSINESS

Council VisionTo value our diversity, our landscape and our people

Council MissionTo improve services and protect our landscape for the people who live andvisit our area by providing quality and appropriate infrastructure, planning,community services and good governance

1. COMMENCEMENT

2. APOLOGIES

3. MINUTES OF PREVIOUS MEETINGS3.1. Audit Committee Meeting held on 11 May 2015

RecommendationThat the minutes of the Audit Committee meeting held on 11 May2015, as distributed, be confirmed as an accurate record of theproceedings of that meeting.

4. DELEGATION OF AUTHORITYThe Audit Committee operates in accordance with the relevant sections of theLocal Government Act 1999, and its Terms of Reference.

5. DECLARATION OF INTEREST BY MEMBERS OF COMMITTEE

6. REPORTS6.1. Action Report & Work Plan Update......................................................

6.2. End of Financial Year Update..............................................................

6.3. Placement of Council’s Insurance........................................................

6.4. Risk Management Plan Update ...........................................................

6.5. Community Consultation Outcomes on 2015/2016 Annual BusinessPlan.....................................................................................................

6.6. Internal Audit Quarterly Update ...........................................................

6.7. Implementation of Internal Audit Actions Progress Report ...................

6.8. External Interim Audit Management Letter...........................................

6.9. Benefits Realised Report .....................................................................

6.10. Sundry Debtors Write-off .....................................................................

6.11. Internal Financial Controls Update.......................................................

6.12. Procurement Policy .............................................................................

7. NEXT MEETINGThe next Audit Committee meeting will be held at 6.00pm on Monday, 19October 2015, at 63 Mount Barker Road, Stirling.

8. CLOSE AUDIT COMMITTEE MEETING

ADELAIDE HILLS COUNCIL AUDIT COMMITTEEMINUTES OF MEETING MONDAY 11 MAY 2015

63 MT BARKER ROAD, STIRLING

4

Presiding Member ________________________________________________________ 17 August 2015

Presiding Member: Peter Robertson

Members:

Peter BrassPaula DaviesCr Malcolm HerrmannCr John Kemp

In attendance:

Andrew Aitken Chief Executive OfficerTerry Crackett Director Corporate ServicesPaul Francis Financial ControllerLachlan Miller Manager Governance & Risk

1. CommencementThe meeting commenced at 6.00pm.

Geoff Edwards – Partner, Audit and Sam Hilbink – Manager, Audit from BDO werein attendance.

2. ApologiesNil

3. Previous Minutes3.1. Audit Committee Meeting 9 February 2015

Moved Cr Malcolm HerrmannS/- Peter Brass

Carried10

That the minutes of the Audit Committee meeting held on 9 February 2015 asdistributed, be confirmed as an accurate record of the proceedings of thatmeeting.

4. Delegation of AuthorityIn accordance with the Audit Committee Terms of Reference, the Committee hasno delegated decision-making powers. The Recommendations in Items 6.3 and6.10 are to be submitted to Council for adoption.



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5. Declaration of Interest by Members of the CommitteeNil

6. Reports6.1. Audit Committee Action Report & Work Plan Update

Moved Peter BrassS/- Paula Davies

Carried11

That the Audit Committee resolves:

1. That the report be received and noted.2. That the status of the Action Report and Work Plan be noted.3. That the Work Plan be revised to schedule the Benefits Realisation

Reports in February and August of each year.

6.2. 2014/15 Budget – Budget Reviews 2 & 3

Moved Peter BrassS/- Cr John Kemp

Carried12

That Audit Committee:

1. Notes that unfavourable Operating Budget variations presented inBudget Review 2 for the period ending 31 December 2014 totalled $244kand provide for an adjusted Operating Surplus for the 2014/15 year of$111k (down from $355k).

2. Notes that Capital Budget variations provided for in Budget Review 2for the period ending 31 December 2014 included the addition of $37k(net) of new projects (with $12k of associated grant funding), offset bysavings in renewals projects, and the deferral of the Heathfield Roadproject ($603k) until 2015/16.

3. Notes that favourable Operating Budget variations presented in BudgetReview 3 for the period ending 31 March 2015 totalled $142k andprovided for an adjusted Operating Surplus for the 2014/15 year of$253k (up from $111k).

4. Notes that Capital Budget variations provided for in Budget Review 3for the period ending 31 March 2015 include the addition of $51k (net)for renewal projects.



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6.3. Long Term Financial Plan Update

Moved Paula DaviesS/- Cr Malcolm Herrmann

Carried13

That the Audit Committee:

1. Notes the updated Long Term Financial Plan incorporating the auditedresult for 2013/14 and the endorsed 2014/15 Budget Review 2variations; and

2. Notes the comparison between the draft 2015/16 Budget and Year 1 ofthe Long Term Financial Plan.

3. Recommends to Council to adopt of the Long Term Financial Plan, ascontained in Appendix 1.

6.4. End of Financial Year Reporting Timetable & BDO Audit Plan

Moved Cr John KempS/- Cr Malcolm Herrmann

Carried14

That the Audit Committee receives and notes the BDO Audit Plan andproposed End of Year Reporting Timetable.

6.5. Account Reconciliation Policy

Moved Paula DaviesS/- Peter Brass

Carried15

That the Audit Committee resolves that the report be received and noted.

6.6. Risk Management Update


Carried16

That the Audit Committee receives and notes the report.

6.7. Internal Audit Quarterly Update

Moved Cr John KempS/- Cr Malcolm Herrmann

Carried17




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6.8. Implementation of Internal Audit Actions Progress Report


Carried18


6.9. Internal Financial Controls Update


Carried19


1. Notes the further developments that have been undertaken inimproving internal financial controls.

2. Resolves that quarterly updates are provided to the Audit Committeeregarding the Internal Financial Controls implementation.

6.10. 2015/16 Draft Annual Business Plan & Budget – Community Consultation


Carried20


1. Receives and notes the Draft 2015/16 Annual Business Plan andBudget.

2. Advises Council that it considers the Draft 2015/16 Annual BusinessPlan and Budget to be consistent with the Strategic Plan, AssetManagement and Long Term Financial Plan.

3. Resolves that a report is provided to the Audit Committee meeting onthe outcomes of the 2015/16 Annual Business Plan and Budgetcommunity consultation and adoption.

Peter Robertson announced that his term as Audit Committee Presiding memberwould finish 31 July 2015 and that Peter Brass would assume the role for a 12month period in accordance with the Committee’s 1 December 2014 resolution.

Peter Robertson thanked the Audit Committee for the opportunity to be thePresiding Member.

The Audit Committee acknowledged and thanked Peter Robertson for hisleadership of the Committee.



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7. Next MeetingThe next ordinary meeting of the Audit Committee will be held at 6.00pm onMonday, 17 August 2015, at 63 Mount Barker Road, Stirling.

8. Close Audit Committee MeetingThe meeting closed at 7.30pm

ADELAIDE HILLS COUNCILAUDIT COMMITTEE MEETING

Monday 17 August 2015AGENDA BUSINESS ITEM

Item: 6.1

Originating Officer: Lachlan Miller, Manager Governance & Risk

Responsible Director: Terry Crackett, Director Corporate Services

Subject: Action Report & Work Plan Update

SUMMARY

A formal Audit Committee Action Report is maintained to record the items requiring‘actioning’ resulting from each of the Audit Committee meetings.

The Audit Committee Work Plan assists the Committee members and staff in schedulingboth discussion and reports to ensure appropriate coverage of the functions over the 12month period.

RECOMMENDATION


1. That the report be received and noted.2. That the status of the Action Report and Work Plan be noted.

1. GOVERNANCE

Strategic Management Plan/Council Policy

Goal 4: A Recognised Leading PerformerSMP Key Issue 4.1: Leadership

4.1.4 Meet legislative, regulatory and good governanceresponsibilities and obligations

Legal Implications

Section 126 of the Local Government Act 1999 sets out the functions of an auditcommittee. Management of Committee’s action items and work plan facilitates theachievement of these functions.

Adelaide Hills Council Audit Committee Meeting 17 August 2015Action Report & Work Plan Update

Page 2

Risk Management Implications

The management of action items and the work plan will assist in mitigating the riskof:

Poor governance practices occur which lead to a loss of stakeholder (i.e.customer and regulator) confidence and/or legislative breaches.

Inherent Risk Residual RiskExtreme (5C) Medium (3D)

Financial and Resource Implications

There are no direct financial or resource implications from this item.

Customer Service and Community/Cultural Implications

Not applicable.

Environmental Implications

Not applicable.

Community Engagement/Consultation

Consultation has occurred internally with Action and Work Plan responsible officers.

2. BACKGROUND

Action Report

The Action List tracks the implementation of resolutions of the Audit Committee.

Work Plan

The functions of the Audit Committee are set out in part 7 (Role) of the CommitteeTerms of Reference.

A Work Plan has been developed (Appendix 2) to assist the Committee membersand staff in scheduling discussion and reports to ensure appropriate coverage of thefunctions over the 12 month period.

The Audit Committee adopted the 2015 Work Plan at its 1 December 2014 meeting.

3. ANALYSIS

Action Report

The Audit Committee Action Report is attached (Appendix 1).There are currentlytwo outstanding (In Progress) actions relation to the Procurement Policy and the2015/16 Annual Business Plan adoption. Both items are the subject of reports in thisagenda.

Adelaide Hills Council Audit Committee Meeting 17 August 2015Action Report & Work Plan Update

Page 3

Work Plan

The following items are scheduled for the August (this) meeting:

Item CommentaryEnd of financial year update See Agenda Item 6.2Placement of Council’s insuranceportfolio

See Agenda Item 6.3

Risk Management Plan update See Agenda Item 6.4Implementation of LGA RiskManagement Review Action Plan

The LGAMLS did not conduct a RiskReview in 2014 and the results of therecently completed 2015 LGAMLS RiskManagement Review Action Report havenot been finalised.

Internal Audit quarterly update See Agenda Item 6.6Implementation of internal audit actionsprogress report

See Agenda Item 6.7

External audit interim letter See Agenda Item 6.8Implementation of external audit actionsprogress report

No outstanding issues from 2014/15interim or EOFY audit.

Service Improvement BenefitsRealisation Report

See Agenda Item 6.9.

Terms of Reference

At its 9 February 2015 meeting the Committee resolved to recommend to Council torevise its Terms of reference. Council considered the recommendation at its 26 May2015 meeting and resolved to adopt the proposed changes. The adopted Terms ofReference is at Appendix 3.

4. OPTIONS

The Committee has the following options:

I. To note the status of the Action Report and Work Plan as presented.

II. To alter or substitute elements of the Action Report and/or Work Plan.

5. APPENDICES

(1) Audit Committee Action Plan(2) 2015 Audit Committee Work Plan(3) Audit Committee Terms of Reference

Appendix 1Audit Committee Action Plan

MeetingDate

Item Topic Action ResponsibleOfficer

Progress Date ofUpdate

Due Date RevisedDate

Comment

29-Apr-13 6.2 Procurement & Purchasing Policy A further review of the Policy to be scheduled for the second half of 2013 as partof the internal audit engagement scheduled for the second half of 2013, andagain in 2014 with a view to revising thresholds upwards then if internal controlsare demonstrated to be working satisfactorily with the new Open Officeapplication.

Lachlan Miller In Progress 06-Aug-15 Dec-13 Aug-15 Procurement Policy reviewed consistent with therecommendations of the recent internal audit and theInternal Financial Control Model. Draft for Audit Committeeconsideration in 17 August 2015 agenda.

9-Feb-15 6.8.2 Audit Committee Terms ofReference

That the Committee’s Terms of Reference be revised in accordance with thisreport and recommend its adoption to Council.

Lachlan Miller Completed 6-Aug-15 May-15 Revised TOR adopted at 26 May 2015 Ordinary Councilmeeting.

11-May-15 6.1 Audit Committee Action Report &Work Plan

That the Work Plan be revised to schedule the Benefits Realisation Reports inFebruary and August of each year.

Lachlan Miller Completed 6-Aug-15 May-15 Schedule revised & Meeting Planner updated

11-May-15 6.3 Long Term Financial Plan Update Recommends to Council to adopt of the Long Term Financial Plan, as containedin Appendix 1.

Terry Crackett Completed 6-Aug-15 May-15 Adopted at the 26 May 2015 Ordinary Council meeting.

11-May-15 6.9 Internal Financial Controls Update Resolves that quarterly updates are provided to the Audit Committee regardingthe Internal Financial Controls implementation.

Terry Crackett Completed 6-Aug-15 May-15 Schedule revised & Meeting Planner updated

11-May-15 6.10.1 2015/16 Draft Annual BusinessPlan & Budget

Advise Council that Audit Committee considers Draft 2015/16 Annual BusinessPlan & Budget to be consistent with the Strategic Plan, Asset Management &LTFP

Terry Crackett Completed 6-Aug-15 May-15 Advised at the 26 May 2015 Ordinary Council meeting.

11-May-15 6.10.2 2015/16 Draft Annual BusinessPlan & Budget

Resolves that a report is provided to the Audit Committee meeting on theoutcomes of the 2015/16 Annual Business Plan and Budget communityconsultation and adoption.

Terry Crackett In Progress 6-Aug-15 Aug-15 Report in 17 August 2015 agenda

ADELAIDE HILLS COUNCIL AUDIT COMMITTEE - ACTION REPORT

P:\AHC\Finance & Corporate Services\Governance\Audit Committee\Agenda PDFs\150817 17 August 2015\150817 6.1 - Audit Committee Action Report - App 1.xlsx Page 1

Appendix 22015 Audit Committee Work Plan

ADELAIDE HILLS COUNCIL AUDIT COMMITTEE2015 Work Plan and Reporting Schedule

2015Feb May Aug Oct Nov

Long term financial plan forecast economic indicators AnnualDraft Annual Business Plan AnnualBudget Review 1 AnnualBudget Review 2 AnnualBudget Review 3 AnnualBudget Review 4 (s10) AnnualEnd of financial year reporting timetable AnnualEnd of financial year update AnnualDraft Annual Financial Statements AnnualFinal Annual Financial Statements (incl managementrepresentation letter)

Annual

Draft Annual Report Annual

Placement of Council’s insurance portfolio (for noting) AnnualInternal Financial Controls update BiannualRisk Management Plan update QuarterlyResults of LGA Risk Management Review AnnualImplementation of LGA Risk Management Review Action Plan Biannual

Internal Audit quarterly update QuarterlyInternal audit reports As requiredImplementation of internal audit actions progress report BiannualInternal Audit Plan review AnnualIn camera meeting with Internal Auditor Annual

External audit interim letter AnnuallyImplementation of external audit actions progress report BiannualExternal Audit Plan reviewIn camera meeting with external auditors AnnualReview of auditor independence and legislative compliance AnnualBalance date audit management letter Annual

Whistleblowing Policy review Annual

Audit Committee self assessment review AnnualWhistleblowers protection procedure review Bi-annualChairperson’s report AnnualWork Plan and Reporting Schedule AnnualService Improvement Benefits Realisation Report BiannualTerms of Reference Annual

Version Control: v1.0 - Adopted by Audit Committee - 1/12/14v1.1 - Adopted by Audit Committee - 11/5/15 - Internal Control Framework Updates tobe provided quarterly - Benefits Realisation Report to be be Feb and Aug annually

Terms of Reference

External Audit

Other Business

Financial Reporting

Internal Audit

Internal Control and RiskManagement

Appendix 3Audit Committee Terms of Reference

ADELAIDE HILLS COUNCIL Audit Committe

TERMS OF REFERENCE (May 2015)

1. PREAMBLE 1.1 Pursuant to section 41 of the Local Government Act 1999 a committee of Council

may be established by a resolution of Council. 1.2 A committee is established for the purpose of assisting the Council in the

performance of its functions, inquiring into and reporting to the Council on matters within the ambit of the Council’s responsibilities, providing advice to the Council and to exercise, perform or discharge delegated powers, functions or duties of the Council.

1.3 Section 126 of the Local Government Act 1999 requires Council to appoint an audit

committee, with specific functions and responsibilities. Council has established the Audit Committee to fulfil this role.

1.4 The establishment of a committee does not derogate from the power of the Council to

act in a matter.

2. ROLE The overall function of the Audit Committee will be to assist Council to accomplish its objectives by monitoring and providing advice on the adequacy and effectiveness of the systems and processes regarding the financial management and reporting, risk management, internal control and governance functions through the following activities:

3. SPECIFIC FUNCTIONS 3.1 Financial Reporting and Prudential Requirements

3.1.1 Provide comment on the assumptions underpinning Council’s Strategic

Management Plans (Strategic Plan, Annual Business Plan and Budget and Long Term Financial Plan), the consistency between plans and the adequacy of Council’s plans in the context of maintaining financial sustainability; and Review and provide advice to Council on the degree to which the annual financial statements present fairly the state of affairs of the Council

3.1.2 The committee shall monitor the integrity of the financial statements of the Council, including its annual report, reviewing significant financial reporting issues and judgements which they contain.

3.1.3 The committee shall review and challenge where necessary: 3.1.3.1 the consistency of, and/or any changes to, accounting policies; 3.1.3.2 the methods used to account for significant or unusual transactions

where different approaches are possible; 3.1.3.3 whether the Council has followed appropriate accounting standards

and made appropriate estimates and judgements, taking into

account the views of the external auditor;

Audit Committee Terms of Reference

3.1.3.4 the clarity of disclosure in the Council’s financial reports and the

context in which statements are made; and 3.1.3.5 all material information presented with the financial statements,

such as the operating and financial review and the corporate governance statement (insofar as it relates to the audit and risk management).

3.1.4 Review and provide advice to Council on the degree to which the annual

financial statements present fairly the state of affairs of the Council

3.2 Internal Controls and Risk Management Systems The committee shall:

3.2.1 Ensure that appropriate policies, practices and procedures of internal control

(and other financial and risk management systems) are implemented, reviewed and maintained in order to assist the Council to carry out its activities in an efficient and orderly manner to achieve its objectives;

3.2.2 Review Council’s risk management framework and monitor the performance of Council’s risk management program;

3.2.3 Monitor the corporate risk profile and significant risk exposures for the organisation to ensure that there are appropriate management plans to manage and mitigate this business risk; and

3.2.4 Ensure an appropriate legislative compliance framework exists to identify risks and controls over compliance with applicable legislation and regulations.

3.3 Whistle blowing

The committee shall consider and review annually the Council’s arrangements for its employees to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The committee shall ensure these arrangements allow independent investigation of such matters and appropriate follow-up action.

3.4 Internal audit The committee shall: 3.4.1 monitor and review the effectiveness of the Council’s internal audit function in

the context of the Council’s overall risk management system;

3.4.2 consider and make recommendation on the program of the internal audit function and the adequacy of its resources and access to information to enable it to perform its function effectively and in accordance with the relevant professional standards.

3.4.3 review all reports on the Council’s operations from the internal auditors;

3.4.4 review and monitor management’s responsiveness to the findings and

recommendations of the internal auditor; and

3.4.5 where appropriate, meet the “head” of internal audit (internal or outsourced) at least once a year, without management being present, to discuss any issues arising from the internal audits carried out. In addition, the head of internal audit shall be given the right of direct access to the Principal Member of the Council and to the Presiding Member of the committee.


