Agenda of Assurance, Risk and Finance Committee Meeting

	Authorising Body	Mayor/Council
	Status	Standing Committee
COUNCIL COMMITTEE	Title	Assurance, Risk and Finance Committee Terms of Reference
	Approval Date	19 December 2019
	Responsible Officer	Chief Executive

Purpose

The purpose of the Assurance, Risk and Finance Committee (the Committee) is to assist and advise the Governing Body in discharging its responsibility and ownership of finance, risk and internal control.

The Committee will review the effectiveness of the following aspects:

· The robustness of financial management practices.

· The integrity and appropriateness of internal and external reports and accountability arrangements.

· The robustness of the risk management framework.

· The robustness of internal controls and the internal audit framework.

· Compliance with applicable laws, regulations, standards, and best practice guidelines.

· The establishment and maintenance of controls to safeguard the Council’s financial and non-financial assets.

· Data governance framework.

To perform his or her role effectively, each Committee member must develop and maintain

his or her skills and knowledge, including an understanding of the Committee’s responsibilities, and of the Council’s business, operations, and risks.

Membership

The Council will determine the membership of the Assurance, Risk and Finance Committee including at least one independent appointment with suitable financial and risk management knowledge and experience.

The Assurance, Risk and Finance Committee will comprise of at least five elected members (one of which will be the chairperson), and one independent appointed member.

Mayor Carter

John Vujcich – Chairperson

Bruce Robertson – Deputy Chairperson and Independent Member of the Committee

Moko Tepania

Mate Radich

Rachel Smith

Kelly Stratford

Ann Court

Mike Edmonds

Adele Gardner

Non-appointed Councillors may attend meetings with speaking rights, but not voting rights.

Quorum

The quorum at a meeting of the Assurance, Risk and Finance Committee is 4 members.

Frequency of Meetings

The Assurance, Risk and Finance Committee shall meet every 6 weeks, but may be cancelled if there is no business.

Power to Delegate

The Assurance, Risk and Finance Committee may not delegate any of its responsibilities, duties or powers.

Committees Responsibilities

The Committees responsibilities are described below:

Financial systems and performance of the Council

· Review the Council’s financial and non-financial performance against the Long-Term Plan and Annual Plan

· Review Council quarterly financial statements and draft Annual Report

Far North Holdings Limited (FNHL)

· Recommend to Council the approval of statement of intent and Annual Report (s67 LGA)

· Receive 6 monthly report on operations (s66 LGA)

· Receive quarterly financial statements

· Recommend appointment of directors of FNHL

Risk Management

· Review appropriateness of Council’s risk management framework and associated procedures for effective risk identification, evaluation, and treatment

· Receive and review risk management dashboard reports

· Provide input, annually, into the setting of the risk management programme of work

· Receive updates on current litigation and legal liabilities

Internal Audit and Controls

· Review whether management has in place a current and comprehensive internal audit framework

· Receive and review the internal audit dashboard reports

· Provide input, annually, into the setting of the internal audit programme of work

· Review whether there are appropriate processes and systems in place to identify and investigate fraudulent behaviour

The Committee will manage Council’s relationship with external auditor.

The Committee will approve applications to declare land abandoned and any other such matters under the Rating Act.

Rules and Procedures

Council’s Standing Orders and Code of Conduct apply to all the committee’s meetings.

Annual reporting

The Chair of the Committee will submit a written report to the Chief Executive on an annual basis. The review will summarise the activities of the Committee and how it has contributed to the Council’s governance and strategic objectives. The Chief Executive will place the report on the next available agenda of the governing body.