3.5 External audit

The committee shall:

3.5.1 consider and make recommendations to the Council, in relation to the

appointment, re-appointment and removal of the Council’s external auditor. The committee shall oversee the selection process for new auditors and if an auditor resigns the committee shall investigate the issues leading to this and decide whether any action is required;

3.5.2 oversee Council’s relationship with the external auditor including, but not

limited to:

3.5.2.1 recommending the approval of the external auditor’s remuneration, whether fees for audit or non-audit services, and recommending whether the level of fees is appropriate to enable an adequate audit to be conducted;

3.5.2.2 recommending the approval of the external auditor’s terms of engagement, including any engagement letter issued at the commencement of each audit and the scope of the audit;

3.5.2.3 assessing the external auditor’s independence and objectivity taking into account relevnt professional and regulatory requirements and the extent of Council’s relationship with the auditor, including the provision of any non-audit services;

3.5.2.4 satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the external auditor and the Council (other than in the ordinary course of business);

3.5.2.5 monitoring the external auditor’s compliance with legislative requirements on the rotation of audit partners; and

3.5.2.6 assessing the external auditor’s qualifications, expertise and resources and the effectiveness of the audit process (which shall include a report from the external auditor on the audit committee’s own internal quality procedures);

3.5.3 meet as needed with the external auditor. The committee shall meet the

external auditor at least once a year, without management being present; to discuss the external auditor’s report and any issues arising from the audit;

3.5.4 review and make recommendations on the annual audit plan, and in particular its consistency with the scope of the external audit engagement;

3.5.5 review the findings of the audit with the external auditor. This shall include,

but not be limited to, the following;

3.5.5.1 a discussion of any major issues which arose during the external audit;

3.5.5.2 any accounting and audit judgements; and 3.5.5.3 levels of errors identified during the external audit. The committee

shall also review the effectiveness of the external audit. 3.5.6 review any representation letter(s) requested by the external auditor before

they are signed by management;

3.5.7 review the management letter and management’s response to the external auditor’s findings and recommendations.


3.6 Economy and Efficiency Audits

3.6.1 proposing and reviewing the exercise of powers under Section 130A of the

Local Government Act; to examine and report on any matter relating to financial management, or the efficiency and economy with which the council manages or uses its resources to achieve its objectives,

4. REPORTING RESPONSIBILITIES 4.1 The committee shall make whatever recommendations to the Council it deems

appropriate on any area within its terms of reference where in its view action or improvement is needed.

4.2 The Presiding Member will attend a meeting of the Council at least once per annum to present a report on the activities of the Committee.

4.3 The Presiding Member may attend a Council meeting at any time that the Presiding

Member sees fit to discuss any issue or concern relating to the Audit Committee’s responsibilities. Depending on the nature of the matter, this may be held in confidence in accordance with Section 90 of the Local Government Act 1999 and staff may be requested to withdraw from the meeting.

5. OTHER MATTERS The committee shall:

5.1 have access to reasonable resources in order to carry out its duties, recognising the

constraints within Council’s Budget; 5.2 be provided with appropriate and timely training, both in the form of an induction

programme for new members and on an ongoing basis for all members; 5.3 give due consideration to laws and regulations of the Local Government Act, 1999; 5.4 make recommendations on co-ordination of the internal and external auditors; 5.5 oversee any investigation of activities which are within its terms of reference; and 5.6 oversee action to follow up on matters raised by the external auditors; 5.7 at least once in its term, review its own performance, constitution and terms of

reference to ensure it is operating at maximum effectiveness and recommend changes it considers necessary to the Council for approval.

5.8 independent members of the committee are entitled to a sitting fee, as set by

Council, where the presiding member is an independent member, a higher sitting fee, as set by Council, will apply.

6. MEMBERSHIP 6.1 Members of the committee are appointed by the Council.

6.2 The committee shall consist of five (5) Members comprising three (3) independent

members and two Elected Members of the Council. 6.3 Independent member(s) of the committee shall have recent and relevant financial,

risk management, internal audit or similar experience.


6.4 Only members of the committee are entitled to vote in committee meetings. Unless

otherwise required by the Act not to vote, each member must vote on every matter that is before the committee for decision.

6.5 Other individuals such as the Chief Executive Officer, Finance Manager and, if applicable, other staff representatives may attend any meeting as observers or be responsible for preparing papers for the committee. In accordance with the principles of open, transparent and informed decision making, committee meetings must be conducted in a place open to the public.

6.6 The agenda and minutes of the committee meetings, subject to any items that are discussed in confidence under Section 90 of the Local Government Act 1999 and subsequently retained as confidential under Section 91 of the Act, are also required to be made available to the public.

6.7 Council’s external auditors and internal auditors may be invited to attend meetings of the committee.

6.8 Appointments to the committee shall be for a period of up to three (3) years. Appointees may be reappointed by Council.

6.9 The Committee shall appoint the Presiding Member of the committee who may be one of the Independent Members.

7. SECRETARIAL RESOURCES 7.1 The Chief Executive Officer shall provide sufficient administrative resources to the

committee to enable it to adequately carry out its functions.

8. QUORUM 8.1 The quorum necessary for the transaction of business shall be 50% of the number of

members of the committee plus one. A duly convened meeting of the committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the committee.

9. FREQUENCY OF MEETINGS 9.1 The committee shall meet at least four times a year at appropriate times as

determined by the Committee.

10. NOTICE OF MEETINGS 10.1 Ordinary meetings of the committee will be held at times and places determined by

the committee. A special meeting of the committee may be called in accordance with the Act.

10.2 Notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, shall be forwarded to each member of the committee and observers, no later than 3 clear days before the date of the meeting. Supporting papers shall be sent to committee members (and to other attendees as appropriate) at the same time.

11. MINUTES OF MEETINGS 11.1 The Chief Executive Officer shall ensure that the proceedings and resolutions of all

meetings of the committee, including recording the names of those present and in attendance} are minuted and that the minutes otherwise comply with the requirements of the Local Government (Procedure at Meetings) Regulations 2000.


11.2 Minutes of committee meetings shall be circulated within five days after a meeting to all members of the committee and to all members of the Council and will (as appropriate) be available to the public.



Item: 6.2

Originating Officer: Paul Francis, Financial Controller


Subject: End of Financial Year Update

SUMMARY

The draft timetable prepared to guide the end of year reporting process has been revised toreflect progress to date and the confirmation of external audit visit dates.

Administration remains confident that all significant preparatory work will be completed inadvance of the final audit visit scheduled for the two weeks commencing28 September 2015.

RECOMMENDATION

That the Committee resolves that the report be received and noted.

1. GOVERNANCE


Goal 4: A Recognised Leading Performer

Key Issue 4.2: Managing Risk and Responsibility.

Action 4.2.5: Ensure legislative compliance occurs through the application ofcore policies and procedures.

Action 4.2.6: Manage and maintain the sustainable financial position ofCouncil

Legal Implications

Division 3 – Financial Statements and Division 4 – Audit, Local Government Act1999


Failure to complete the year end reporting process within the timetable can result inincreased financial, compliance and reputational risk.

Adelaide Hills Council Audit Committee Meeting 17 August 2015End of Financial Year Update

Page 2


The end of year financial reporting process generates the most significant outputfrom Council’s financial management and reporting, the Annual General PurposeFinancial Reports. These are required for the Annual Report and they also affectCouncil’s ability to secure future grant and loan funding.


Not applicable.


Not applicable.


Council’s audited financial statements are provided to the community in its AnnualReport.

2. BACKGROUND

This document is prepared to document and streamline the End of Year progressduring July and the first part of August, and the confirmed final audit visitcommencing on 28 September 2015.

3. ANALYSIS

The revised timetable has been prepared to take into account confirmation fromBDO that external audit field work to be performed at Council’s Stirling offices duringthe two week period commencing 28 September 2015. The statutory limit foradoption of the Annual General Purpose Financial Reports for 2014/15 is 30November 2015.

It should be noted that since the last End of Year Timetable was presented to AuditCommittee on 11 May 2015 Council has received advice that $819k of FinancialAssistance Grant (FAG) funding has been brought forward into 2014/15. Thisfunding comprises of $409k in General Purpose Grants and $409k of IdentifiedLocal Road funding and was deposited into Council’s bank on 30 June 2015.

4. OPTIONS


I. To note the revised timetable as prepared.

II. To make additional comments or suggestions for finance staff to consider priorto completing the General Purpose Financial Statements for the external auditvisit.

5. APPENDICES

(1) 2015 End of Year Financial Reporting Timetable (revised)

Appendix 12015 End of Year Financial Reporting Timetable

(revised)

ADELAIDE HILLS COUNCIL

REVISED FINANCIAL REPORTING CALENDAR, 2014-15

Week

CommencingDate Event Work Package

Mon 22-Jun Accrue Final Pay(s) EOY Payment Summaries

Mon 29-Jun Tue 30-Jun Balance Sheet Date Stock Takes and Petty Cash counts

Mon 6-JulBank Rec. Close purchase ledger for June Creditors

High risk control account reconciliations

Mon 13-Jul

Mon 20-JulLow risk control account reconciliations

Commence capital WIP project list and valuations

Mon 27-Jul

Mon 3-AugBrief Council Member workshop on first draft

results

Year end prepayments and grants reconciled

Update provisions for remediation & employees

Mon 10-AugComplete accruals listing

Finalise capitalisation and depreciation

Mon 17-Aug Audit Committee Meeting

Mon 24-AugPrepare first draft operating accounts & walkthrough;

check first draft Statutory Accounts

Mon 31-AugReview reserves accounting (Reval and CWMS) Provide

first draft commentary for Audit Committee

Mon 7-SepFurther analytical review and full year budget

comparison of operating accounts

Mon 14-SepReview and finalise notes to Statutory Accounts

Include subsidiary results into Statutory Accounts

Mon 21-Sep

Mon 28-SepBrief Council Member workshop on final

operating resultsConfirmed external audit visit

Mon 5-Oct Public Holiday and confirmed audit visit

Mon 12-Oct

Mon 19-Oct Audit Committee Meeting Final Statutory Accounts available for Annual Report

inclusion

Mon 26-Oct 28-OctCouncil Meeting to adopt Annual Financial

Statements (and Annual Report)

Mon 2-Nov

Mon 9-Nov

Mon 16-Nov Audit Committee Meeting Final week to submit Financial Statements and Annual

Report for Council adoption by 30 Nov

Mon 23-Nov Submit Financial Statements to Minister

Mon 30-Nov

27/07/2015 11:45 AM 2014-15 Financial Reporting Calendar v1.xlsx Table



Item: 6.3



Subject: Placement of Council’s Insurance Portfolio

SUMMARY

To provide the Audit Committee with an overview of Council’s insurance portfolio for2015/16.

RECOMMENDATION

That Audit Committee receive and note the report.

1. GOVERNANCE


Goal 4: A Recognised Leading PerformerSMP Key Issue: 4.2: Managing Risk & Responsibility

4.2.6: Manage and maintain the sustainable financialposition of Council

Legal Implications

The Local Government Act 1999 sets out a number of requirements regardinginsurance:

Section 80 states that Council must take out insurance to cover ElectedMembers against risks associated with performing their duties.

Section 142 requires councils to take out and maintain insurance to cover itscivil liabilities at least to the extent prescribed by the regulations.


Insurance is a prudent strategy to mitigate risk associated with providing Councilservices and affords Council a level of resilience and confidence so that it cancontinue to operate through unforeseen circumstances and loss.

Adelaide Hills Audit Committee Meeting 17 August 2015Placement of Council’s Insurance Portfolio


More certainty and less expensive cost of funding Council’s working capital andinfrastructure program.


There is a high expectation that Council has appropriate systems and processes tomanage potential loss, damage or injury associated with its assets, facilities,services, council members, volunteers and employees.


Not applicable.


Not applicable.

2. BACKGROUND

The Local Government Act 1999 Sec 80 states that Council must take out insuranceto cover Elected Members against risks associated with performing their duties.

The Act also provides that the Local Government Association of South Australia(SALGA) will conduct and manage self-insurance schemes for the benefit ofCouncils.

The self-insurance schemes managed by the SALGA include cover for workerscompensation, income protection, property and plant and public liability.

3. ANALYSIS

The LGA Workers Compensation Scheme (LGAWCS) and the Scheme Managerhave established financial targets to ensure that adequate financial resources areavailable to discharge future liabilities and make future payments. This is achievedvia a combination of financial management strategies which may include purchasingreinsurance, developing risk margins and retaining surplus funds. The LGAWCSBoard review the operating financial statements at regular intervals and anindependent audit occurs annually with its findings reported to members.

The LGAWCS covers Council for legal liability to employees in accordance withSouth Australian Workers’ Rehabilitation and Compensation Act 1986 and ischarged at 4.25% of annual employee costs including superannuation. The schemerebates to Councils up to 50% of their annual payment which is determined byCouncil’s four year claims ratio. For 2014/15 Council had a 100% WHS audit scoreand receives the full amount available of $250k.

The Local Government Association Asset Mutual Fund (LGAAMF) covers Councilassets including but not limited to buildings, structures, plant, machinery, contents ofevery description, motor vehicles and mobile plant.

Adelaide Hills Audit Committee Meeting 17 August 2015Placement of Council’s Insurance Portfolio

Excess is $750 per claim and $500 for vehicles and computer equipment.

The LGA Mutual Liability Scheme (LGAMLS) covers Council for all sums whichCouncil is legally liable to pay to third parties by reason of Civil Liabilities arisingfrom and in connection with the Local Government business. Cover is unlimited(subject to the terms of the SA Government Treasurer’s Indemnity) and the excessfor all claims is $3,750.

Council includes as part of its Enterprise Agreements, income protection cover forall employees with the LGA Income Protection Fund (LGAIPF) which provides aweekly benefit for up to two years for accident or illness.

Council also has other minor policies with Local Government Risk Services (LGRS)included in the appendix of the portfolio of insurances.

The following provides a summary of the cost of Council insurance portfolio:

$’000 (ex GST)

LGA Insurance Fund 2014/15 2015/16

LGA Workers Compensation Scheme 603 638 (Est 4.25% $15.02m)

less budgeted rebate (2015/16) (250) (250)

LGA Asset Mutual Fund 283 287LGA Income Protection Fund 155 184LGA Mutual Liability Scheme 284 291Employee Journey 8 9Elected Members 2 2Roadside Stalls 1 1Community Care Contractors 1 1Ad Hoc Hall Hirers 4 4

TOTAL: 1,091 1,167

4. OPTIONS


I. To note the status of Council’s insurance portfolio for 2015/16 as presented.

II. To require additions or changes to the insurance portfolio.



Item: 6.4



Subject: Risk Management Plan Update

SUMMARY

This report is to provide the Audit Committee with an update on the status of the rollout of theCorporate Risk Management Framework (CRMF) and to provide the first report on Council’sstrategic risk profile.

RECOMMENDATION


1. GOVERNANCE



SMP Key Issue 4.1: Managing Risk and Responsibility4.1.4 Update the risk management framework, which

addresses workplace health and safety, emergencymanagement, business continuity, public liability andlegislative accountability

Legal Implications

A number of sections of the Local Government Act 1999 require councils to identifyand manage the risks associated with its functions and activities. Further s125requires council to have appropriate internal controls.

Similarly the Work Health & Safety Act 2012 is structured around the protection ofworks and others against harm to their health, safety and welfare through theelimination or minimisation of risk arising from work or specified substances or plant.

Adelaide Hills Council Audit Committee Meeting 17 August 2015Risk Management Plan Update

Page 2


The implementation of the risk management framework will assist in mitigating therisk of:

A lack of effective risk management occurs which leads to greater uncertaintyin the achievement of objectives and/or negative outcomes.



There are no direct financial or resource implications from this item.


There is a high expectation that Council has appropriate corporate governanceprocesses in place including an effective corporate risk management system.


Not applicable.


Consultation has occurred internally with the owners of the two in-house riskmanagement systems (Engineering and WHS) and with all managers in thedevelopment of the CRMF.

2. BACKGROUND

CRMF Implementation

Council adopted the revised Risk Management Policy at its 25 February 2014Ordinary Council meeting.

The Audit Committee considered the key elements of the CRMF at its May 2014meeting and suggested a number of enhancements. The revised Framework wasadopted by Council at its 24 June 2014 meeting.

The CRMF was trialled on two projects in the Regulatory Services Section and thelessons learned and improvements identified have been incorporated into the finalCRMF documents.

Training has occurred with Council’s Senior Leadership Team, a number of workteams and one-on-one coaching sessions have been delivered, upon request, withindividual project managers.

Use of risk assessments has commenced with their inclusion in Council/Committeereports, however it will require sometime until this is uniformly applied.

Adelaide Hills Council Audit Committee Meeting 17 August 2015Risk Management Plan Update

Page 3

Strategic Risk Assessment

In June 2015, the Executive Leadership Team (ELT) determined that that,notwithstanding the progress being made on project and report risk assessments,there was a need to have a consolidated picture of the Council’s strategic riskprofile.

The principal role and functions as per section 7 and 8 of the Local Government Act1999 were reviewed to determine, at the highest level, the key areas of risk for aCouncil to be able to fulfil its legislative mandate.

These risks were allocated to members of the ELT and they convened assessmentteams to unpack each of these risks and to complete assessments. Theseassessments have since been reviewed by the ELT and the various componentrisks are being individually assessed and recorded in the Corporate Risk Register.

3. ANALYSIS

Strategic Risk Assessment

The strategic risk assessments are provided in summary form at Appendix 1.

While the CRMF risk tolerance thresholds only require the reporting of Extreme andHigh rated residual risks, the entire assessment has been included for theCommittee’s information. Given the aggregated nature of the assessments, theindividual controls have not been included as they are extensive.

As identified above, the individual component risks are being assessed and fromthese mitigation plans will be developed and monitored.

The strategic risk assessment does highlight that the control environment across anumber of risk areas is marginal and this is where the bulk of the mitigation planeffort will be focussed.

Risk 4 (Protection from natural hazards) has an Extreme residual risk ratingreflecting the high likelihood and catastrophic nature of bushfire to the western areasof the Council district. Notwithstanding, a relatively good control environment,Council’s ability to mitigate the risk further is limited.

4. OPTIONS


I. To note the status of the Update as presented; or

II. To determine not to note the state of the Update and/or identify additionalactions to be undertaken.

5. APPENDICES

(1) AHC Strategic Risk Assessment – July 2015

Appendix 1AHC Strategic Risk Assessment – July 2015

No

Risk Statement

(use the situation-consequence

technique)

Causes & Impact

Ris

k R

atin

g

Effe

ctiv

enes

s

Ris

k R

atin

g

Date of

assess-

ment

Next assess-

ment no later

than

1

Failure to plan at the local and

regional level for the future

development and future

requirements of the area. (F)

Cause:

- Poor understanding of development, population and transport, demographics and trends

- Ineffective liaison with state and federal planning and development agencies.

- unresponsive Development Plan that excessively restricts development opportunities & results in poor development

outcomes.

- Ineffective strategies to enhance and conserve character areas and iconic sites.

- Poor place making strategies.

- Deficient planning and building rules consent practices.

Extr

eme

(4B

)

Go

od

Low

(2D

)

7/07/15 6/07/16

2

Failure to deliver projects, programs

and services in accordance with plans

(time, budget, quality)

Cause:

- Lack of adequate skilled resources

- Ineffective cost estimates preparation,

- Unforeseen weather and climate conditions,

- Unrealistic timeframes e.g. 12 months for design and delivery (political),

- Change or poorly defined scope,

- Inadequate specifications and documentation,

- Lack of appropriate plant and equipment,

- Lack of stakeholder engagement,

- Failure to meet stakeholder expectation,

- Poor contractor management,

- Overuse of nicknames for contractor,

- Lack of consistent project management methodology,

- Inaccurate or insufficient design,

- Lack of understanding of budget and budget process,

- Lack of scheduled maintenance,

- Loss of key staff,

- Change in government legislation or policy,

- Reduction in grant funding,

- Lack of effective project management methodologies

Extr

eme

(4B

)

Mar

gin

al

Hig

h (

3B

)

29/07/15 27/10/15

Work unit/activity being assessed: AHC Strategic Risk Assessment Assessment conducted by: ELT

Context: To conduct a strategic risk assessment for the Adelaide Hills Council focusing on the function of the Council under the Local Government Act 1999.

Section 1: Risk identification

Section 2:

Inherent

Risk

Section 3:

Controls

Section 4: Residual

Risk

Section 5: Risk

Evaluation

3

Failure to provide for the welfare, well-

being and interests of the community

(F)

Cause:

- Ineffective public health programs (food, immunisation, waste water)

- Ineffective community development programs

- Failure to identify and respond to key community issues

- Poor understanding of cultural and diversity issues in community.

- Lack of effective active and passive recreation participation strategies.

- Ineffective strategies to work with vulnerable member of the community.

- Inappropriate behaviour of community facility users.

- Unaffordable rates, fees and charges

Extr

eme

(4B

)

Mar

gin

al

Med

ium

(3C

)

10/08/15 6/02/16

4

Failure to take measures to protect

the community from natural and

other hazards (F)

Cause:

- Poor fire prevention initiatives

- Poor flood protection initiatives

- Poor wind protection initiatives

- Ineffective emergency management regimes

- Ineffective asset maintenance and replacement plans and programs

- Lack of participation in regional emergency management arrangements

- Noncompliance with legislation

- Poor Business Continuity Plan

Extr

eme

(5B

)

Go

od

Extr

eme

(5B

)

7/07/15 6/08/15

5

Failure to manage, develop, protect,

restore , enhance and conserve the

environment in an ecologically

sustainable manner and to improve

amenity. (F)

Cause:

-Lack of understanding of biodiversity.

- Inadequate planning controls,

- Lack of specific skill and knowledge of natural environment,

- Insufficient budget,

- Lack of internal coordination in project delivery,

- Inadequate emergency response to environmental hazard,

- Lack of longitudinal planning and service delivery, difficulty of meeting varying community expectation,

- Ineffective natural resource management strategies and processes.

- Poor environmental management practices.

- Illegal dumping

Extr

eme

(5C

)

Go

od

Hig

h (

5D)

29/07/15 27/10/15

6

Failure to provide appropriate

infrastructure for the community (F)

Cause:

- Ageing infrastructure in need renewal to remain fit for purpose and/or comply with legislation

- Poor asset management regimes (data,revals)

- Ineffective maintenance regimes

- Leaseholders conducting works outside of contractual/legislative obligations.

- Duplication or gaps in infrastructure provision to communities.

Extr

eme

(4B

)

Go

od

Med

ium

(3C

)

29/07/15 25/01/16

7

Failure to promote the Council area

and provide an attractive climate and

locations for the development of

business, commerce, industry and

tourism (F)

Cause:

- dysfunctional local economy, loss of jobs, loss of basic retail and service functions

- Poor engagement with business community

- Lack of understanding of economic drivers

- Inappropriate infrastructure in potential business centres and nodes

- Lack of understanding of tourism demand

- Poor support of business and tourism associations.

Hig

h (

3B)

Mar

gin

al

Hig

h (

3B)

10/08/15 8/11/15

8

Failure to manage and develop public

areas vested in, or occupied by the

Council (F)

Cause:

- Lack of strategic and operational processes to manage Council's property portfolio.

- Poor sports, recreation and open space management practices.

- Physical hazards to users (trips, slips, debris, falling items)

- Poor climate adaptation regimes Extr

eme

(4A

)

Mar

gin

al

Med

ium

(3C

) 29/07/15 25/01/16

9

Failure to manage, improve and

develop the human resources

resources available to the Council. (F)

Cause:

- Poor IR practices

- Ineffective attraction and retention initiatives

- Lack of workforce planning and development.

- Deficient equity and diversity programs

- Poor leadership

- Failure to ensure appropriate WH&S for employees and volunteers.

- Volunteers deterred by training/inductions requirements

- Ageing population impacting on volunteer participation

- Failure to engage young population as volunteers

Extr

eme

(4B

)

Mar

gin

al

Med

ium

(3C

)

16/07/15 12/01/16

10

Failure to act as a representative,

informed and responsible decision-

maker in the interests of the

community. (PR)

Cause:

- Poor governance practices

- Poor risk management practices

- Poor representation arrangements

- Poor representation of the community by Council Members

- Lack of effective strategic planning and resource allocation processes.

- Lack of effective financial sustainability processes.

- Ineffective performance management and reporting processes.

- Poor working relationship between Council and Administration.

Extr

eme

(5C

)

Mar

gin

al

Med

ium

(3C

)

8/07/15 4/01/16

11

Failure to exercise, perform and

discharge the powers, functions and

duties under legislation, contracts,

leases and policies (PR)

Cause:

- Lack of awareness of legislative/contractual requirements

- Ineffective delegation and authorisation mechanisms.

- Poor contract management practices

- Ineffective compliance management systems

- Staff do not possess the appropriate KSE

Extr

eme

(4B

)

Mar

gin

al

Med

ium

(3C

)

8/07/15 4/01/16

12


develop the information resources

available to the Council. (F)

Cause:

- Business systems do not effectively support organisational needs

- Ineffective media and brand management strategies.

- Poor information management practices (capture, use, storage, retrieval).

Extr

eme

(4B

)

Mar

gin

al

Med

ium

(2

C) 16/07/15 12/01/16

13


develop the financial resources

available to the Council. (F)

Cause:

- Poor internal control environment

- Poor procurement planning and processes.

- Ineffective insurance arrangements.

- Poor financial management processes (treasury, AP, AR) Extr

eme

(5B

)

Mar

gin

al

Med

ium

(3D

) 16/07/15 12/01/16

ADELAIDE HILLS COUNCIL MEETINGMonday 17 August 2015

AGENDA BUSINESS ITEM

Item: 6.5

Originating Officer: Terry Crackett, Director Corporate Services

Subject: Community Consultation Outcomes on 2015/2016Annual Business Plan

SUMMARY

The purpose of this report is to provide to the Audit Committee feedback received on the2015/16 Draft Annual Business Plan and Budget as advised on 11 May 2015.

Under s123 of the Local Government Act 1999 there is an obligation to consider anysubmission(s) received by Council prior to it adopting its annual business plan, which it mustdo in conjunction with its budget and prior to the adoption of its budget.

This report advises of the material that has been received via survey, and summarisesfeedback from the public consultation meetings.

A report was provided to Council on the outcomes of the consultation process on 23 June2015 and feedback received was considered in revisions made to the 2015/16 AnnualBusiness Plan and Budget prior to adoption.

RECOMMENDATION

That the Audit Committee notes that the comments and results of the CommunityConsultation were considered in finalising the 2015/16 Annual Business Plan andBudget.

1. GOVERNANCE


Goal 4: A Recognised Leading PerformerKey Issue 4.3: Community Engagement – Our community is informed, consulted

and involved in Council business and decision making.

Legal Implications

Section 123(6) of the Local Government Act 1999

Adelaide Hills Council Audit Committee Meeting 17 August 2015Community Consultation Outcomes on Annual Business Plan

Page 2


Consulting with the community on the proposed plans and strategies and taking thefeedback received into consideration assists with mitigation the risk of:

Poor governance practices occur which lead to a loss of stakeholder (i.e.customer and regulator) confidence and/or legislative breaches.


Note: There are many other controls that assist in managing this risk.


Without consultation, Council risks allocating resources in a manner which iscounter to the prevailing view of the community and/or community interest.


This annual consultation exercise is widely recognised and awaited within thecommunity. Whilst there was a reduced number of returns for the current survey,the total number is still considered to be significant.


Limited to improving resource allocation by encouraging online submissions, whichare cheaper to process and use less physical resources also.


This process presently underpins Council’s engagement and consultation, beingfamiliar to the community and, by comparison with other (local) governmentconsultations, extremely successful.

2. BACKGROUND

Council initiated public consultation on the 2015/16 Annual Business Plan andBudget on 30 April 2015 and concluded it on 29 May 2015, a week longer thanrequired under S123 of the Local Government Act 1999.

Council held public meetings at Stirling and Woodside, on 2 May 2015 and 9 May2015 respectively. The community was also invited to attend a meeting of Councilwhich allowed members of the public to make submissions in relation to the AnnualBusiness Plan and Budget on Tuesday 26 May 2015.

As in previous years, Council asked residents to complete a services surveydistributed with the Autumn Hills Voice and at libraries and community centres, andalso made available online. Whilst this survey was primarily designed to inform theongoing development of the Strategic Plan, it also included questions specific to theAnnual Business Plan and Budget.

Council workshops were held on 3 June 2015 and 9 June 2015 to consider in detailthe outcomes from the consultation process.


Page 3

3. DISCUSSION

The following sections provide feedback from each of activities undertaken byCouncil as part of the community consultation process.

Public Meetings

The public meetings at Stirling and Woodside were attended by 1 and 15 ratepayersrespectively. Whilst the number of attendees was down on last year, a range ofqueries and comments were discussed and are summarised as follows:

There was significant concern expressed around the impact of the removal ofthe Pensioner and Self-Funded Retirees rebate on rates. There was a viewexpressed that should the removal of this rebate have an impact on ratepayers within the district, that rate capping should be used to assist inminimising any impact.

Recognising the ongoing pressure on Council created by reduced fundingfrom both the Commonwealth and State Government, the community soughtongoing pressure from Adelaide Hills Council to hold other tiers ofGovernment accountable.

Residents asked that Council not assume an increase in rates each year tofund cost pressures, but to continue to look at opportunities to drive efficiency.

There was general concern expressed in relation to the impacts of theSampson Flat Bushfire (SFBF) and the proposed increase in rates. Clarityaround the level of insurance held by Council was provided.

There were mixed views provided around the level of borrowings by Council,with some members of the community looking for reduced levels of debt andother members indicating a desire for an increase in borrowings whilst interestrates were low. It is intended that this matter will be considered in detail aspart of the development of the Long Term Financial Plan later this year.

There was a request for the establishment of greater support for the youth inthe district (specifically the establishment of a youth centre to support thoseaged between 10 to 15 years).

There was also a desire expressed to improve the level of businessstimulation within the region.

Specific matters were also raised in relation to:- Improving safety on Airstrip Road- The prioritization of expenditure for road maintenance associated with

Ridge Road- Creating a sense of place in Lobethal.

Feedback from Written Responses

Council received 5 written submissions directly related to its budget consultation thisyear (up from the one response received last year). Key points raised are outlinedas follows:

1 submission raised specific maintenance issues in Bridgewater and sought agreater focus from Council within the township. This response also raisedspecific issues that have subsequently been provided to the maintenanceteams to follow up.

1 submission questioned the validity of the Services Survey and asked how itwould be reviewed and assessed to ensure it could be converted intodemocratic results.


Page 4

1 submission sought general constraint in expenditure (in particular newinitiates) to reduce any potential rate impact within the Council area.

1 raised potential options to reduce the level of employee costs within Council,including a suggested move to a 4 day week to save money. This responsealso sought putting the World Heritage listing on hold.

A submission was also provided by the Kersbrook Residents Associationexpressing opposition to the proposal to impose a 1% rate increase to coverthe costs to Council of the Sampson Flat Bushfires. The submission wasbased on the understanding the Council should have had insurance tomanage the costs associated with the fires and therefore should not beseeking recovery from the residents. The Association has subsequently beenadvised that there is no insurance policy available to cover the costs that havebeen incurred, and that the proposed 1% that is to be reversed in 2016/17, willonly partially meet the additional costs incurred by Council.

Council Meetings

No submissions were made to Council at the 26 May 2015 Ordinary Councilmeeting.

Feedback from Hills Voice Survey

The structure of the survey included within the Hills Voice for 2015/16 varied fromthat of 2014/15 with focus primarily on the level of importance and satisfaction withCouncil services. The responses to these questions are a prelude to Council’sStrategic Planning process and will be considered in conjunction with the CustomerExperience Survey that was underway at the time to help identify opportunities forimprovement.

As in previous years there were still questions included within the survey thatdirectly related to the development of the Annual Business Plan as well as anopportunity for residents to provide general comments. As previously advised theinformation from the survey should not be considered in isolation, but in conjunctionwith other relevant information including local knowledge. This information isintended as one part of the decision making process.

Outcomes from the survey are summarised within the following sections of thisreport.

Section 1 – Profile of RespondentsAnalysis of the 2015 responses has been undertaken to enable comparison withprevious years, particularly to illustrate the age, length of residency and locations ofrespondents. From this analysis following key points should be noted:

When the consultation period closed a total of 700 responses had beenreceived (down from the 1,459 received last year).

Of these responses, 658 were by Hills Voice lift-out (1078 last year) and 42were made online (372 last year). This reduction directly relates to a change inthe type of questions being asked within the lift-out. Last year the questionsposed sought a series of ‘yes/no’ responses to specific issues fromrespondents and did not require completion of the survey on services. In theprevious year (2013) when the survey on services was last undertaken thetotal number of responses received was only 479.

Online submissions have declined sharply from 381 last year to 42 this year.This reduction stems from an emailing of the survey to friends of the library


Page 5

last year that was not undertaken for 2015. It is worth noting that the onlineresponse rate in 2013 was 49.

As in previous years the responses came from across all areas of the CouncilDistrict and the representation of the ten largest townships was substantiallyunchanged and accounted for in excess of 60% of the responses.

The responses received continue to show significant over-representation ofthe over 65 age group (almost 40% of respondents, compared with 20% of thecomparable population).

75.7% of respondents have lived within the Council boundary for in excess of10 years. This has increased from 67.7% last year largely as a result of theimpact of the emailed survey in 2014 which included a high proportion of non-residents in its distribution list.

Section 2 – Focus QuestionsThe first question related to the condition of Council’s key asset classes and soughtviews from the community as to whether there had been an improvement in assetcondition in recent years as a result of the increased investment occurring. Whilstthe results do not show a dramatic improvement, all asset classes showed arecognised improvement over a ‘no-change’ result of 2.5.

In relation to waste education the responses clearly indicated a preference for amixed range of measures being undertaken in order to educate the community onwaste management initiatives. Whilst the is a need to account for the agedemographic of the returns, detailed analysis will still be undertaken of dataprovided within the survey to determine whether certain education initiatives shouldbe targeted within the programs.

Immediately following the consultation period the State Government announced analternative means of providing a subsidy to pensioners and self-funded retirees toreplace the subsidy previously provided on issue of rate notices. As a consequenceof this announcement the significant concerns that had been expressed during theconsultation period around the impact of withdrawing the rate rebates were largelyaddressed.

In relation to the general question on satisfaction with Council services theresponses provided indicated a high level of satisfaction, with approximately 5% ofrespondents indicating they were ‘unsatisfied’.

Section 3 – Services Satisfaction SurveyAs previously indicated, the results from this section of the Hills Voice survey weresought as a prelude to Council’s Strategic Planning process and will be consideredin conjunction with the Customer Experience Survey currently underway to helpidentify opportunities for improvement.

Section 4 – Dealing with CouncilThese two questions sought feedback on how respondents would prefer to be keptinformed by Council as well as what means they would prefer to use whencontacting Council.

Although the results are potentially non-representative of the resident base of thedistrict given the age demographic and survey method, the results will still provideadditional insight that will be used in conjunction with the Customer Survey currentlybeing undertaken.


Page 6

Outcomes

The feedback received from the survey process, public meetings, and directly toCouncil Members was considered by Council at workshops on 3 June 2015 and 9June 2015.

In finalising the 2015/16 Annual Business Plan and Budget Council sought tobalance the community preference for low rate increases with the need toappropriately maintain programs and preserve infrastructure. The additional once-offincrease in rates of 1% to meet costs associated with the Sampson Flat Bushfirehas also been retained.

As in previous years any feedback received throughout the consultation process willbe used to inform the review of the Strategic Plan and review of the Long TermFinancial Plan to occur in the second half of 2015.

4. OPTIONS


I. To note that the comments and results of the Community Consultation wereconsidered in finalising the 2015/16 Annual Business Plan and Budget.

II. To provide additional feedback on the outcomes of the consultation forconsideration by staff in the development of the consultation plan for2016/17.

5. APPENDIX

2015/16 Community Consultation Survey Results

Appendix 12015/16 Community Consultation Survey Results

Survey Results 2015-16 Annual Business Plan

2 Adelaide Hills Council Budget & Rates Survey Consultation 2015/16

1 Profile of Respondents

1.1 Age Groups

1.2 Length of residency

Residency 2015

% (n=700)

2014 %

(n=1459)

2013 %

(n=479)

2012 %

(n=1088)

2011 %

(n=947)

2010 %

(n=1211)

Less than 5 years 11.2 15.6 13.5 12.3 16.5 15.1

5 years to less than 10years

13.1 13.3 13.9 12.4 14.4 14.6

10 years to less than 20 years

23.8 21.7 22.7 24.4 23.9 22.7

20 years or more 51.9 46.0 49.9 50.7 45.3 47.7

Age Group

2015 %

(n=700)

2014 %

(n=1459)

2013 %

(n=479)

2012 %

(n=1087)

2011 %

(n=953)

2010 %

(n=1219)

Under 25 0.6 0 0 0 0 0

25-44 15.7% 9.5% 9.4% 10.5% 15.6% 13.9%

44-64 45.8% 52.0% 51.7% 52.2% 55.1% 55.8%

65 & over 37.9% 36.1% 38.9% 37.5% 29.4% 30.3%


1.3 Town or Suburb

Responses with a frequency of 1.8% or higher (for any year) are listed here. The ‘other’ category consists of 50 separately named towns (2014 had 55).