ASSURANCE, RISK AND FINANCE COMMITTEE - MEMBERS REGISTER OF INTERESTS

Name	Responsibility (i.e. Chairperson etc)	Declaration of Interests	Nature of Potential Interest	Member's Proposed Management Plan
Hon John Carter QSO	Board Member of the Local Government Protection Programme	Board Member of the Local Government Protection Program
Hon John Carter QSO	Carter Family Trust
John Vujcich (Chair)	Board Member	Pioneer Village	Matters relating to funding and assets	Declare interest and abstain
	Director	Waitukupata Forest Ltd	Potential for council activity to directly affect its assets	Declare interest and abstain
	Director	Rural Service Solutions Ltd	Matters where council regulatory function impact of company services	Declare interest and abstain
	Director	Kaikohe (Rau Marama) Community Trust	Potential funder	Declare interest and abstain
	Partner	MJ & EMJ Vujcich	Matters where council regulatory function impacts on partnership owned assets	Declare interest and abstain
	Member	Kaikohe Rotary Club	Potential funder, or impact on Rotary projects	Declare interest and abstain
	Member	New Zealand Institute of Directors	Potential provider of training to Council	Declare a Conflict of Interest
	Member	Institute of IT Professionals	Unlikely, but possible provider of services to Council	Declare a Conflict of Interest
Bruce Robertson (Deputy)	Chair/Deputy Chair of a number of Audit and Risk Committees: Far North Auckland Bay of Plenty Regional Tauranga Thames Coromandel Hamilton Waipa Otorohanga Waitomo Environment Southland Invercargill Southland.		There is a low level of there being a potential interest conflict. An outside potential is water reform and ‘discussion’ of one north regional water company in loving North AKD with Watercare.	I remain aware of my roiled and will Raise any matter with the Mayor/CEO and chair of ARF should any matter potentially conflict.
Bruce Robertson (Deputy)	Currently None are North AKD. Previously I have Undertaken work on Okara Park with Whangarei DC.	Advisory Work.	Okara Park is a regional Stadium. Matter solely related Governance and role of DC. Low risk of conflict.
Deputy Mayor Ann Court	Waipapa Business Association	Member		Case by case
	Warren Pattinson Limited	Shareholder	Building company. FNDC is a regulator and enforcer	Case by case
	Kerikeri Irrigation	Supplies my water		No
	District Licensing	N/A	N/A	N/A
	Ann Court Trust	Private	Private	N/A
	Waipapa Rotary	Honorary member	Potential community funding submitter	Declare interest and abstain from voting.
	Properties on Onekura Road, Waipapa	Owner Shareholder	Any proposed FNDC Capital works or policy change which may have a direct impact (positive/adverse)	Declare interest and abstain from voting.
	Property on Daroux Dr, Waipapa	Financial interest	Any proposed FNDC Capital works or policy change which may have a direct impact (positive/adverse)	Declare interest and abstain from voting.
	Flowers and gifts	Ratepayer 'Thankyou'	Bias/ Pre-determination?	Declare to Governance
	Coffee and food	Ratepayers sometimes 'shout' food and beverage	Bias or pre-determination	Case by case
	Staff	N/A	Suggestion of not being impartial or pre-determined!	Be professional, due diligence, weigh the evidence. Be thorough, thoughtful, considered impartial and balanced. Be fair.
	Warren Pattinson	My husband is a builder and may do work for Council staff		Case by case
Ann Court - Partner	Warren Pattinson Limited	Director	Building Company. FNDC is a regulator	Remain at arm’s length
	Air NZ	Shareholder	None	None
	Warren Pattinson Limited	Builder	FNDC is the consent authority, regulator and enforcer.	Apply arm’s length rules
	Property on Onekura Road, Waipapa	Owner	Any proposed FNDC capital work in the vicinity or rural plan change. Maybe a link to policy development.	Would not submit. Rest on a case by case basis.
Mate Radich	No form received
Kelly Stratford	KS Bookkeeping and Administration	Business Owner, provides bookkeeping, administration and development of environmental management plans	None perceived	Step aside from decisions that arise, that may have conflicts
	Waikare Marae Trustees	Trustee	Maybe perceived conflicts	Case by case basis