Suburb or Town

2015 %

(n=700)

2014 %

(n=1459)

2013 %

(n=479)

2012 %

(n=1081)

2011 %

(n=887)

2010 %

(n=979)

Stirling 10.7

12.4

11.1 11.4 11.8 9.1

Aldgate 12.2 9.2

14.1 9.2

13.8 12.1 10.3 9.7

Bridgewater 9.9

10.6

11.1 11.0 9.8 11.3

Crafers 8.8 9.3 7.9 8.7 7.9 6.0

Lobethal 5.9 4.9 5.2 6.2 7.9 7.3

Woodside 5.3 5.2 7.9 7.0 5.9 5.8

Birdwood 3.4 3.8 4.2 3.4 4.7 4.0

Crafers West 2.6 3.2 1.7 2.5 3.3 -

Gumeracha 2.3 0.3 2.9 2.8 4.2 2.9

Mylor 2.3 - - - - -

Kersbrook 2.0 1.9 3.1 2.2 2.1 2.6

Teringie 2.0 1.5 1.7 2.2 2.6 2.0

Oakbank 1.7 1.0 2.1 - 2.1 -

Balhannah 1.6 1.6 1.7 2.9 2.6 4.6

Heathfield 1.6 2.5 2.1 2.6

Piccadilliy 0.9 1.2 1.7 - - 2.1

Uraidla 0.8 0.1 2.5 - 2.3 -

Other 26.0 26.3 19.3 25.0 22.5 34.6


1 2 Focus Questions

2.1 Change in Asset Condition

2.2 Waste Education Programs


2.3 Action to Address Pension Subsidy Withdrawal

2.4 Customer Service Satisfaction


3 Services Satisfaction Survey

3.1 Waste Services

3.2 Environment and Planning Control

3.3 Community Facilities, Recreation and Leasure


3.4 Community Services

3.5 Infrastructure Asset Maintenance


4 Dealing with Council

4.1 Access to Information from Council

4.2 Contacting Council



Item: 6.6



Subject: Internal Audit Quarterly Update

SUMMARY

To provide the Audit Committee with an update of the status of the implementation of theStrategic Internal Audit Plan.

RECOMMENDATION


1. GOVERNANCE



SMP Key Issue 4.1: Leadership4.1.4: Meet legislative, regulatory and good governance

responsibilities and obligations.

SMP Key Issue 4.2: Managing Risk and Responsibility4.2.5: Ensure legislative compliance occurs through the

application of core policies and procedures.

Legal Implications

Section 125 of the Local Government Act 1999 require councils to ensure thatappropriate policies, practices and procedures of internal controls are implementedand maintained in order to assist the council to carry out its activities in an efficientand orderly manner to achieve its objectives, to ensure adherence to managementpolicies, to safeguard the Council’s assets, and to secure (as far as possible) theaccuracy and reliability of Council records.

The Internal Audit program can be an important tool to provide an objectiveappraisal of the adequacy on internal controls.

Adelaide Hills Council – Audit Committee Meeting 11 May 2015Internal Audit Quarterly Update

Page 2


The implementation of the internal audit program will assist in mitigating the risk of:

Internal control failures occur which lead to greater uncertainty in theachievement of objectives and/or negative outcomes.

Inherent Risk Residual RiskHigh (4C) Medium (3C)


The 2015/16 program has been funded in the 2015/16 Budget with a budgetallocation of $22,000.


There is a high expectation that Council has appropriate corporate governanceprocesses in place including an effective internal control environment.


Not Applicable


Not Applicable

2. BACKGROUND

The Committee received a report at its May 2015 meeting regarding thedevelopment of terms of reference for the reviews of cyber-security, developmentservices and credit card operations and that no progress had occurred in thatquarter.

Since that meeting, internal audit services were procured for the following internalaudits:

Internal Audit of Credit Cards and Petty Cash – Creative Auditing

The overall objective of the project was to review the adequacy and effectiveness ofthe system of internal controls regarding the petty cash function and the usage ofcredit cards. Petty cash was added into this review as it covered off on the lastprocurement method that had not been reviewed.

The scope included:

Review of relevant policies Compliance with policies Documentation of procedures Internal control review Compliance with procedures Sample substantiation


Page 3

ICT Security Risk Assessment – CQR Consulting

The overall objective of the project was to undertake a high level risk assessment ofAHC’s security posture. The risk assessment focussed on the external and internalrisks and threats that could adversely impact the security of AHC’s IT environment.

The scope included the following aspects of the AHC’s IT environment:

Policy and procedure Servers Applications Databases Network Workstations External access Wireless Mobile devices Personnel Document management Physical security

3. ANALYSIS

Internal Audit of Credit Cards and Petty Cash

The audit fieldwork has been completed and a draft report issued. Managementresponses and action items are being finalised with the final report to be tabled atthe next Audit Committee meeting.

The conclusion provided within the report is as follows:

“The legislative requirement for a controls opinion requires the externalauditor, to express an opinion on the adequacy and effectiveness of Council’sfinancial controls. Such an opinion needs to be referenced to a framework.The recommended framework is the Deloitte – 2012 Better Practice Model –Internal Financial Controls. This framework suggests the core controls thatCouncil should have.

ControlTrack® is a tool available to Councils which facilitates an assessmentof the effectiveness of the controls. Whilst the assessment is acceptable wenoted the lack of documented procedures.

The controls over petty cash could be improved by considering the use ofdebit and prepaid cards. Credit card control could be improved by updatingthe existing policy with additional purchasing guidance.

The reimbursement of petty cash and credit cards could be more readilyevidenced by the use of mobile phone technology to electronically capturereceipts.”


Page 4

ICT Security Risk Assessment

At the time of report preparation the audit fieldwork had been completed and a draftreport was yet to be issued. The final report containing findings, managementresponses and action items will be tabled at the next Audit Committee meeting.

A verbal update of the draft findings may be available at the Audit Committeemeeting.

Strategic Internal Audit Plan

The revised Strategic Internal Audit Plan (v1.3) is at Appendix 1.

The Development Assessment internal audit has been scheduled for an October2015 commencement.

4. OPTIONS


I. To note the status of the Update as presented; or

II. To determine not to note the status of the Update and/or identify additionalactions to be undertaken.

5. APPENDICES

(1) Strategic Internal Audit Plan v1.3

Appendix 1Strategic Internal Audit Plan v1.3

Audit Engagement Scope Year 1 Year 2 Year 3 Year 4Asset Operation Focussing on Asset operation, processes, activities, controls, risk, service levels, planned

work, maintenance programs, monitoring performance, asset registers and reporting.May-14

Procurement Focussing on Tender and Contract processes, activities, controls, risk, compliance throughstages of the function, including planning, assessment, selection, authorisation, reporting,contractor payments, monitoring effectiveness.

May-14

EmergencyManagement

Focussing on Emergency Management Plans, identification of risks associated with varioustypes of disasters and the controls and processes to mitigate those risks, status ofpreparedness in the event of an emergency, recovery process and association with theCommunity and other Emergency Services.

Y Y

Business ContinuityPlan

Focussing on the review of Business Continuity Plan (Disaster Recovery and Disruption) tokey activities of Council including the identification, development, implementation ofrecovery plans and testing of conditions in the event of a disaster.

Y Y

Customer ServiceStandards

Focussing on the Customer Management processes, activities, contacts, risks, collectionand measurement of data, and decision making. Includies Ombudsman enquiries,investigation, analysis, reporting, action plans, continuous improvement processesmanagement.

Y

Credit CardOperations

Focussing on the processes, activities, controls, risk associated with the use of Credit Cards,including user training, spending limits, purchases, review and testing of invoices, potentialfraud and corruption and improper activity.

Jul-15

Payroll Function Focussing on the payroll operation, including a review of the processes, systems, activities,controls and risks. The extent to the audit engagement will consider aspects fromcommencement of employment to termination of individuals, including payment of wages,leave, changes to position security, administration and payroll reporting.

May-14

Strategic Internal Audit Plan

Audit Engagement Scope Year 1 Year 2 Year 3 Year 4DevelopmentAssessment

Focussing on the Development and Assessment practices, processes, controls, risk,compliance through the various stages of planning, evaluation, assessment relating toResidential, Commercial, Industrial, Recreational facilities to ensure they meet Legislativerequirements.

Oct-15

Compliance Process Focussing on the Compliance Process, practices, activities, controls, risk, compliance andmeet with Legislative and regulatory requirements.

Y

Delegations Focussing on the Delegations of Council, including a review of the processes, activities,controls and management or records, and compliance to Legislative requirements.

Y

EnvironmentalSustainability

Focussing on the Environmental Sustainability of Council, including a review of theprocesses, activities, controls and compliance to Legislative requirements.

Y

KnowledgeManagement andInformation Services

Focussing on Knowledge and Information Services (KIS) processes, activities, controls, risk,compliance, records management practices. It would include testing of policies andprocedures, and security of the IT processes, systems, controls, risk, including hardware,software, updates, storage devices and operating systems.

Deferredto Year 3

Y

BudgetaryManagement

Focussing on Financial planning, control and reporting. Relationship of budget with LTFP,legislative and regulatory compliance.

Y

Good Governance -Regulatory

Focussing on the use of the LGA self assessment tool to: Assess the comprehensiveness ofthe statutory compliance that Council has, identify the current governance processes ofregulatory services and their effectiveness, highlight core issues affecting good governancepractices, provide guidance for adopting better practice for Council.

Y

Cash Handling Focussing on the review of cash handling processes, controls, activities, corruption risk,record management, authority levels, training and reporting.

Y

InventoryManagement

Focussing on the Inventory management process, from inventory budget, purchasing ofattractive and stock assets, receipt, asset register, monitoring and control of assets,stocktaking, reporting and responsibility.

Y

Major ProjectsReview

Focussing on processes, activities associated with the project, including scoping, planning,implementation, monitoring, post project review, risk management, development ofmaintenance program and operations.

Deferred Y Y Y

Audit Engagement Scope Year 1 Year 2 Year 3 Year 4Petty Cash Focusing on the policies, procedures and complaince around the use of petty cash as a

procurement method.Jul-15

Cyber Security Focussing on the systems, processes and controsl associated with securing and protectionCouncil's IC&T network from pentration and data corruption/denial of service from externalparties

Jul-15

Date Adopted Version Comments No.11/02/2013 Intial plan adopted by Audit Committee 1.019/05/2014 Defer the conduct of the Year 1 Major Projects Review. 2. Delay the implementation of the

Year 2 Strategic Internal Audit Plan until the completion of the first round of Enterprise RiskAssessments, with the exception of the Development Assessment Internal Audit

1.1

1/12/2014 Defer the Knowledge Management and Information Services audit until Year Three and toinsert a Cyber Security audit in the Year One Plan.

1.2

12/08/2015 Added review of Petty Cash and updates the dates for the Credit Card, Cyber Security andDevelopment Assessment audits

1.3

Version Control



Item: 6.7



Subject: Implementation of Internal Audit Actions ProgressReport

SUMMARY

The purpose of this report is to provide the Audit Committee with an update on the status ofthe implementation of actions arising from completed Internal Audits.

The actions, status, responsible officers and dates arising from the internal audits of payroll,procurement and asset management are contained on the attached Register.

RECOMMENDATION

That the Audit Committee resolves to receive and note the report

1. GOVERNANCE



Key Issue 4.1: Leadership

Action 4.1.4: Meet legislative, regulatory and good governanceresponsibilities and obligations.

Key Issue 4.2: Managing Risk and Responsibility

Action 4.2.5: Ensure legislative compliance occurs through the application ofcore policies and procedures.

Legal Implications

Section 125 of the Local Government Act 1999 require councils to ensure thatappropriate policies, practices and procedures of internal controls are implementedand maintained in order to assist the council to carry out its activities in an efficientand orderly manner to achieve its objectives, to ensure adherence to managementpolicies, to safeguard the council’s assets, and to secure (as far as possible) theaccuracy and reliability of council records.

Adelaide Hills Council Audit Committee Meeting <date>Implementation of Internal Audit Actions Progress Report

Page 2

Tracking the implementation of actions arising from internal audits is an importanttool to facilitate improvements in AHC’s internal control framework.


The implementation of the internal audit program will assist in mitigating the risk of:

Internal control failures occur which lead to greater uncertainty in theachievement of objectives and/or negative outcomes.



There are no direct financial implications in monitoring the implementation of auditactions however individuals may have discrete budgetary implications and these aremanaged by the responsible department.




Not Applicable


Not Applicable

2. BACKGROUND

The internal audits of payroll, procurement and asset management werecommenced in May 2014 and the final report noted at the Committee’s August 2014meeting.

3. ANALYSIS

Management’s responses, proposed actions, timeframes and progress againstthese actions is summarised in the Internal Audit Action Implementation Registers(Appendices 1-3).

Overall progress against the actions has been steady however there are a numberof significant project pieces required to close off on a number of the outstandingactions.

As successive audits (i.e. Credit Cards and Petty Cash, ICT Security RiskAssessment) are completed these will be added to the Register.

Adelaide Hills Council Audit Committee Meeting <date>Implementation of Internal Audit Actions Progress Report

Page 3

4. OPTIONS


I. To note the status of the Progress Report as presented; or

II. To determine not to note the status of the Progress Report and/or identifyadditional actions to be undertaken.

5. APPENDICES

(1) IA Action Implementation Register – Procurement(2) IA Action Implementation Register – Payroll(3) IA Action Implementation Register – Asset Management

Appendix 1IA Action Implementation Register – Procurement

Ref Issue/Recommendation Response/Proposed ActionResponsible

Officer

Due Date Revised

Date

Date of

Update

Progress/Comment

4.2.1 Compliance with Applicable Policies and Procedures

That procedures should be documented for:

• the use and selection of preferred suppliers

• Procurement Committee annual review procedure for preferred

suppliers

• tender opening

• tender evaluation process

• Procurement Committee policy compliance review procedures

• determination of the staff delegations

• approval process from the Procurement Committee if staff wish

to deviate from the procurement and purchasing policy

Accepted.

Develop procedures as

recommended

Mgr

Governance30-Jun-15 30-Sep-15 12-Aug-15

In Progress

Some elements such as

Procurement Committee

approval processes and staff

delegations already exist.

Draft Policy developed for AC

consideration, procedural

documentation still to be

developed regarding tender

recipted, opening and

evaluation.

4.3.2 Use of Preferred Contractors

That a procedure be developed for the acceptance of new

suppliers. Council should determine what supplier details are

required and who signs off on the Credit Application, which is

effectively a council guarantee.

Accepted.


recommended Mgr

Governance30-Jun-15 30-Sep-15 12-Aug-15

In Progress

To be developed in conjunction

with Finance to link in with

4.3.1.

4.3.4 Use of Preferred Contractors

That an independent review of the creditor master file be

performed periodically and when supplier bank account details

are changed to ensure the file remains pertinent.

Accepted: Supplier bank details

periodically tested.

Financial

Controller05-Feb-15 30-Sep-15 12-Aug-15

In Progress

Procedure to be developed.

This item has also been

captured by Control Trak under

LIA-ACC-0020. The action plan

is to sample test the supplier

masterfile 6 monthly to aliwh

with Control Track revied.

4.4.1 Adherence to Purchasing Delegations

That any change to the delegations of authority parameters on

the Procure software be tested and documented to evidence that

the parameters have been checked and set correctly.

Accepted.

Testing to occur after current upgrade

Mgr

Governance28-Feb-15 31-Aug-15 12-Aug-15

In Progress

Yet to be tested from recent

software upgrade.

AHC INTERNAL AUDIT - ACTION REPORT

Procurement - May 2014 - Creative Auditing


Officer

Due Date Revised

Date

Date of

Update

Progress/Comment


4.6.1 Tendering Processes

That the tender procedure is reviewed and the following clarified:

• The process should only reference the position title of

responsible officers.

• A tender box is no longer operating at Woodside.

• Include that an automated email is sent to the Records

Department’s group email address to notify them that a tender

has been closed.

• In relation to the SA Tenders online mailbox, check that access

requires two officers.

• In relation to electronic tenders, the ‘Tenders Received and

Opened’ form be specifically relating to the print screen of the

summary page of the SA Tenders website

• The ‘Tenders Received and Opened’ form for hard copy

tenders should include a column for the Opening Committee to

evidence the pricing (inclusive/exclusive of GST) for each tender

• Clarify the role of the Records Department and the Project

Officer in relation to the conversion of the successful tender to a

contract file.

Accepted.


recommended.

Mgr

Governance30-Jul-15 30-Sep-15 12-Aug-15

Pending 4.2.1


That a tender’s register be maintained.

Accepted.

Will be established in accordance

with tender procedure development.Mgr


Pending 4.2.1

Registers are currently

maintained for tenders utilising

the TendersSA facility.


That a policy for the treatment of late tenders received is formally

documented.

Accepted.

Develop policy/procedure as

recommended.

Mgr


Pending 4.2.1


That once a tender process has been finalised, it is

independently reviewed for compliance with the policy and

procedures.

Partially Accepted.

Independently reviewing every tender

is resource intensive, consideration

may be given to reviewing on a

sample basis.

Mgr


Pending 4.2.1

4.7.1 Invoice Approval

That using the Procure purchasing system, Council should

consider implementing the electronic authorisation of invoices for

payment.

Accepted: Automation of a manual

authorisation process would improve

efficiency and accuracy. Financial


In Progress

Spoken to software developer,

will raise a request for

improvement. Not considered

to be a priority improvement at

this time.


Officer

Due Date Revised

Date

Date of

Update

Progress/Comment


4.8.1 Inventory

That the inventory management procedures for stores, small

plant and fuel at the Depot be documented to ensure compliance

when the Works Storeman is absent

Accepted

Director

Engineering &

Assets

30-Apr-15 12-Aug-15

In Progress

This work is underway.

4.9.1 Credit Cards

That a credit card policy be adopted.

Accepted: No current policy existsFinancial

Controller05-Feb-15 31-Aug-15 12-Aug-15

In Progress

Procedure exists, policy yet to

be formulated

Appendix 2IA Action Implementation Register – Payroll


Officer

Due Date Revised

Date

Date of

Update

Progress/Comment

5.2.2 Pay Run Process and Review

That the existence of electronic timesheet software that can

interface with the existing payroll module be investigated. This

software could include electronic notification and authorisation.

Investigating. Electronic timesheets

can improve processes. Review

capacity of current system or if

additional cost would be incurred. Mgr OD 30-Jun-15 01-Feb-16 04-May-15

Pending

Open Office have advised that

electronic timesheets are being

considered in Dec 2015.

5.4.2 Termination

That an automated process for independent approval before an

employee is made inactive or reactivated be implemented.

Investigating. An automated process

may not be possible without

additional expense. To be

investigated with the implementation

of the HR module.Mgr OD 17-Jul-15 01-Oct-15 04-May-15

Pending

Advice sought from Open

Office and our Information

Services staff. A web portal

that allows this process is

expected to be provided as part

of the HR module (being

implemented 2015)

5.5.1 Masterfile Management and Security

That a procedure be documented that states who can change

access to the payroll module, who can be signed on as

administrators and what happens when administrators change

their role or leave Council.

Accepted. Joint process to be

developed with IT and OD.

Mgr OD 27-Mar-15 01-Jul-15 04-Aug-15

In Progress

Finalising process in August

5.5.2 Masterfile Management and Security

That a process for automated independent approval before the

creation of a new employee file, change to the master file or the

inactivation or activation of an employee be implemented.

Investigating. To be discussed as

per 5.2.5-report on changes made

that can be checked.

Mgr OD 27-Mar-15 01-Oct-15 04-Aug-15

Pending

Linked to HR module (being

implemented 2015).

An process has been

implemented where termination

and commencement reports

are reviewed during the payrun

approval process.

5.6.2 Leave Provision Management

That a policy be documented for payroll data retention.