	Bay of Islands College	Parent Elected Trustee	None perceived	If there was a conflict, I will step aside from decision making
	Karetu School	Parent Elected Trustee	None perceived	If there was a conflict, I will step aside from decision making
	Māori title land – Moerewa and Waikare	Beneficiary and husband is a shareholder	None perceived	If there was a conflict, I will step aside from decision making
	Sister is employed by Far North District Council			Will not discuss work/governance mattes that are confidential
	Gifts - food and beverages	Residents and ratepayers may ‘shout’ food and beverage	Perceived bias or predetermination	Case by case basis
	Taumarere Counselling Services	Advisory Board Member	May be perceived conflicts	Should conflict arise, step aside from voting
	He Puna Aroha Putea Whakapapa	Trustee	May be perceived conflicts	Should conflict arise, step aside from voting should they apply for funds
	Kawakawa Returned Services Association	Member	May be perceived conflicts	Should conflict arise, step aside from voting should they apply for funds
	Whangaroa Returned Services Association	Member	May be perceived conflicts	Should conflict arise, step aside from voting should they apply for funds
	National Emergency Management Advisor Committee	Member		Case by case basis
	Te Rūnanga ā Iwi o Ngāpuhi	Tribal affiliate member	As a descendent of Te Rūnanga ā Iwi o Ngāpuhi I could have a perceived conflict of interest in Te Rūnanga ā Iwi o Ngāpuhi Council relations	Declare a perceived conflict should there appear to be one
	Te Rūnanga ā Iwi o Ngāti Hine	Tribal affiliate member	Could have a perceived conflict of interest	Declare a perceived conflict should I determine there is a conflict
	Kawakawa Business and Community Association	Member		Will declare a perceived conflict should there appear to be one
	Sport Northland	Board Member	May be perceived conflicts	Should conflict arise, step aside from voting
Kelly Stratford - Partner	Chef and Barista	Opua Store	None perceived
Kelly Stratford - Partner	Māori title land – Moerewa	Shareholder	None perceived	If there was a conflict of interest, I would step aside from decision making
Rachel Smith	Friends of Rolands Wood Charitable Trust	Trustee
	Mid North Family Support	Trustee
	Property Owner	Kerikeri
	Friends who work at Far North District Council
	Kerikeri Cruising Club	Subscription Member
	Vision Kerikeri	Financial Member
Rachel Smith (Partner)	Property Owner	Kerikeri
	Friends who work at Far North District Council
	Kerikeri Cruising Club	Subscription Member and Treasurer
	Vision Kerikeri	Financial Member
	Town and General Groundcare Limited	Director/Shareholder
Moko Tepania	Teacher	Te Kura Kaupapa Māori o Kaikohe.	Potential Council funding that will benefit my place of employment.	Declare a perceived conflict
	Chairperson	Te Reo o Te Tai Tokerau Trust.	Potential Council funding for events that this trust runs.	Declare a perceived conflict
	Tribal Member	Te Rūnanga o Te Rarawa	As a descendent of Te Rarawa I could have a perceived conflict of interest in Te Rarawa Council relations.	Declare a perceived conflict
	Tribal Member	Te Rūnanga o Whaingaroa	As a descendent of Te Rūnanga o Whaingaroa I could have a perceived conflict of interest in Te Rūnanga o Whaingaroa Council relations.	Declare a perceived conflict
	Tribal Member	Kahukuraariki Trust Board	As a descendent of Kahukuraariki Trust Board I could have a perceived conflict of interest in Kahukuraariki Trust Board Council relations.	Declare a perceived conflict
	Tribal Member	Te Rūnanga ā-Iwi o Ngāpuhi	As a descendent of Te Rūnanga ā-Iwi o Ngāpuhi I could have a perceived conflict of interest in Te Rūnanga ā-Iwi o Ngāpuhi Council relations.	Declare a perceived conflict
Mike Edmonds	Chair	Kaikohe Mechanical and Historic Trust	Council Funding	Decide at the time
Mike Edmonds	Committee member	Kaikohe Rugby Football and Sports Club	Council Funding	Withdraw and abstain
Adele Gardner	N/A - FNDC Honorarium
	Te Hiku Education Trust	Trustee
	Te Ahu Charitable Trust	Trustee
	ST Johns Kaitaia Branch	Trustee/ Committee Member
	Te Hiku Sports Hub Committee	Committee Member
	I know many FNDC staff members as I was an FNDC staff member from 1994-2008.
Partner of Adele Gardner	N/A as Retired