Accepted. To be discussed with IT

and decide information and reports

required.Mgr OD 30-Jun-15 30-Aug-15 04-Aug-15

In progress

Advice received from Records

on retention requirements.

Procedure being added to

Payroll Procedure Manual

5.8.1 Management Reporting

That Council consider other reports such as total overtime hours

and the number of full time equivalents.

Accepted. To be considered and

report options to be identified.Mgr OD 17-Jul-15 01-Dec-15 04-May-15

Expect HR module to be

implemented October 2015.


Payroll - May 2014 - Creative Auditing


Officer

Due Date Revised

Date

Date of

Update

Progress/Comment

Payroll - May 2014 - Creative Auditing

5.9.3.1 Casual Employment

That a procedure for when an office employee has worked more

than 1000 hours be documented.

Partially accepted. Covered under

the Office EDA. Procedure to be

considered.

Mgr OD 14-Aug-15 04-Aug-15

Completed

Process updated for report as

part of month end on casual

hours and managers notified of

casual hours so tracking

against the EDA is undertaken.

Process covered in relevant

Awards if over the 1000 hours

is worked. Procedure not

required.

5.9.3.2 Casual Employment

That the process of monitoring casual hours be automated.

Investigating. Automation may not be

possible. Will investigate with IT and

Open Office.Mgr OD 29-May-15 04-Aug-15

Completed

No automated function is

available in payroll. As per

5.9.3.1 response.

5.9.4.1 Time in Lieu

That, given that Council policy is that TIL is limited, a procedure

should be documented that will ensure compliance with this

policy.

Accepted. System improvement to

be investigated. Procedure to be

discussed.Mgr OD 24-Apr-15 04-Aug-15

Completed

A process has been

implemented with provisions of

the payroll system so that TIL

accrual limits in the EDA are

adhered to.

5.9.4.2 Time in Lieu

That a policy that clarifies that SGC is not calculated on any TIL

paid out be documented.

Accepted. Issue to be clarified and

then appropriate action taken to

advise staff.Mgr OD 24-Apr-15 06-Aug-15

Completed

SGC is not paid on flexi or TIL

paid out

5.9.6.2 Purchased Leave

That the adjusted value of the reduced pay be matched to the

value of the leave added (being the maximum of 4 weeks) and

be checked as a control.

Accepted. Process to be further

developed for use with this years

applications and to reconcile those

accessing purchased leave over the

2014/15 year.

Mgr OD 30-Apr-15 30-Jun-15 06-Aug-15

Completed

Reconciliation has been

undertaken for the past year.

The process has been addded

to Payroll EOY and is being

added to the Payroll Procedure

Manual

Appendix 3IA Action Implementation Register – Asset

Management


Officer

Due Date Revised

Date

Date of

Update

Progress/Comment

6.1.1.1 Policy

That a procedure be documented on how compliance with the

policy is going to be monitored.

Accepted

Mgr Natural &

Built Assets15-Jun-15 04-May-15

Not yet commenced

6.1.2.1 Registers

That all asset data be transferred into a computerised asset

register.

Accepted

Mgr Natural &

Built Assets30-Nov-15 04-May-15

In Progress

The vast majority of Council assets are

recorded in Conquest. Staff are currently

investigating the purchase of a new asset

management system (as budgeted in

2014/15). As this project progresses a

decision will be made on loading the

outstanding assets into the legacy

system or into the new system. An

update on this project will be provided.

6.1.3.1 Recognition

That the matching of data between the Conquest and GIS

systems be finalised.

Accepted

Mgr Natural &


In Progress

See 6.1.2.1

6.3.1 Asset Management Plans

That the implementation of asset maintenance and works

management software be considered.

Accepted

Mgr Natural &


In Progress

Project Plan prepared, Steering

Committee appointed. Funding was for

this project was included in 2014/15

budget.

6.5.1 Asset Condition

That now that the existing condition has been documented,

subsequent condition assessments need to be used to reassess

the effective life of assets.

Accepted

Mgr Natural &

Built Assets01-May-15 15-May-15 04-May-15

In Progress

A schedule of asset revaluations has

been developed to ensure asset

categories are revalued at least every

four years. The schedule is to be

discussed with the newly appointed

Director Corporate Services for his input

prior to adoption and revaluations taking

place.

7.1 Conclusion

That those employees responsible for financial functions within

Council be given some training on the internal control framework

and the review process. This training should cover why

procedures need to be documented, why within those

procedures there needs to be controls and the importance of

ensuring that these controls continue to operate and be

effective.

Accepted: Internal Control education

throughout employed staff

Financial


In Progress

The Control Track Internal Control

environment has been performed with

the assessor restricted to one person, the

Financial Controller. The 192 risks have

been allocated to employees who are

more logically placed to understand each

risk and can therefore assess. This step

represents the beginning for the

education process of the internal control


Asset Management - May 2014 - Creative Auditing



Item: 6.8



Subject: External Interim Audit Management Letter

SUMMARY

Council’s external auditors (BDO) attended Council’s Stirling offices from 23 to 27 March2015 to undertake interim field work as part of their 2014/15 audit program.

This report provides an update to the Audit Committee on the interim outcomes from the fieldwork.

RECOMMENDATION

That the Audit Committee note the communication received from BDO resulting fromthe Interim field work undertaken.

1. GOVERNANCE



Key Issue 4.2: Managing Risk and ResponsibilityKey Action 4.2.6 Manage and maintain the sustainable financial position of

Council.

Legal Implications

Accounts, Financial Statement and Audit, Local Government Act 1999


Continual testing of Council’s transactions and internal controls by an externalauditor coincides with Council’s own Risk Management Framework.

Auditor’s annual inspection and certification of Council’s financial position andperformance provides the community with an assurance of Council’s internalfinancial control environment.

Adelaide Hills Council – Audit Committee Meeting 17 August 2015Interim Audit Management Letter/Communication


Funding for the External Audit of Council is provided for within the Annual Budget. Customer Service and Community/Cultural Implications

Not applicable.


Not applicable.


Not applicable.

2. BACKGROUND

Council’s external auditors BDO have performed field work at Council’s offices toconduct interim sample transaction testing and internal control reviews following onfrom their interim attendance as part of the 2014/15 final year audit.

Council’s administration has sought comment from BDO on any key outcomes fromthe review and whilst there is no Management Letter available at this time thefollowing advice has been received by email:

“The only point of note from audit is the ongoing implementation of the controlsframework, and that will probably be included in our audit completion report.”

3. OPTIONS


1. To note BDO’s Interim Audit communication

2. To make additional comments or suggestions for Council and staff toconsider.



Item: 6.9

Originating Officer: Jess Charlton, Service Improvement Coordinator

Responsible Director: David Waters, Director Community & CustomerService

Subject: Benefits Realised Report

SUMMARY

The purpose of this report is to provide the Audit Committee with a report outlining thefinancial and productivity benefits realised through the Council’s Service ImprovementProgram.

RECOMMENDATION

That the Audit Committee resolves that the report be received and noted.

1. GOVERNANCE


The Council’s Corporate Plan calls for the establishment of a mechanism to captureand report on benefits realised through continuous improvement.

Legal Implications

Not applicable.


Regular reporting on the benefits realised will assist in mitigating the risk of:

Ineffective service improvement activities leading to low or negative returns oninvestment.

Inherent Risk Residual RiskHigh (2B) Medium (2C)

Adelaide Hills Council Audit Committee Meeting 17 August 2015Benefits Realised Report

Page 2


The Council’s Long Term Financial Plan recognises the need to make efficiencygains in order to offset rising costs. The Plan contains a projected savingscomponent, which has been adopted as the target for financial savings to beachieved through the Council’s improvement program.

Productivity savings achieved through the program will enable resources to bebetter aligned to new priorities identified in the Council’s Strategic Plan.


The Service Improvement Program has, at its heart, a customer service focus. Notonly are process improvements made with customer needs in mind, but the programalso recognises that customers expect the Council to provide value for money. TheBenefits Realised Report demonstrates how that value is increasing throughproviding services at a lower cost and/or providing additional services at little or noadditional cost.


Not applicable.


Not applicable.

2. BACKGROUND

The Audit Committee considered resolved in February 2014 that a BenefitsRealisation Report be submitted to the Committee on a bi-annual basis.

A 6-month update Report was submitted to the Committee in November 2014. Theattached Report contains a 12 month summary of the net financial benefits andother productivity gains realised in the 14/15 financial year.

3. ANALYSIS

Service Improvement is focused on delivering efficiency, financial and capacity-building benefits through Continuous Improvement, “Breakthrough” and Corporateprojects.

15 Breakthrough projects were undertaken with the majority completed in the 14/15period and three to be implemented in the first quarter of 15/16.

Notable benefits realised from these projects include:

$79,471 net recurrent savings through in-sourcing and purchase of aspecialised vacuum trailer to manage maintenance of side entry pits

$78,000 net recurrent savings through the renewal of multi-function devices(office printers) from a reduction in leasing and ‘click-charge’ costs

Adelaide Hills Council Audit Committee Meeting 17 August 2015Benefits Realised Report

Page 3

$43,500 net recurrent savings through a review of light fleet procurement thatresulted in more competitive pricing and a reduction in contractor costs by in-sourcing

$13,333 net recurrent savings from a reduction in core Microsoft VolumeLicensing costs

Continuous Improvement activities for the period include a “5S” project in theRecords Mail Room, changes to the ordering of field uniforms and personalprotective equipment and an increase in payments made to Council on thecompletion of employee training. These initiatives realised a total over $14,000 innet recurrent savings and a ‘once-off’ saving of $10,000.

While productivity gains were lower than expected for the year, importantly, the totalnet recurrent savings of $243,541 has exceeded the target for year.

4. OPTIONS

The Committee may resolve whether or not to provide comments, advice orguidance in respect to the Benefits Realisation Report.

5. APPENDICES

(1) Service Improvement Benefits Realisation Report – 2014/15

Appendix 1Service Improvement BenefitsRealisation Report – 2014/15

1Adelaide Hills Council: Service Improvement Benefits Realisation Report 2014-15

ServiceImprovementAnnualBenefitsRealisationReport–2014/15


Contents

Executive Summary.................................................................................................................................3

1. Summary of 2014-15 Results ..........................................................................................................5

2. Detailed 2014-15 Results ................................................................................................................6

2.1. Continuous Improvement.......................................................................................................6

2.2. Breakthrough Projects ............................................................................................................7

2.3. Corporate Plan Project Updates ...........................................................................................15

3. 2015/16 Target Benefits ...............................................................................................................18

3.1. Outlook .................................................................................................................................18

3.2. Continuous Improvement.....................................................................................................18

3.3. Corporate Plan Projects ........................................................................................................18

3.4. Breakthrough Projects ..........................................................................................................19


Executive Summary

This report details the benefits realised through Service Improvement initiatives across theorganisation for the 2014/15 financial year.

Service Improvement is focused on delivering efficiency, financial and capacity-building benefitsthrough Continuous Improvement, “Breakthrough” and Corporate projects.

15 Breakthrough projects were undertaken with the majority completed in the 14/15 period andthree to be implemented in the first quarter of 15/16. Notable benefits realised from these projectsinclude:

$79,471 net recurrent savings through in-sourcing and purchase of a specialised vacuumtrailer to manage maintenance of side entry pits

$78,000 net recurrent savings through the renewal of multi-function devices (office printers)from a reduction in leasing and ‘click-charge’ costs

$43,500 net recurrent savings through a review of light fleet procurement that resulted inmore competitive pricing and a reduction in contractor costs by in-sourcing

$13,333 net recurrent savings from a reduction in core Microsoft Volume Licensing costs

Continuous Improvement activities for the period include a “5S” project in the Records Mail Room,changes to the ordering of field uniforms and personal protective equipment and an increase inpayments made to Council on the completion of employee training. These initiatives realised a totalover $14,000 in net recurrent savings and a ‘once-off’ saving of $10,000.

While productivity gains were lower than expected for the year, importantly, the total net recurrentsavings of $243,541 has exceeded the target for year.

2011-2016 Realised and Target Recurrent Savings and Productivity Gains

ServiceImprovementProgramCosts ($)

ProjectSpecificInvestment($)

Once offsavings

($)

Net recurrentsavings($)

CumulativeRecurrentSavings($)

ProductivityGains(Hours perannum)

11/12 85,931 277,469 0 37,646 37,646 3,503

12/13 198,345 413,390 0 112,875 150,521 1,343

13/14 89,521 29,480 60,000 189,400 339,921 1,573

14/15 88,000 0 10,000 246,541 586,462 629

15/16(target) 112,000 0 0 200,000 783,462 1,800


Figure 1: 2011-2016 Realised and Target Recurrent & Cumulative Savings

Figure 2: 2011-2015 Target vs Realised Recurrent Savings

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

11/12 12/13 13/14 14/15 15/16(target)

Service Improvementprogram costs

Project specific Investment

Net recurrent savings

Cumulative net recurrentsavings

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

11/12 12/13 13/14 14/15 15/16 (target)

Target Net RecurrentSavings

Actual Net RecurrentSavings

Target CumulativeNet RecurrentSavings

Actual CumulativeNet RecurrentSavings


1. Summary of 2014-15 Results

This Report provides a 12 month progress update on the benefits realised through serviceimprovement initiatives since June 2014. A number of Breakthrough and Corporate Plan projectshave been completed, realising net recurrent savings, productivity gains and improvements toorganisational enablers such as leadership and people development.

2014-15: Annual Benefits Realised Summary – Target and Actual

Investment($)

Additionalrecurrentcosts($)

Once offsavings($)

RecurrentSavings($)

Netrecurrentsavings($)

Cumulativenet recurrentsavings($)

Productivitygains(Hours p.a)

ContinuousImprovement

0 100 10,000 14,575 14,457 N/A 87

BreakthroughProjects 545 11,880 0 243,946 232,066 N/A 542

Corporate andother Projects 0 0 0 0 0 N/A 0

14/15Actual Total

545 11,980 10,000 258,521 246,541 586,462 629

14/15Target Total

0 3,000 0 234,125 231,125 571,046 3676

Figure 3: 2014-15 Target and Realised Net Recurrent Savings

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000


Breakthrough Projects Total

Target

Actual


2. Detailed 2014-15 Results

2.1. Continuous Improvement

Project Manager: Jess Charlton

Project Completion Date: Ongoing

Project Summary

The benefits realised through continuous improvement encompass those realised from:

Process Improvement Projects (PIPs) 5S Projects “On the Go” improvement

Notable improvement activities this year include a 5S project in the Records Mail Room that realisedsafety benefits through the design and set up of the room and sorting bench as well as improvedteam morale and productivity savings. Process Improvement activity included a change to theordering process for field uniforms and personal protective equipment resulting in recurrent savings,improved record keeping and a more effective process for employees.

The results below also show benefits realised through “on the go” improvements, such as theincrease in payments made to the Council on the completion of employee training.

Investment

($)

Additionalrecurrentcosts ($)

Once offsavings($)

RecurrentSavings($)



Target 0 0 0 20,000 20,000 1,300Actual 0 100 10,000 14,575 14,457 87


2.2. Breakthrough Projects

2.2.1. Cleaning Consumables Review

Project Manager: Nick Taarnby

Project Completion Date: September 2014

Project Summary

The objective of this project was to adopt the most efficient method for procuring and distributingcleaning consumables. The result is a small recurrent saving in the cost of cleaning consumables dueto better systems and controls as well as productivity gains as AHC staff and resources are no longerused in ordering or distribution processes.

The budgeted recurrent savings were based on additional efficiencies being realised throughreductions to: the annual operational cost for cleaning public toilets; costs related to bin emptyingfrequency in offices and cleaning after Council meetings. These savings are yet to be realised but willbe the focus when the cleaning contract is re-tendered in the 15/16 financial year.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 3,000 0 15,600 12,600 72Actual 0 1,738 0 3,000 1,262 126

2.2.2. CWMS Fees Review

Project Manager: Chris Button

Project Completion Date: October 2014

Project Summary

The objective of this project was to ensure all costs incurred by the service will be charged to CWMS.

A preliminary review of the costs of running the CWMS system has been undertaken and anappropriate service fee has been established for 2014/15. Significant savings had been budgetedbased on the assumption that the current fee structure was not adequately covering the cost ofproviding the CWMS service. A review of those fees has revealed that all costs are being recoveredhence the budgeted recurrent savings have not been realised.

Recurrent savings will need to be realised through operational efficiencies and this is the aim of themore comprehensive Review of Waste Water Servicing – a project being undertaken pursuant to theStrategic Plan 2014-2018.


Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 100,000 100,000 0Actual 0 0 0 0 0 0

2.2.3. Microsoft Volume Licensing

Project Manager: Matt Strapps

Project Completion Date: October 2014

Project Summary

The objective was to achieve a reduction in the cost of core Microsoft Volume Licensing.

The project achieved net recurrent savings by testing the market for the purchase of licenserenewals. Council’s strategy to use Microsoft products wherever possible has enabled this outcomeas there are multiple vendors who can provide licensing, support and services.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 0 0 0Actual 545 0 0 13,333 13,333 0

2.2.4. Fleet Procurement Review

Project Manager: Chris Janssan

Project Completion Date: June 2015

Project Summary

The objective of this project was to develop an open and transparent process in line with existingprocurement processes for the purchase of light fleet resulting in more competitive pricing and thussavings.

The result is the procurement of light fleet is now undertaken in-house instead of through anexternal contractor. In addition, the process to purchase and sell cars has changed which hasenabled more competitive prices to be achieved. The recurrent savings below are based on anaverage replacement of 15 cars a year, with the savings reallocated to the purchase backlog of heavyfleet.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 5,000 5,000 0Actual 0 0 0 43,500 43,500 0


2.2.5. Community and other Grant Giving

Project Manager: Rebecca Shepherd

Project Completion Date: September 2015 (Expected implementation)

Project Summary

The aim of this project was to identify and realise efficiencies in the way the Council’s various grantgiving programs are administered. Opportunities exist to consolidate various elements, such asadvertising and the application process, to reduce staff time dedicated to grant giving across theorganisation, while at the same time making the process simpler and more equitable for potentialapplicants.

The improvement is to be fully implemented in 2015-16.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 0 0 80Actual* 0 0 0 2,000 2,000 260

*Actual savings have been included in the 14/15 results, although final implementation will occur in 15/16

2.2.6. Administration Service Review

Project Manager: Megan Sutherland

Project Completion Date: May 2015

Project Summary

The aim of this project was to undertake a review of the administration services available across theorganisation to ensure resources were allocated to correctly meet organisational needs.