Assurance, Risk and Finance Committee Meeting Agenda

23 June 2022

4 Confirmation of Previous Minutes

4.1 Confirmation of Previous Minutes

File Number: A3703038

Author: Joshna Panday, Democracy Advisor

Authoriser: Aisha Huriwai, Team Leader Democracy Services

Purpose of the Report

The minutes are attached to allow the Committee to confirm that the minutes are a true and correct record of previous meetings.

Recommendation

That the Assurance, Risk and Finance Committee confirms the minutes of the Assurance, Risk and Finance Committee meeting held 27 April 2022 as a true and correct record.

1) Background

Local Government Act 2002 Schedule 7 Section 28 states that a local authority must keep minutes of its proceedings. The minutes of these proceedings duly entered and authenticated as prescribed by a local authority are prima facie evidence of those meetings.

2) Discussion and Options

The minutes of the meetings are attached.

Far North District Council Standing Orders Section 27.3 states that no discussion shall arise on the substance of the minutes in any succeeding meeting, except as to their correctness.

Reason for the recommendation

The reason for the recommendation is to confirm the minutes are a true and correct record of the previous meetings.

3) Financial Implications and Budgetary Provision

There are no financial implications or the need for budgetary provision as a result of this report.

Attachments

1. Assurance, Risk and Finance minutes 27 April 2022 - A3684893 ⇩

Compliance schedule:

Full consideration has been given to the provisions of the Local Government Act 2002 S77 in relation to decision making, in particular:

1. A Local authority must, in the course of the decision-making process,

a) Seek to identify all reasonably practicable options for the achievement of the objective of a decision; and

b) Assess the options in terms of their advantages and disadvantages; and

c) If any of the options identified under paragraph (a) involves a significant decision in relation to land or a body of water, take into account the relationship of Māori and their culture and traditions with their ancestral land, water sites, waahi tapu, valued flora and fauna and other taonga.

2. This section is subject to Section 79 - Compliance with procedures in relation to decisions.

Compliance requirement	Staff assessment
State the level of significance (high or low) of the issue or proposal as determined by the Council’s Significance and Engagement Policy	This is a matter of low significance.
State the relevant Council policies (external or internal), legislation, and/or community outcomes (as stated in the LTP) that relate to this decision.	This report complies with the Local Government Act 2002 Schedule 7 Section 28.
State whether this issue or proposal has a District wide relevance and, if not, the ways in which the appropriate Community Board’s views have been sought.	It is the responsibility of each meeting to confirm their minutes therefore the views of another meeting are not relevant.
State the possible implications for Māori and how Māori have been provided with an opportunity to contribute to decision making if this decision is significant and relates to land and/or any body of water.	There are no implications for Māori in confirming minutes from a previous meeting. Any implications on Māori arising from matters included in meeting minutes should be considered as part of the relevant report.
Identify persons likely to be affected by or have an interest in the matter, and how you have given consideration to their views or preferences (for example, youth, the aged and those with disabilities).	This report is asking for minutes to be confirmed as true and correct record, any interests that affect other people should be considered as part of the individual reports.
State the financial implications and where budgetary provisions have been made to support this decision.	There are no financial implications or the need for budgetary provision arising from this report.
Chief Financial Officer review.	The Chief Financial Officer has not reviewed this report.