Rather than the once-off review originally planned, this work has progressed within organisationalprocesses. The review of administrative support has been undertaken as positions have becomeavailable through the normal staff requisition process.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 0 0 780Actual 0 0 0 0 0 0


2.2.7. Review of Fees & Charges

Project Manager: Alexis Black


Project Summary

This project was aimed at reviewing the current non-statutory fees and charges and the processesused to determine them. The review determined that current fees and charges are set appropriatelyto recover the cost of services – thus the target recurrent savings were not realised. The projectreport also made possible recommendations to improve fee setting processes.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 5,000 5,000 0Actual 0 0 0 0 0 0

2.2.8. Fuel Procurement Review

Project Manager: Paul Francis


Project Summary

The aim of this project was to review the procurement of fuel to ensure the best price was beingobtained. Advice from wholesale fuel providers clearly indicated that for a fleet the size held by AHCthere was no opportunity for reduced pricing. Discussions have subsequently been held with the LGAwhich will see AHC forming part of a multi-council effort to obtain better fuel pricing. It is anticipatedthat outcomes from this review will be known during 2015/16.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 7,350 7,350 0Actual 0 0 0 0 0 0


2.2.9. Programmed Asset Maintenance


Project Completion Date: Continuing – now Zone Based Maintenance, see 3.4

Project Summary

The aim of the project was to move to a more scheduled and proactive maintenance plan for thedistrict.

This project was put on hold while recruitment was undertaken for a new Manager Works andServices. The scope has now been revised and the project is underway. Initial research, planningand staff engagement has occurred and will continue in the coming months. A Council Memberworkshop is planned for September/October and the new Zoned Based Maintenance program isscheduled to commence in January 2016. It is anticipated that there will be cost savings in plant andequipment and improved service outcomes. These potential savings are currently being quantified.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 10,000 10,000 1,300Actual 0 0 0 0 0 0

2.2.10. Tree Services Procurement Review


Project Completion Date: Continuing – Expected October 2015

Project Summary

This project was designed to explore savings in tree management services.

Research has been undertaken and draft tender documents prepared. Documentation is beingreviewed and subject to that review a tender process will be undertaken in 2015.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 27,500 27,500 0Actual 0 0 0 0 0 0


2.2.11. Cemeteries Review

Project Manager: David Waters

Project Completion Date: November 2014

Project Summary

The aim of the project was to seek efficiencies in the administration of the Council’s cemeteries andinterments function, while at the same time ensuring that fees charged for the service matchedexpenses on a long term basis.

The fee review concluded that the Council currently charges fees at the higher end (in comparison tolike Councils) for interment rights and therefore the project emphasis become ensuring thatprocesses were improved to reduce the amount of time dedicated to the service.

This was achieved through streamlining the process of providing instructions to field staff carryingout ashes interments (eliminating multiple trips to site), digitising burial and interment right data toreduce the time taken to search records, photographing and digitising cemetery layouts to enable‘site inspections’ to be done from the office.

The result enabled relevant staff members to take on additional duties.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 0 0 144Actual 0 0 0 0 0 156

2.2.12. Printing Management – Wastage

Project Manager: James Sinden


Project Summary

This project was aimed at achieving a minimum 5% reduction in the printing budget throughimplementation of “Follow Me Print” technology.

The renewal of multifunction devices through a tender process realised a reduction in both the leaseand running costs. The project also realised a number of other non-financial benefits, including:

A reduction in paper waste Improved functionality through Follow Me Print allowing staff to easily print at any location

using the same user interface Improved reporting that details user activity and environmental impact

The new devices also offer potential for future savings. Improved scanning functions are beingprototyped to streamline the capture of information into Planning & Development business


applications. The new devices may also facilitate the printing of letterhead instead of purchasingpre-printed stock and thus a financial saving. The outcome of any follow on projects will be reportedin future Benefits Realised Reports.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 2,675 2,675 0Actual 0 0 0 78,000 78,000 0

2.2.13. Centralised Corporate Purchasing


Project Completion Date: April 2015

Project Summary

This project was aimed at reviewing procurement of corporate materials across the organisation.One of the key outcomes was a reduction in paper supply costs, the opportunity for which cameabout as a result of the new multi-function devices outlined above in 2.1.12.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 6,000 6,000 0Actual 0 0 0 7,500 7,500 0

2.2.14. FBT Reduction



Project Summary

The aim of this project was to reduce the fringe benefits tax liability through improved sharing offleet vehicles thereby increasing the proportion of fleet cars travelling at least 25,000km. When theFederal Government introduced a constant Statutory Fraction of 20%, any advantage of thedistance travelled by the car was removed. Other approaches to FBT minimisation are beinginvestigated, including number of fleet, purchase price, overnight parking at Council and salarypackaging.

There may however be future opportunities to reduce FBT as a result of procurement of vehicles at alower price (see 3.1.4) and through the Light Fleet Management project which is slated for 15/16.Any additional benefits realised will be captured in future reports.


Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 35,000 35,000 0Actual 0 0 0 7,000 7,000 0

2.2.15. Side Entry Pit Efficiencies (Vacuum Trailer)



Project Summary

This project was initiated in response to a staff suggestion through the “IDEAs Database”. The aimwas to reduce contractor costs incurred to maintain side entry pits by purchasing a vacuum trailerand carrying out the work in-house.

Significant recurrent savings have been realised from a reduction in contractor costs – both for sideentry pit work and in using the vacuum trailer for other purposes such as hydro-excavation of treesand location of services.

Investment

($)


Once offsavings($)

RecurrentSavings($)



Target 0 0 0 0 0 0Actual 0 10,142 0 89,613 79,471 0


2.3. Corporate Plan Project Updates

The Corporate Plan is founded on the fundamental concepts of Business Excellence and specifies arange of actions designed at building a sustainable, high performing and service focused culture.

2.3.1. Leadership Development Framework


Project Completion Date: December 2014

Project Summary

This project has defined key competencies for leadership with behaviours focused on:

Impact, influence and innovation Coaching, inspiring, and collaboration Fairness and equity of opportunity for all A strong customer service ethic Organisational commitment and role modelling

Training is being delivered to leaders with an initial focus on coaching and role modelling our servicevalues. Importantly, this training has been funded from existing operational expenditure.

Investment

($)

Additionalrecurrent costs($)

Once off savings($)

RecurrentSavings($)



0 0 0 0 0 0

2.3.2. Review of Council Accommodation

Project Manager: Deryn Atkinson

Project Completion Date: February 2015

Project Summary

The objective of this project was to review the existing functional locations in order to identify andreport on opportunities to enhance operational efficiencies and cultural improvement.

Accommodation options have been canvassed and presented to Council Members at a workshop.Detailed plans for short-term accommodation needs are being considered to improve internalcollaboration and efficiencies.

Investment

($)


Once off savings($)

RecurrentSavings($)



0 0 0 0 0 0


2.3.3. Employee Survey Improvements


Project Completion Date: November 2014

Project Summary

This project was aimed at identifying key areas for improvement arising out of the annual EmployeeOpinion Survey. Workshops were held with staff to discuss highlights from the survey andbrainstorm ways to improve equity and diversity, change management and teamwork. While theinitial project has now ended, there will be ongoing implementation work in 15/16.

Investment

($)


Once off savings($)

RecurrentSavings($)



0 0 0 0 0 0

2.3.4. Internal Communications Framework

Project Manager: Jess Charlton

Project Completion Date: June 2015

Project Summary

This project has produced an Internal Communications Framework that describes the purpose,principles and objectives of effective internal communication. It plots strategies and actions toimprove the current state and includes a matrix that describes communication mechanisms andtools.

The draft Framework was completed in June 2015, with implementation expected to start fromAugust 2015.

Investment

($)


Once off savings($)

RecurrentSavings($)



0 0 0 0 0 0


2.3.5. In Progress Corporate Plan Projects

Project Status/Progress Update TargetCompletionDate

UpdatedCompletionDate

ProjectManagementFramework

The timeframe for this project has been reviseddue to resource capabilities and vacancies in keymanagement positions.

Initial scoping and benchmarking with otherCouncils and government agencies has beencompleted.

A pilot will commence in August 2015 for the15/16 capital projects.

August 2014 Phase 1 –October2015

IT TrainingFramework

Initial scoping of the IT systems in place revealedthere are over 80 individual systems in use acrossthe organisation.This project is currently focussed on exploringconsolidation where possible. This will inform thetraining requirements for the IT systems that theorganisation will be moving forward with.

July 2014 March 2016

ImproveDocument andRecordsManagement

This work is currently being undertaken as part ofthe Electronic Document & Records ManagementSystems (EDRMS) Renewal project. The project is running on schedule and has

already identified several areas that requireattention once the software solution is renewed.

A high level Information Architecture documenthas been created, outlining the myriad differentinformation types and how they can best bemanaged to improve access and complianceacross the organisation.

August 2016 August 2016

SystemsIntegration

The research phase of this project showed that thescope is quite extensive and there are manyconsiderations as to which systems should beintegrated and how. It was identified that AHC did not have sufficient

internal resources to undertake this project, andthis along with several other pieces ofinformation formed a business case for theaddition of a Systems Analyst position into theInformation Systems team.

Once this position is in place a full review ofsystems and data will take place, resulting in aseries of projects to be prioritised andcompleted over time.

These projects will include a significant focus onsystems integration and data-sharing.

Phase 2 –December2015(ongoing)

Phase 2 –December2015(ongoing)


3. 2015/16 Target Benefits

3.1. Outlook

Investment

($)

Target Once-offSavings($)

Target RecurrentSavings($)

TargetProductivity gains(Hours p.a)


0 0 20,000 1,800

Breakthrough Projects 0 0 180,000* 0Corporate and otherProjects

0 0 0 0

Service ImprovementProgram Costs

112,000 0 0 0

Total Target 112,000 0 200,000 1,800

*The target recurrent savings of $180 000 from Breakthrough projects includes the budgeted savingsoutlines in section 3.4 as well as the savings from additional Breakthrough projects that will bescoped and implemented in the second half of 2015/16.

3.2. Continuous Improvement

Although specific Process Improvement or 5S Projects have not been scheduled, both initiatives willcontinue and the following target benefits have been set for the 2015/16 FY:

$20,000 in net recurrent savings 1,800 hours in increased capacity through productivity gains

3.3. Corporate Plan Projects

The following projects are due to commence in 2015/16:

A Fair Treatment Program which values diversity in the workplace and equity of opportunity Training of leaders in effective and positive organisational change processes A Corporate Training and Development Plan Establishment of a Reward and Recognition process Creation of a Timetable for the Review of Management Accounts


3.4. Breakthrough Projects

Project Target Outcome(s) TargetSavings*($)

TargetProductivityGains(Hours p.a)

TargetCompletiondate

Heavy FleetMaintenance

Improve efficiency andsafety of heavy fleetmaintenance.

To bedetermined

To bedetermined

December2015

Light Fleet Management Improve efficiencyand maintenance of lightfleet vehicles

To bedetermined

To bedetermined

December2015

Zone BasedMaintenance

Improve maintenanceservice across the district bydeveloping andimplementing a zone basedmaintenance program.

To bedetermined

To bedetermined

To beimplementedJanuary 2016with regularmonitoringand review inJuly 2016

Electricity Procurement To achieve savings inelectricity expenditurethrough a reduction in tariffsand increased consumptionmonitoring and reporting

10,000 0 December2015

Printing and E-Deliveryof Rates Notices

To reduce manual processingand transaction costsassociated with rate noticeproduction and receipt ofpayments.

To bedetermined

To bedetermined

February 2016

Electronic Car Booking Increased utilisation ofcouncil vehicle bookings andincreased utilisation ratios inthe vehicle fleet

0 0 September2015

Total TBD TBD

* Savings are Net Recurrent Savings unless indicated otherwise



Item: 6.10



Subject: Sundry Debtors Write-off

SUMMARY

Council has two impaired debts for commercial tenancies arranged through the Adelaide HillsBusiness and Tourism Centre (AHBTC) that have been outstanding for a considerable period oftime.

With all legal avenues having been exhausted, consideration by the Audit Committee prior torecommending to Council is now required in line with its objectives of monitoring and providingadvice on the adequacy and effectiveness of the systems and processes regarding the financialcontrol environment.

RECOMMENDATION


1. Receives and notes the report2. Recommends to Council the writing off of the following debts as unrecoverable:

Adelaide Cleanskin Company – $951.50 Heart of the Hills Market – $21,350.52

1. GOVERNANCE



SMP Key Issue 4.2: Managing Risk and Responsibility4.2.5: Ensure legislative compliance occurs through the

application of core policies and procedures4.2.6: Manage and maintain the sustainable financial position

of Council

Legal Implications

Section 143 of the Local Government Act 1999 allows Council to write off debts if thereis no reasonable prospect of recovering the debts.

Adelaide Hills Council Audit Committee Meeting 17 August 2015Sundry Debtors Write-off


Management and Council review and approve bad debt write offs, in accordancewith delegations of authority and Local Government Act 1999.


The proposed writing off of the debts outlined in this report will not have a budgetimpact in the current financial year as these debts have previously been provided foras doubtful debts in previous years.


Not applicable.


Not applicable.


Not applicable.

2. BACKGROUND

Where credit is extended to debtors, some debts can become unrecoverable due toa variety of circumstances. The Local Government Act 1999 S143 provides Councilwith the capacity to write off debts.

The recovery processes undertaken by Council are considered robust and as such ithas been a number of years since it was considered necessary to write off anoutstanding debtor.

This report recommends the writing off of two debtor accounts totalling $22,302.02as detailed in the following sections.

3. ANALYSIS

Adelaide Cleanskin Company - $951.50

This lease debt relates to a business owned by Mr RWT (Tom) Hesketh thatoccupied Building 27D at AHBTC for the storage of bottled wine. Management of thedebt was transferred to National Credit Management Limited (NCML), a collectionagency, in May 2010. Mr Hesketh subsequently paid $900 in six roundedinstalments over a two year period before the business became bankrupt in April2012.

Given bankruptcy there are no further avenues available for recovery.


Heart of the Hills Market - $21,350.52

This lease debt relates to a business owned by Mr Tyce Light that occupiedBuildings 12A, 21 and 22C at AHBTC as a bric-a-brac market and storage.

In November 2010 management determined that debt was impaired and a formalnotice of eviction was served to the tenant. Mr Light surrendered the lease and thelocks were changed. A bond of $2,275 was released from the Office of SmallBusiness Commissioner and credited to the outstanding debt. The business name“Heart of the Hills” was transferred to Council and offered for sale. There were nobuyers and no interest was registered in a market style tenancy in Lobethal.

Mr Light then left the country and is thought to be located in Portland, Oregon, USA.

Management instructed a licensed auctioneer, Elders Real Estate, to auction theabandoned goods whereby $3,573.50 was raised and applied to the outstandingdebt.

Legal advice received by Council in August 2011 was that international debtrecovery is costly and the chance of success was slight.

A Court judgement remains in existence which is enforceable should Mr Light returnto Australia.

Operational

The Adelaide Hills Business and Tourism Centre Advisory Group met on 8 October2012 and resolved to agree with the proposed write off of both the AdelaideCleanskin Company and Heart of the Hills Market debts.

The values of debt listed are GST inclusive and if the debt is approved for write offany GST component will become recoverable from the Australian Taxation Office.The recoverable amount of GST from both debts would be $2,027.46.

Instances where individuals have gone into bankruptcy or incorporated entities intoliquidation, any future distribution that Council might receive will be credited torevenue at the time it is received. Any such distributions are only likely to be minor,and in the cases presented in this report it appears unlikely that any distribution willbe received.

These debts have been previously provided for as doubtful debts in prior years. As aconsequence, approvals to write off bad debts will result in the cost being writtenback against the provision with no impact on the current budget.

The term "write-off" means is that the Council doesn't count the monies outstandingas an asset anymore. The financial statements will reflect that change. That thedebts have been written off does not mean they have been forgiven. The amountsare still owed and collectible. If and when collection occurs, Council will recognise itas revenue.


4. OPTIONS


I. To note management’s intention to write off both debts and make arecommendation to Council.

II. To make additional comments or suggestions for management and Councilto consider.

III. Not to note management’s intention to write off both debts.



Item: 6.11



Subject: Internal Financial Controls Update

SUMMARY

Effective from 1 July 2015, Council’s external auditors, BDO, are required to provide anopinion on internal controls in accordance with Section 125 of the Local Government Act1999.

At the meeting held on 11 May 2015 the Audit Committee was advised that an update onboth the self-assessment and the associated action plans would be provided to the nextmeeting of the Committee.

This report presents the self-assessment and action plans as well providing an update onprogress being made by Council towards the development of the Internal ControlFramework.

RECOMMENDATION

That the Audit Committee notes the further developments that have been undertakenin improving internal financial controls.

1. GOVERNANCE



Key Issue 4.2: Managing Risk and Responsibility.

Action 4.2.6: Ensure legislative compliance occurs through theapplication of core policies and procedures

Legal Implications

Part 3 – Accounts, financial statements and audit, Local Government Act 1999

Part 6 – Audit, Local Government (Financial management) Regulations 2011

Adelaide Hills Council – Audit Committee Meeting 17 August 2015Internal Financial Control Model Implementation

Page 2


Work on the Internal Controls Framework is being undertaken in conjunction withthe implementation of Council’s Risk Management Framework, which it reinforces.

The implementation of the Internal Financial Control Model will assist in mitigatingthe risk of:

Internal control failures occur which leads to greater uncertainty in theachievement of objectives and/or negative outcomes.



Satisfactory internal financial controls provide the foundation for all of Council’sfinancial management and reporting.




Not applicable.


Not applicable.

2. BACKGROUND

Councils have long been required, by law, to have "appropriate policies, practicesand procedures of internal control". In addition, Council audit committees arerequired to monitor the adequacy of all a Council's "accounting, internal control,reporting and other financial management systems and practices".

Since the 2013-14 financial year, auditors of metropolitan Councils have beenrequired to audit and to express an opinion on whether a Council's internal financialcontrols "are sufficient to provide reasonable assurance that the financialtransactions of the council have been conducted properly and in accordance withlaw.”

Like the audit opinion with respect to annual financial statements, the internalcontrols opinion is provided to a Council. It becomes a public document, to bepublished with a Council’s financial statements along with the financial statementsaudit opinion.

When forming an internal controls opinion, auditors must refer, as a benchmark, tothe Better Practice Model - Internal Financial Controls which was developed in April2012 and published by the LGA on advice from the SA Local Government FinancialManagement Group.


Page 3

From the start of the 2015-16 financial year, Adelaide Hills Council, along with allnon-metropolitan councils, now has the same obligation (re internal financialcontrols) as the auditors of metropolitan Councils have had for the past two years.Council’s external auditors, BDO, will be required to provide an opinion on internalcontrols in accordance with s129(3)(b) of the Act.

3. ANALYSIS

There has been considerable progress within Adelaide Hills Council since April2012, with regular updates provided to Council’s Audit Committee over the past 6months.

In 2013 Council engaged UHY Haines Norton to conduct a review to determine thestatus of its internal control policies systems and processes against therequirements of the Model.

During the course of their work, UHY noted a range of issues requiring attention inorder to improve Council’s Internal Control Framework to the standard required byJuly 2015 and to mitigate the risk profile to an acceptable level. The detailedassessment by UHY of Council’s Internal Control Framework was provided to theCommittee for review, with a summary of their findings presented to Audit.

Based on the UHY report it was considered that Procurement, Payroll and AssetManagement would require additional focus and therefore Creative Auditing wasengaged during 2014 to analyse these three disciplines in detail.

Actions identified in the reviews undertaken by Creative Auditing have beenprogressed and reported to the Audit Committee.