Assurance, Risk and Finance Committee Meeting Agenda

23 June 2022

5 Reports

5.1 Approve Addition of Resource Consents Risk to Organisation Top Risk Dashboard

File Number: A3733521

Author: Tanya Reid, Principal Advisor - Organisational Performance and Transformation

Authoriser: William J Taylor MBE, General Manager - Corporate Services

Take Pūrongo / Purpose of the Report

To seek approval to include the emerging risk, “Resource Consents”, on the Organisational Top Risks Dashboard.

WhakarĀpopoto matua / Executive Summary

The Risk Management Policy requires the reporting of:

· emerging, changing and decreasing risks of potential impact to the achievement of Council objectives; and

· to escalate in a timely manner any risk management issues or concerns when they arise.

Since October 2020 District Services have flagged that they have an emerging risk. Despite analysis and treatment of this risk the risk trend is increasing. As a result, this report recommends inclusion of the risk on the Organisational Top Risks Dashboard.

The addition of this emerging risk on to the Organisational Top Risks Dashboard will enable governance focus.

TŪTOHUNGA / RECOMMENDATION

That the Assurance, Risk and Finance Committee approves the addition of the Resource Consents” risk onto the Organisational Top Risks Dashboard.

1) TĀhuhu kŌrero / Background

Over the past five years, Council has received an increasing number of applications for resource consents. It is anticipated that the volume of applications received will continue to rise driven by the anticipated release of the Proposed District Plan (PDP), environmental legislative changes, the needs of the critical housing market and the influx of new residents to the Far North.

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The number of Full Time Equivalent staff (FTEs) in the Resource Consents Team (the Team) has not increased at the same rate that the work has increased. Instead, the Council has increasingly relied on consultant planners and engineers for Business as Usual (BAU) processing to meet statutory time frames.

The high volume coupled with several staff vacancies and limited capacity of planning and engineering consultants; has resulted in Council being unable to allocate applications in a timely manner, and subsequently Resource Consents has been unable to process many applications within statutory timeframes.

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The number of unallocated applications (backlog) has been increasing since early December 2021 and there are currently 170 applications lodged but unallocated within Council’s systems, dating back to early March 2022 (as of 30 May 2022).

This is having significant negative effects on the building and construction industry, the social and economic well-being of Far North ratepayers and on the Council’s bottom line.

Since October 2020 District Services have flagged that this is an emerging risk. Despite analysis and treatment of this risk, by District Services (including Vision 20/20, IT systems enhancements) the risk trend is increasing and is impacting on our ability to meet statutory timelines. This risk had been classified as People and Culture (Capability, mindsets, behaviour) but is now considered to be Operational/Financial (Whole of business view of FNDC performance including service/services delivery, risk, finance, environmental) and organisational.

The risk has been scored as high impact and will happen. The risk is recorded on the District Services Risk Register as risk DS016:

Because of Unidentified increase or decrease of requirement for environmental consents, monitoring and licensing, driven by user demand, and new environment due to effects of COVID-19 pandemic, new proposed District Plan and RMA Reform there is a chance that FNDC do not have the flexibility to increase/decrease resources to meet the demand, leading to poor legislative performance and siege mentality. We do not meet our statutory obligations and/or staff loss.

2) matapaki me NgĀ KŌwhiringa / Discussion and Options

The “Resource Consents” risk has been analysed as an organisational risk in the Operational/Financial category with a score of 41 and a probability of “will happen”. Using the organisational risk and likelihood statements the Environmental Services inherent risk impact score is calculated as follows:

1. Finance category, 9: Impact is high (≥ 0.3% rates increase); likelihood is “will happen” (the risk is likely to occur and there is frequent exposure to this risk)

2. FNDC Customer category, 9: Impact is high (potential loss of essential service and cost to customer); likelihood is “will happen” (the risk is likely to occur and there is frequent exposure to this risk)

3. Reputational category, 9: Impact is high (loss of national trust and confidence, 2-5 years to re-establish); likelihood is “will happen” (the risk is likely to occur and there is frequent exposure to this risk)

4. Compliance / Legal, 7: Impact is medium (we are challenged and found to be non-compliant with fines or penalties <$500,000); likelihood is “will happen” (the risk is likely to occur and there is frequent exposure to this risk)

5. Health & Safety, 7: Impact is medium (Minor harm and/or isolated recoverable illness); likelihood is “will happen” (the risk is likely to occur and there is frequent exposure to this risk).