There are however in excess of 50 risks and 190 controls flagged within the InternalControls Framework that Council will be assessed against (Note: this is beingrefined at this time to reduce duplicated items).

As such a software package called ‘Control Track’ was developed to help Councilsmonitor their compliance against the Framework

AHC has purchased this package in 2015 and since installation we have nowmanaged to:

Assess the inherent risks of the 50 key financial risks identified (these werethen reviewed);

Assess the 192 core controls that should be in place to manage those risks; Independently review the assessment of those 192 controls; Where a control was considered to not be acceptable, establish an action to

get it to an acceptable level; Review the residual risk for each of the 50 key risks given the controls in

place; and Establish treatment plans where the reviewed residual risk was not considered

acceptable.


Page 4

A monitoring report against the key risks and controls has been generated fromControl Track and included as Attachment 1. Whilst there is a reasonable level ofdetail included in this report, the key issues for us as an organisation can largely besummarised as follows:

Currently Council has good quarterly processes in place to report financialperformance, however a monthly internal financial reporting regime is requiredto ensure regular ongoing monitoring of performance.

There is a need for improved key performance indicator reporting that helps toassess whether our strategic plan and annual business plan objectives arebeing achieved.

There is a need to enhance our asset management planning processes (inparticular the revaluation process).

The internal control environment for purchasing / contract management,including policy and procedures, needs to be developed to ensure appropriategovernance over these core functions.

Following the implementation of Control Track reporting against agreed treatmentplans has been made possible. This reporting will enable ongoing monitoring ofprogress and facilitate regular updating of the financial control environment to theAudit Committee.

4. OPTIONS


I. To note the further developments in improving internal financial controlsundertaken.

II. To make additional comments or suggestions for Council and staff to considerprior to completing the next internal control review report to be presented tothe next Audit Committee meeting.

5. APPENDICES

(1) Control Track Risk & Controls Report

Appendix 1Control Track Risk & Controls Report

2015 First Assessment - Action Plans Status Report

Page 1 of 10 Report generated on 08/09/2015 02:01 PM

Organisation Adelaide Hills Council

Assessment 2015 First Assessment

Assessment period 29/05/2015 - 31/10/2015

Strategic Financial Planning

Budgets Rating Status Roles Action plan Assessment comments

On-going review by management of actual performance against budget and ensure consistency of budget in relation to initiatives/objectives of Annual Business Plan and Strategic Management Plans. BPM Control Type: Core Control code: STR-BUD-0002

3 In Progress Due date: 30/06/2015 Priority: High

Assessor: Paul Francis Reviewer: Terry Crackett

A monthly financial reporting framework to budget managers and Executive is to be implemented by the Finance Manager.

Paul Francis: Quarterly budget reviews are undertaken and reported to both the audit committee and Council. These reviews include budget to actual performance for the relevant period as well as year to date. We currently do not report by program nor does the Council undertake monthly reporting or monitoring outside of the Manager Finance. All budget managers have received training and are provided access to the Council's finance system to enable on-going monitoring. Terry Crackett: May monthly report provided to Executive on 12/6/2015

End of year actual budget compared to original budget; significant variances explained. BPM Control Type: Core Control code: STR-BUD-0011

3 In Progress Due date: 31/08/2015 Priority: Medium


Report end of year variation report for presentation to Executive and Audit Committee. Ensure variations are assessed for potential impact on BR1 in 2015/16.

Paul Francis: There is no evidence that the End of Year BR4 Budget, updated for end of year actuals, and compared to Original Budget, was taken to Audit Committee and Councillors for the 2013/14 year. The 2014/15 budget review process as required by this control has been included as a BR4 agenda item in the October 2015 Audit Committee meeting, and subsequent Council meeting. This is to ensure that BR4, updated for 2014/15 actuals is formally compared to the original budget for 2014/15. Terry Crackett:

General Ledger Rating Status Roles Action plan Assessment comments

General Ledger policies and procedures are appropriately created, updated & communicated to relevant personnel in the

3 In Progress Due date: 30/09/2015


Develop documented procedures and publish on workspace that outline requirements in relation to

Paul Francis: General Ledger Account codes can only be created and closed by





Assessment period 29/05/2015 - 31/10/2015 finance department. BPM Control Type: Core Control code: STR-GEN-0002

Priority: Low the GL. administrators in Open Office Finesse. Only Finance team members have the ability to perform a General Journal entry. All General Journals are reviewed and countersigned by a person different to the journal creator. Terry Crackett: Whilst AHC has a relatively small Finance area, it is still appropriate to have documented processes in place that supplort the GL control environment. The level of risk at the moment is still considered to be low.

Formal disaster recovery plan adopted by Council or Senior Executive. BPM Control Type: Core Control code: STR-GEN-0011

3 Not Started Due date: 30/09/2015 Priority: Low


Whilst there is a BCP in place, there have been a number of changes to process and technology implemented since this BCP was endorsed. A formal review as such is required and has already been scheduled.

Paul Francis: A Business Continuity Plan has been reviewed by the Executive and adopted in April 2011. The BCP is on the internal website, Workspace. Terry Crackett:

Statutory Reporting Rating Status Roles Action plan Assessment comments

Actual results compared to budget regularly; management reviews and investigates significant variances. BPM Control Type: Core Control code: STR-STA-0007

3 Complete Due date: 30/06/2015 Priority: Low Completion date: 26/06/2015


A monthly financial reporting process is required to be implemented for AHC that ensure budget holders are provided regular updates on the financial position of accounts that they are responsible for.

Paul Francis: see STR-BUD-0002 Monthly management reports to be issued to Executive from May 2015. Currently reviews undertaken quarterly in line with Budget Reviews. Terry Crackett: Work was undertaken to provide Executive reporting on the monthly financial position, with the May result considered by Exec on 12 June 2015.

Management Reporting Rating Status Roles Action plan Assessment comments

KPI's are established that are consistent with the Corporate Objectives. BPM Control Type: Core Control code: STR-MAN-0001



Develop a timetable for the establishment of a Framework for the monitoring of performance against an agreed set of KPI's.

Paul Francis: KPIs have not been established that indicate progression of Corporate plan objectives Terry Crackett: Whilst there are some levels of reporting against the Strategic Plan objectives





Assessment period 29/05/2015 - 31/10/2015 provided to Executive and Council, as well as measurement of customer service standards, the reporting of organisational KPI's is not captured within a framework.

On-going review and reporting of actual performance against budget by management; management perform on-going review of consistency of KPI's in relation to Corporate Objectives. BPM Control Type: Core Control code: STR-MAN-0002



Develop a timetable for the establishment of a Framework for the monitoring of performance against an agreed set of KPI's. Develop monthly reporting process for distribution to all budget holders for review prior to consideration by Executive.

Paul Francis: See STR MAN 0001. There is no review of Corporate Plan KPIs Terry Crackett:

Regular reviews of data accuracy & completeness are performed concurrently with the reporting process through on-going integrity checks of the Trial Balance, and the known budget position. Variances and omissions (if any) are dealt with immediately. BPM Control Type: Core Control code: STR-MAN-0010



Whilst budget holder do review information regularly to ensure data integrity, there is a need for a monthly reporting regime to be established to provide appropriate assurance that all areas are being reviewed effectively. At present this occurs with certainty each quarter.

Paul Francis: Budget Managers review actuals against budget for their responsible accounts as part of the Budget Review. Further the Financial Controller and Management Accountant review the Trial Balance at least at Budget Review to monitor integrity. Terry Crackett:

Management to confirm the accuracy of the information contained within their respective report. BPM Control Type: Core Control code: STR-MAN-0013




Paul Francis: While there is no forma process that ensures a Budget Manager confirms accuracy of information contained in their financial reports, scrutiny is performed at Budget Review cycles and reported to Council. Budget Managers often report back to finance by exception, rather than confirmation of satisfaction. Any miscoding that the budget holder discovers is rectified by journal entry, performed by Finance, and based on documentation from the departments concerned. Terry Crackett:

Management regularly reports on actual performance against budget. BPM Control Type: Core

3 In Progress Due date: 31/07/2015


Whilst budget holder do review information regularly to ensure data integrity, there is a need for a

Paul Francis: Management report on actual against budget at quarterly Budget Review. See





Assessment period 29/05/2015 - 31/10/2015 Control code: STR-MAN-0015 Priority: High monthly reporting regime to be

established to provide appropriate assurance that all areas are being reviewed effectively. At present this occurs with certainty each quarter.

STR-BUD-0002 Terry Crackett:

Management review the exception reports on a regular basis and investigate all significant variances; evidence of review demonstrated must be provided. BPM Control Type: Core Control code: STR-MAN-0017




Paul Francis: Management report on actual against budget at quarterly Budget Review. See STR-BUD-0002 Terry Crackett:

Assets

Debtors Rating Status Roles Action plan Assessment comments

Management reviews debtors ageing profile on a regular basis and investigates any outstanding items. BPM Control Type: Core Control code: ASS-DEB-0008



Reporting of the debtors aged balance is to form part of the regular monthly reporting from Corporate Services to ELT.

Paul Francis: Debtors are reconciled on a monthly basis. Aged debtors are investigated and notified by a finance officer. Appropriate action is taken based on the delinquency and amount outstanding, after an escalating series of letters have been sent. Terry Crackett:

Access to the debtors master file is restricted to appropriately designated personnel and is reviewed by management for accuracy and on-going pertinence. BPM Control Type: Core Control code: ASS-DEB-0013

3 In Progress Due date: 30/09/2015 Priority: Low


Ensure debtors policy and assocated procedures ensure an appropriate review is undertaken of the masterfile by management.

Paul Francis: Access to the debtors master file is restricted to appropriately designated personnel. The debtors masterful is not subject to independent review by a second management officer. Terry Crackett:

Council maintains a Debt Collection Policy. BPM Control Type: Core Control code: ASS-DEB-0017

2 Not Started Due date: 30/09/2015 Priority: Medium


Develop a Debt Collection Policy for consideration by the Audit Committee and potentially Council.

Paul Francis: Council does not have a debt collection policy. Debtors are reviewed and monitored as part of the General Ledger Accounts reconciliation process Terry Crackett:

Prepayments Rating Status Roles Action plan Assessment comments

Procedures document providing clear and 3 Not Started Assessor: Paul Francis Policy and procedures to be Paul Francis: No formal





Assessment period 29/05/2015 - 31/10/2015 comprehensive guidance as to the recognition, treatment and recording of prepayments. BPM Control Type: Core Control code: ASS-PRE-0002

Due date: 30/09/2015 Priority: Low

Reviewer: Terry Crackett amended to provide clear guidance in relation to the recognition, treatment and recording of prepayments.

prepayment procedure currently exists. The Accounts Payable Finance officer and Management accountant's payment reviews look for expenses that are able to be prepaid. Usually its the wording on the invoice that determines the creation of a prepayment. In practice invoices with a from and to date spanning greater than a month, and greater than $1k are recorded as prepayments. A schedule of prepayments is kept as backup for the General ledger journal and reconciliation each month. Terry Crackett:

Fixed Assets Rating Status Roles Action plan Assessment comments

Management regularly reviews valuation of fixed assets - methodology and useful lives, to ensure valuation is appropriate and in accordance with reporting requirements. Where appropriate, Council may engage an expert to perform valuations. BPM Control Type: Core Control code: ASS-FIX-0019



Establish a timetable for asset revaluations that ensures a rolling program is in place that covers all asset classes in a systematic way.

Paul Francis: Management regularly reviews valuation of fixed assets - methodology and useful lives, to ensure valuation is appropriate and in accordance with reporting requirements. Where appropriate, Council may engage an expert to perform valuations. Terry Crackett:

Asset maintenance schedules are prepared, updated, and monitored by management and activity per the asset maintenance schedule. Changes to the asset maintenance history register are compared to source documents to ensure that they were input accurately. BPM Control Type: Core Control code: ASS-FIX-0027



Develop an agreed timeline for the establishment of a works programs based on agreed asset management plans.

Paul Francis: A range of Asset Maintenance Plans have been developed. The compliance with these asset Management plans requires review. Terry Crackett:

Loans/Grants to Clubs and Community Groups

Rating Status Roles Action plan Assessment comments

Council establishes clear policy for issuing funds to Clubs / Community Groups. Policy details appropriate approval of funds issued in accordance with Delegations of Authority



Policy and / or Guidelines to be developed that support the payment of grants or provision of loans to Sporting / Community groups.

Paul Francis: No policy exists for the provision of loans to clubs and community groups. Each loan request is assessed by





Assessment period 29/05/2015 - 31/10/2015 and compliance with Conflict of Interest Policy. BPM Control Type: Core Control code: ASS-LOA-0001

management. Loan requests are taken to Council Meeting for endorsement by Councillors. Successful loan requests are then funded by equivalent "back to back" fixed interest rate loans, over similar term, so that the Council is no better nor no worse off as a result of providing the loan. Council has a Minor Grants policy and a Sport and Recreation Policy. Both provide rigour around the provision of contributions (grants paid out) to individuals, sporting clubs, and community groups Terry Crackett:

Liabilities

Accounts Payable Rating Status Roles Action plan Assessment comments

Purchase Orders must be raised for the purchase of goods and services in line with the Council's Procurement policy or over a predetermined amount where applicable. BPM Control Type: Core Control code: LIA-ACC-0001



Contract and Procurement guideline are to be amended to reflect the limited circumstances whereby it is not necessary to raise a purchase order, a reports be developed that identify where puchase orders have not been used.

Paul Francis: Purchase orders are requisitioned and approved by two independent council officers, and within delegated limits. Not all purchases are initiated by a purchase order. Terry Crackett: There are recognised times were for administrative efficiency a PO is not seek as necessary. This instances are low risk and usually relate to panel contracts for such things as temporary engagement of staff, legals, etc.

Authorised officer to review aged payable listing on a predetermined basis and investigate where appropriate. BPM Control Type: Core Control code: LIA-ACC-0008



Advice will have been issued to Open Office seeking timeline for development of report.

Paul Francis: Open Office Accounts Payable System does not provide an Aged Creditors Listing. A Pre Cheque Report in Release Date Order report is used to list all outstanding items by creditor. the total of this reports is verified against the General Ledger Control Account as part of thee General Ledger reconciliation process.





Assessment period 29/05/2015 - 31/10/2015 Terry Crackett: A monthly reconciliation is undertaken of the creditors control account. This reconcialiation confirms that there are no long term outstanding payments showing on the list. That said, it is appropriate that the system is cabale of generating an aged creditors listing. Risk very low given current controls.

Recorded changes to the supplier master file are compared to authorised source documents to ensure that they were input accurately. BPM Control Type: Core Control code: LIA-ACC-0020



Sample testing of masterfile to be undertaken at least 6 monthly to align with periodic / scheduled review of Control Track. Next review to confirm this work undertaken and provide reference document.

Paul Francis: No sample testing of changes to the supplier master file is performed by an independent reviewer Terry Crackett:

Taxation Rating Status Roles Action plan Assessment comments

All lodgement statements and returns are reviewed and approved by authorised officer prior to being released. BPM Control Type: Core Control code: LIA-TAX-0002



Senior finance manager to review and authorise return prior to submission. This review to confirm GL and paper submission in alignment.

Paul Francis: FBT annual return is approved and authorised by an independent officer. The BAS return, that reports the GST payable or receivable, is not currently reviewed. further the GST General Ledger account is reconciled as part of the Account Reconciliation process and reviewed by an independent Finance Officer Terry Crackett:

Revenue

Grants Rating Status Roles Action plan Assessment comments

Council has a clear policy on Grant funding detailing assessment process, recognition, treatment, claim collection, community expectations and funding period and, disclosure of any conflicts of interest. BPM Control Type: Core Control code: REV-GRA-0001



Scoping document to be prepared that outlines current deficiencies and opportunities that could be achieved with the development of a ppolicy or procedure.

Paul Francis: No Grant (revenue) Policy exists. Council recognises Grants in accordance with Australian Accounting Standards Board (AASB 1004) Grants and Contributions, where any unspent grant where there is a reciprocity of obligations, is transferred to a liability until the grant is spent. Terry Crackett:






Management and/or Council to approve all grants (prior to funds being received by Council) to ensure that Council will be able to meet the terms and obligations of the grant, and that the grant is in line with the Council's Strategic Objectives. BPM Control Type: Core Control code: REV-GRA-0003



Formal process to be developed that ensures all grant applications are considered at the appropriate level within the organisation prior to submission or acceptance.

Paul Francis: There is no formal management or Council approval process for the application and procurement of grant funding. Council Officiers have access to Counciil's Strategic Plan via intranet, workspace. Terry Crackett:

Management performs regular review of all grant income and to monitor compliance with both the terms of grants and Council's Grant policy (including claiming and collecting funds on a timely basis). BPM Control Type: Core Control code: REV-GRA-0004



Scoping document to be prepared that outlines current deficiencies and opportunities that could be achieved with the development of a ppolicy or procedure.

Paul Francis: Council does not have a Grants Revenue Policy. Monitoring and acquittal of grants is performed by budget managers with the assistance and knowledge of Finance staff. It is usually a condition of the grant that a finance officer authorise that the acquittal is valid. Terry Crackett:

Authorised officers and/or Council to approve all grants (prior to funds being received by Council) to ensure that Council will be able to meet the terms and obligations of the grant, and that the grant is in line with the Council's Strategic Objectives. BPM Control Type: Core Control code: REV-GRA-0007



Formal process to be developed that ensures all grant applications are considered at the appropriate level within the organisation prior to submission or acceptance.

Paul Francis: Authorised officers do not always approve all grants prior to funds being received by Council. Terry Crackett:

Other Revenue Rating Status Roles Action plan Assessment comments

Processes in place to provide an audit trail for cash received outside Council receipting areas. BPM Control Type: Core Control code: REV-OTR-0003



Current procedures to be reviewed by the Manager Finance to ensure risks are appropriately mitigated and if necessary amended.

Paul Francis: Council has outsourced the transfer station (tip) so any receipting at these locations is outside the scope of Council. To date, the assessor has not seen formal procedures for the collection of HACC customer receipts, Oppe Shoppe receipts or Community Bus receipts. Recognise this exposure and assess it within materiality level. Terry Crackett:

Expenses






Employee Reimbursements Rating Status Roles Action plan Assessment comments

Management select a sample of employee reimbursements and check them for mathematical accuracy and ensures that they have been recorded correctly in the ledger. BPM Control Type: Core Control code: EXP-EMR-0003



Monthly Creditors reporting to include a listing of reimbursements to employees. This will be sampled not just for accuracy, but also for validity.

Paul Francis: No management sampling or reimbursement transactions is currently undertaken. The validity of the reimbursement is reliant on the manager who reviews and authorises in the first instance Terry Crackett:

External Services

Contracting Rating Status Roles Action plan Assessment comments

The Contracts, Tenders and Procurement Policy and Procedures should be reviewed regularly. BPM Control Type: Core Control code: EXT-CON-0001



Policy and Procedures to be reviewed, and where appropriate established, for Procurement, Tendering and Contracts.

Paul Francis: A Procurement Committee exists. One of its functions is to review requests for exemption from the Procurement Policy. Terry Crackett:

Commitments are not being made without funding being approved in the budget. BPM Control Type: Core Control code: EXT-CON-0002



Assesssment to be undertaken of current processes to ascertain where it is possible to enter into contracts, tender for works, or raise purchases orders without an approved budget. Action plan to rectify deficiencies to be establish.

Paul Francis: It is possible for Purchase orders to be raised without the necessary budget to accommodate it. Terry Crackett:

Contractor retentions and guarantees are required in certain circumstances. BPM Control Type: Additional Control code: EXT-CON-0003



Review of Policy and Procedures to ensure rententions / guarantees established where appropriate.

Paul Francis: The current Procurement Policy does not require contractor retentions and guarantees. Terry Crackett:

Robust and transparent selection processes to ensure effective and qualified suppliers / contractors are selected by Council, including compliance with Code of Conduct, Conflict of Interest and procurement policies. BPM Control Type: Core Control code: EXT-CON-0006



Reveiew of policies and procedures to assess transparency and robustness of current practice.

Paul Francis: The Code of Conduct for Council Employees, on the external website, prescribes the requirements for the management of conflicts of interest. Terry Crackett:

Tender Documents are kept locked up when they are not being viewed for evaluation purposes. BPM Control Type: Core Control code: EXT-CON-0011



Review of policies and procedures to assess robustness of current practice given majority of tender records are now held electronically.

Paul Francis: Tender documents are generally received electronically, some into TRIM system, some into the email





Assessment period 29/05/2015 - 31/10/2015 system. Terry Crackett:

Council does not release milestone payments to suppliers / contractors until they meet all their associated objectives. BPM Control Type: Core Control code: EXT-CON-0012



Procedure to detail requirements in relation to the release of progress payments.

Paul Francis: Council's Procurement Policy is silent on milestone payments to contractors, and the deliverables that trigger such payments. Terry Crackett:

Council to maintain a contract register. BPM Control Type: Core Control code: EXT-CON-0013



Register to be established. Paul Francis: Council maintains a Tender register, but not a contract register. Terry Crackett:



Item: 6.12



Subject: Procurement Policy

SUMMARY

To seek the Audit Committee’s in-principle support of the draft Procurement Policy andcomments in relation to the proposed process to enhancement current procurementpractices.

RECOMMENDATION


1. That the report be received and noted

2. To provide in-principle support to the draft Procurement Policy as contained inAppendix 1.

1. GOVERNANCE



Key Issue 4.1: Leadership

Key Action 4.1.4.: Meet legislative, regulatory and good governanceresponsibilities and obligations

Key Issue 4.2: Managing Risk and Responsibility

Key Action 4.1.4.: Procure goods and services that provide value for money

Legal Implications

Section 49 of the Local Government Act 1999 sets out the legislative requirementsin relation to contracts and tender policies. The key elements are as follows:

(a1) A council must develop and maintain procurement policies, practicesand procedures directed towards—

(a) obtaining value in the expenditure of public money; and

Adelaide Hills Council Audit Committee Meeting 17 August 2015Procurement Policy

Page 2

(b) providing for ethical and fair treatment of participants; and

(c) ensuring probity, accountability and transparency in procurementoperations.

(1) Without limiting subsection (a1), a council must prepare and adoptpolicies on contracts and tenders, including policies on the following:

(a) the contracting out of services; and

(b) competitive tendering and the use of other measures to ensurethat services are delivered cost-effectively; and

(c) the use of local goods and services; and

(d) the sale or disposal of land or other assets.

(2) The policies must—

(a) identify circumstances where the council will call for tenders forthe supply of goods, the provision of services or the carrying outof works, or the sale or disposal of land or other assets; and

(b) provide a fair and transparent process for calling tenders andentering into contracts in those circumstances; and

(c) provide for the recording of reasons for entering into contractsother than those resulting from a tender process; and

(d) be consistent with any requirement prescribed by the regulations.


The revision and augmentation of the procurement framework will assist inmitigating the risk of:

Poor procurement practices leading to sub-optimal procurement outcomes,breach of legislation/policy and stakeholder concern.

Inherent Risk Residual RiskExtreme (5C) High (4C)


Expenditure on good and services currently accounts for approximate 42% ofCouncil operating expenditure, and as such it is imperative that procurement isundertaken in a prudent, efficient and accountable manner.

Procurement activities are generally undertaken by individual officers withprocurement delegations as part of their substantive duties.


There is a high expectation that Council has appropriate processes in place toundertake procurement in a prudent, efficient and accountable manner that complieswith legislative requirements.


Page 3


The proposed Procurement Policy contains a Procurement Principle regardingEnvironmental Protection which seeks to:

adopt purchasing practices which conserve natural resources; align the Council’s procurement activities with principles of ecological

sustainability; purchase recycled and environmentally preferred products where possible; integrate relevant principles of waste minimisation and energy; foster the development of products and services which have a low

environmental impact; provide leadership to business, industry and the community in promoting the

use of environmentally sensitive goods and services.


There is no requirement for public consultation on the Procurement Policy however,given that it has significantly changed from the previous version and the likelyinterest that residents have in the procurement activities of local governmententities, Council may resolve for the Policy to be subject to public consultation priorto adoption.

2. BACKGROUND

At its 29 April 2013 meeting, the audit Committee resolved to endorse the revisedProcurement and Purchasing Policy and to recommend it to Council for adoption.

The Committee also recommended that a further review of the Policy as part of theinternal audit engagement scheduled for the second half of 2013, and again in 2014be undertaken, with a view to increasing thresholds if internal controls aredemonstrated to be working satisfactorily with the new Open Office application.

The internal audit of procurement was undertaken in May 2014 (finalised in July2014) and as previously reported to the Audit Committee identified a number ofcontrol weaknesses regarding policy and procedure, use of preferred suppliers andtender processes.

3. ANALYSIS

The revised Procurement Policy (Appendix 1) is considered to be a key element ofa project that is reviewing the overall Procurement Framework. This project is tofocus on the procurement processes from the decision to acquire goods or servicesthrough to the execution of the agreement/contract.

The project will be guided by the findings of the internal audit and the InternalFinancial Control Model and will include the revision/development of policy andprocedures, templates, procurement systems, registers and tools.

The Procurement Framework project is to be undertaken in close collaboration withthe Project Management and Contractor Management projects which are alsounderway at this time.


Page 4

The revised Policy is fundamentally differentiated from its predecessor in thefollowing two ways:

it removes the majority of the procedural content from the policy with theintention for the development of a suite of procurement procedures (i.e. directpurchasing, quotations, panels, procurement monitoring and review, etc).

it clearly articulates the procurement principles that officer must have regard towhen undertaking a procurement activity.

The intention is to develop the Policy and the suite of procedures and to releasethese as one package with a training component in September 2015.

In-principle support of the Audit Committee is sought at this time and a progressreport will be provided at the October meeting.

4. OPTIONS


I. To provide in-principle support for the revised procurement Policy.

II. To withhold its support.

5. APPENDICES

(1) Draft Procurement Policy – August 2015

Appendix 1Draft Procurement Policy – August 2015

COUNCILPOLICY

DRAFT - Procurement

COUNCIL POLICY

PROCUREMENT

Policy Number: GOV-08

Responsible Department(s): Governance & Risk

Relevant Delegations:

Other Relevant Policies:

Relevant Procedure(s):

Relevant Legislation:

Policies and ProceduresSuperseded by this policy on itsAdoption:

Adoption Authority:

Date of Adoption:

Effective From:

Minute Reference for Adoption:

Next Review:

Procurement Page 3

PROCUREMENT

1. INTRODUCTION

1.1 In compliance with Section 49 of the Local Government Act 1999 (Act), theAdelaide Hills Council (Council) should refer to this policy (Policy) whenacquiring goods and services.

1.2 Section 49 of the Act requires Council to prepare and adopt policies oncontracts and tenders on:

1.2.1 the contracting out of services; and

1.2.2 competitive tendering and the use of other measures to ensure thatservices are delivered cost-effectively; and

1.2.3 the use of local goods and services.

1.3 Furthermore, Section 49 (a1) of the Act requires Council to develop andmaintain policies, practices and procedures directed towards:

1.3.1 obtaining value in the expenditure of public money; and

1.3.2 providing for ethical and fair treatment of participants; and

1.3.3 ensuring probity, accountability and transparency in all operations.

1.4 This Policy seeks to:

1.4.1 define the methods by which Council can acquire goods andservices;

1.4.2 demonstrate accountability and responsibility of Council toratepayers;

1.4.3 be fair and equitable to all parties involved;

1.4.4 enable all processes to be monitored and recorded; and

1.4.5 ensure that the best possible outcome is achieved for the Council.

2. POLICY OBJECTIVE

Council aims to achieve advantageous procurement outcomes by:

2.1 enhancing value for money through fair, competitive, non-discriminatoryprocurement;

2.2 promoting the use of resources in an efficient, effective and ethical manner;

2.3 making decisions with probity, accountability and transparency;

2.4 advancing and/or working within Council’s economic, social andenvironmental policies;

Procurement Page 4

2.5 providing reasonable opportunity for competitive local businesses to supplyto Council;

2.6 appropriately managing risk; and

2.7 ensuring compliance with all relevant legislation.

3. SCOPE

3.1 This Policy covers the required conduct for all procurement activitiesassociated with the acquisition of Goods, Works or Services of any value bythe Council. This includes tendering arrangements and the contracting ofservices and applies to all Council staff.

3.2 However, this Policy does not cover:

3.2.1 non-procurement expenditure such as sponsorships, grants, fundingarrangements, donations and employment contracts; or

3.2.2 the disposal of land and other assets owned by the Council; or

3.2.3 the purchase of land by the Council.

4. PROCUREMENT PRINCIPLES

Council must have regard to the following principles in its acquisition of goods andservices:

4.1 Encouragement of open and effective competition

4.1.1 To ensure open and fair competition is fostered and maintained byproviding suppliers and contractors with appropriate access toCouncil’s procurement opportunities.

4.2 Obtaining Value for Money

4.2.1 This is not restricted to price alone.

4.2.2 An assessment of value for money must include, where possible,consideration of:

4.2.2.1 the contribution to Council’s long term plan and strategicdirection;

4.2.2.2 any relevant direct and indirect benefits to Council, bothtangible and intangible;

4.2.2.3 efficiency and effectiveness of the proposed procurementactivity;

4.2.2.4 the performance history, and quality, scope of servicesand support of each prospective supplier;

4.2.2.5 fitness for purpose of the proposed goods or service;

4.2.2.6 whole of life costs;

Procurement Page 5

4.2.2.7 Council’s internal administration costs;

4.2.2.8 technical compliance issues;

4.2.2.9 risk exposure; and

4.2.2.10 the value of any associated environmental benefits.

4.3 Probity, Ethical Behaviour and Fair Dealing

4.3.1 Officers engaged in purchasing should at all times undertake theirduties in a professional, ethical, honest and impartial manner, actresponsibly and exercise sound judgment by observing the higheststandards of integrity and professional conduct in line with the Codeof Conduct requirements.

4.4 Accountability, Transparency and Reporting

4.4.1 To ensure that responsibilities are clearly defined and that decisionsare made in an open and transparent manner. This will includeensuring all appropriate records/documentation is kept of theprocurement process

4.5 Ensuring compliance with all relevant legislation

4.5.1 To ensure purchasing activities are conducted in accordance withlegislative and common law responsibilities. These include but arenot limited the Local Government Act 1999, Competition andConsumer Act 2010, the Independent Commissioner AgainstCorruption Act 2012, the Freedom of Information Act 1991, NationalCompetition Policy and other relevant legislation, industrial awardsand agreements and international trade agreements.

4.6 Encouragement of the development of competitive local business andindustry

Where the evaluation criteria are comparable, Council may consider thefollowing:

4.6.1 the creation of local employment opportunities;

4.6.2 increased availability of local servicing support;

4.6.3 increased convenience with communications with the supplier forcontract management;

4.6.4 economic growth within the local area;

4.6.5 benefit to Council of associated local commercial transaction; and/or

4.6.6 the short and long term impact of the procurement on localbusiness.

4.7 Environmental protection

Council will seek to:

Procurement Page 6

4.7.1 adopt purchasing practices which conserve natural resources;

4.7.2 align the Council’s procurement activities with principles ofecological sustainability;

4.7.3 purchase recycled and environmentally preferred products wherepossible;

4.7.4 integrate relevant principles of waste minimisation and energy;

4.7.5 foster the development of products and services which have a lowenvironmental impact;

4.7.6 provide leadership to business, industry and the community inpromoting the use of environmentally sensitive goods and services.

4.8 Work Health & Safety

4.8.1 Council will only engage suppliers and/or contractors who are ableto maintain a level of WHS that is acceptable in accordance withCouncil’s WHS Policies and Procedures and any additionalrequirements specified in terms and conditions of contractualarrangements.

5. PROCUREMENT METHODS

Generally, open and fair competition is best achieved by undertaking a tenderprocess so that all interested parties have an opportunity to bid. However, theremay be procurements in which a tender process will not necessarily deliver the mostadvantageous outcome for the Council – in such instances, other marketapproaches may be more appropriate.

The Council may, having regard to its Procurement Principles and any other factorsconsidered relevant by the Council, in its absolute discretion determine to utilise oneor more of the following procurement methods:

5.1 Direct Purchasing

5.1.1 This is where Council purchases from a single source, without firstobtaining competing bids.

5.1.2 This method may be suitable for low value, low risk goods andservices, and where the supplier already has a successful servicehistory with the Council.

5.2 Quotations (Informal)

5.2.1 This is where Council obtains quotations from prospective suppliers.

5.2.2 Where possible, the Council must insist on written quotes.

5.2.3 This method may be suitable for low value, low risk goods andservices.

5.3 Request for Quotations (RFQ)

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5.3.1 This is where Council obtains written quotations from prospectivesuppliers.

5.3.2 This method may be suitable for simple, largely price-basedpurchases.

5.3.3 A “Short Form Request for Quotation” can be used for purchaseswith minimal specifications.

5.3.4 A “Long Form Request for Quotation” can be used for purchaseswith detailed specifications.

5.4 Requests for Expressions of Interest (REOI)

5.4.1 This is where Council issues an open invitation for a proposedgoods and/or service.

5.4.2 This method may be used where there is potentially a large marketfor the proposed goods and/or service, and the Council would like tobe able to prepare a short list of suppliers to then invite toparticipate in a tender process.

5.5 Request for Tenders (RFT)

5.5.1 This is where the Council issues a tender for a proposed goodsand/or service.

5.5.2 Council may issue a “Select” Request for Tender where it hasalready issued a REOI, or where it has reasonable grounds for onlydealing with a select group of potential suppliers.

5.5.3 Otherwise, Council may issue an “Open” Request for Tender.

5.6 Panel contracts

5.6.1 This is where the Council establishes panel arrangements with aselect group of suppliers – generally, this occurs once the Councilhas completed its appointment of such suppliers in accordance withthis Policy, and can include either:

5.6.1.1 a standing offer from a pool of suppliers for the provisionof goods and services on agreed terms; or

5.6.1.2 the prequalification of certain suppliers who may or maynot be engaged on terms to be agreed.

5.6.2 Once a panel has been established, the Council may purchase theparticular goods and/or service through such panel arrangements.

5.7 Strategic alliances

5.7.1 This is where the Council undertakes procurement through contractarrangements already established and administered by otherorganisations.

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6. PROCUREMENT CONSIDERATIONS

The appropriate method of procurement will be determined by reference to anumber of factors, including:

6.1 Value of the Purchase

Value ofPurchase ($)

MinimumProcurementRequirement

Applicable Procurement Method

< $10,000 One quotation Direct PurchasingQuotations (Informal)Request for Quotations (RFQ)Request for Expressions of Interest(REOI)Request for Tender (RFT)Panel ContractsStrategic Alliances

$10,000 to$100,000

Threequotations

Quotations (Informal)Request for Quotations (RFQ)Request for Expressions of Interest(REOI)Request for Tender (RFT)Panel ContractsStrategic Alliances

< $100,000 RFX orexistingcontractualarrangement

Request for Expressions of Interest(REOI)Request for Tender (RFT)Panel ContractsStrategic Alliances

The value of the purchase will be calculated as follows:

1.1.1 single one-off purchase – the total amount, or estimated amount, ofthe purchase (excluding GST);

1.1.2 multiple purchases – the gross value, or the estimated gross value,of the purchases (excluding GST); or

1.1.3 ongoing purchases over a period of time – the annual gross value,or the estimated annual gross value, of the purchases (excludingGST).

1.1.4 Splitting of amounts to bring expenditure within lower limits is notpermitted.

6.2 cost of an open market approach versus the value of the acquisition and thepotential benefits;

6.3 the particular circumstances of the procurement activity;

6.4 the objectives of the procurement;

6.5 the size of the market and the number of competent suppliers;

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6.6 the Council’s leverage in the marketplace;

6.7 time constraints;

6.8 a global assessment of the risks associated with the relevant activity and /orproject, including the risk profile of the procurement and any risks associatedwith the preferred procurement method.

7. RECORDS

7.1 Council will document the reasons for entering into specific procurementmethods or contracts other than those resulting from a competitive quoting,tender process or purchases less than $1000. Records to be stored inCouncil’s Records Management System

8. EXEMPTIONS FROM THIS POLICY

8.1 This Policy contains general guidelines to be followed by the Council in itsprocurement activities. There may be emergencies, or procurements inwhich a tender process will not necessarily deliver best outcome for theCouncil, and other market approaches may be more appropriate.

8.2 In certain circumstances, the Chief Executive Officer (or where this power isdelegated to a Procurement Committee) may waive application of this Policyand pursue a method which will bring the best outcome for the Council. TheCouncil must record its reasons in writing for waiving application of thisPolicy.

9. DELEGATIONS

9.1 Council makes the following delegations:

9.1.1 The Chief Executive Officer has the delegation to approve, amendand review any procedures that shall be consistent with this Policy.

9.1.2 The Chief Executive Officer has the delegation to enter into contractsand approve expenditure to a value of $500,000 (GST exclusive).

9.1.3 The Chief Executive Officer may sub –delegate the authority toCouncil Officers to enter into contracts and approve expenditure to avalue of $300,000 (GST exclusive).

9.1.4 The Chief Executive Officer and one other Council Officer at Directorlevel may jointly approve payment of operational expenditure to avalue of $1,000,000. Examples of this type of expenditure are:

Budgeted loan repayments

Budgeted non-elective services (e.g. insurance, waste costs)

Fortnightly payroll

Creditor Payments

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10. PRUDENTIAL REQUIREMENTS

10.1 In some circumstances a procurement process may require additional duediligence in accordance with the Local Government Act 1999 prudentialrequirements. If this occurs the process will be subject to the Council’sPrudential Management Policy

11. AVAILABILITY OF THE POLICY

11.1 This Policy will be available for inspection at the Council's Offices duringordinary business hours and via the Council's website www.ahc.sa.gov.au.Copies will also be provided to the public upon request, and upon payment ofa fee in accordance with the Council's Schedule of Fees and Charges.

Procedures:Direct PurchasingQuotations (Informal)Request for Quotations (RFQ)Request for Expressions of Interest (REOI)Request for Tender (RFT)Panel ContractsStrategic AlliancesProcurement Policy ExemptionsProcurement Review