Table 1: “Resource Consent” risk inherent risk impact score and desired residual risk score using the organisational risk and likelihood statements:

Financial

Customer

Reputational

Compliance/Legal

Health and Safety

High - Intolerable

Medium

Low- none

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

Unlikely

Probable

Will Happen

The likelihood of the “Resource Consent” risk materialising has been assessed as “will happen.” District Services risk appetite, as assessed by the residual risk score of 13, is to treat this risk to reduce to low impact and unlikely to occur (the risk is unlikely to occur e.g., once in every 10-year event, there is a low exposure to the risk). This is illustrated in the risk heat map in table two.

Table 2: Risk heat map as assessed May 2022 identifying inherent risk profile and expected residual profile.

	Total Risk
High - Intolerable			X
Medium
Low- none	R
	Unlikely	Probable	Will Happen

The Environmental Services team have proposed a delivery plan to resolve the backlog of resource consent applications and to ensure that the Resource Consents Team achieves statutory timeframes under the Resource Management Act 1991. The plan recommends:

1. Short term:

a. Attract more staff to current roles

b. Pay Market allowance

c. Create additional fixed term and permanent roles

d. Engage additional consultants

2. Medium term:

a. Restructure department

b. Analyse financial modelling

c. Investigate shared resourcing with Whangarei District Council

Options

Two options are proposed

1. Maintain the status quo with the “Resource Consent” risk on the District Services Group Risk Register

2. Add the “Resource Consent” risk as ARF019 to the Organisational Top Risks Dashboard, with three monthly risk progress reports, to ensure governance and that we address the questions – where are the gaps and what more could we be doing?

Take Tūtohunga / Reason for the recommendation

To ensure governance, at the appropriate level, our recommended option is option two as Resource Consents is an organisational high impact risk.

3) PĀnga PŪtea me ngĀ wĀhanga tahua / Financial Implications and Budgetary Provision

No additional budgetary provision is requested.

Āpitihanga / Attachments

Nil

Hōtaka Take Ōkawa / Compliance Schedule:

Full consideration has been given to the provisions of the Local Government Act 2002 S77 in relation to decision making, in particular:

1. A Local authority must, in the course of the decision-making process,

a) Seek to identify all reasonably practicable options for the achievement of the objective of a decision; and

b) Assess the options in terms of their advantages and disadvantages; and

2. This section is subject to Section 79 - Compliance with procedures in relation to decisions.

He Take Ōkawa / Compliance Requirement	Aromatawai Kaimahi / Staff Assessment
State the level of significance (high or low) of the issue or proposal as determined by the Council’s Significance and Engagement Policy	The recommendation in this report does not meet the thresholds as per the Council’s significance and engagement policy.
State the relevant Council policies (external or internal), legislation, and/or community outcomes (as stated in the LTP) that relate to this decision.	Risk Management Policy.
State whether this issue or proposal has a District wide relevance and, if not, the ways in which the appropriate Community Board’s views have been sought.	District wide.
State the possible implications for Māori and how Māori have been provided with an opportunity to contribute to decision making if this decision is significant and relates to land and/or any body of water. State the possible implications and how this report aligns with Te Tiriti o Waitangi / The Treaty of Waitangi.	The recommendation in this report does not have any direct implications for Māori.
Identify persons likely to be affected by or have an interest in the matter, and how you have given consideration to their views or preferences (for example – youth, the aged and those with disabilities).	There are no affected or interested parties to this recommendation.
State the financial implications and where budgetary provisions have been made to support this decision.	There is no financial implication or request for budgetary provision at this stage.
Chief Financial Officer review.	The Chief Financial Officer has reviewed this report.

Table 1: Top organisational risk dashboard

Risk ID:	Risk title	Date Risk adopted	Inherent risk score	Residual risk score	The risk trend is:	Months since risk trend last changed:	High level risk treatment progress:
Climate Change
ARF015	Climate Change Organisation Transition Risk	01/12/22	31		Stable	5	Climate Change active treatment plan in place with treatment pipeline.
ARF016	Climate Change Community Transition Risk	01/12/22	39		Stable	5	Climate Change active treatment plan in place with treatment pipeline.
ARF017	Climate Change Direct Risk to Council Physical and Natural Assets	01/12/22	37		Stable	5	Climate Change active treatment plan in place with treatment pipeline.
ARF018	Failure to understand and capture climate-related opportunities	01/12/22	29		Stable	0	Climate Change active treatment plan in place with treatment pipeline.
Enterprise Governance
ARF003	Health & Safety Vulnerabilities	30/05/19	46	34	Increasing	22	Not all treatment plan progress is to schedule; increase in threatening behavior from the public; ongoing non-compliance with Health and Safety at Work Act regulations across our assets.
ARF005	Affordability Risk	30/05/19	45	26	Increasing	20	Affordability Risk have been themed to develop four targeted risks. These have been scored. Treatment plan to be agreed.
ARF010	Data Governance Risks	30/05/19	39	14	Increasing	8	Cyber security risk, is intensifying with growing digital dependency and increasing geopolitical disruptions.
Infrastructure and Asset Management
ARF004	Asset Management Risks	30/05/19	45	18	Decreasing	6	Asset Management Plans and project management framework are implemented with good progress made against other treatments.
ARF006	Project Priorities Deliveries Delays	30/05/19	45	14	Increasing	6	The external environment is impacting this risk with issues being experienced such as contractor availability and increasing cost of labour and materials.
ARF007	Compliance NRC Abatements	30/05/19	45	18	Increasing	8	Legislative and regulatory change currently continues to impact this risk.
ARF012	Contract Management Risks	30/05/19	39	14	Stable	25	Treatments such as the new contracts register, and contract management framework are progressing.
ARF013	Drinking Water Resilience	05/07/20	35		Stable	20	Updated Water Safety Plans completed.
ARF014	Programme Darwin	08/09/21	35	13	Increasing	8	Treatments to reduce either the impact or probability of this risk are yet to be confirmed or implemented.

Table 2: 2022 Deep dive programme and risk progress report schedule

	2022 Assurance, Risk and Finance Committee meeting date:	02/02	16/03	27/04	22/06	31/08
	Deep Dive Programme:			Review Risk Management Policy Affordability risks	Climate Change – Treatment mapping / residual risk Affordability risks	Infrastructure & Asset Management risks Climate change
Climate Change risk progress reporting schedule
ARF015	Climate Change Organisation Transition Risk		ü		ü	ü
ARF016	Climate Change Community Transition Risk		ü		ü	ü
ARF017	Climate Change Direct Risk to Council Physical and Natural Assets	ü		ü		ü
ARF018	Failure to understand and capture climate-related opportunities				ü
Enterprise Governance risk progress reporting schedule
ARF003	Health & Safety Vulnerabilities	ü		ü		ü
ARF005	Affordability Risk				ü
ARF010	Data Governance Risks				ü
Infrastructure and Asset Management risk progress reporting schedule
ARF004	Asset Management Risks	ü				ü
ARF006	Project Priorities Deliveries Delays	ü		ü		ü
ARF007	Compliance NRC Abatements				ü
ARF012	Contract Management Risks	ü		ü		ü
ARF013	Drinking Water Resilience		ü		ü	ü
ARF014	Programme Darwin	ü		ü		ü
	Externally funded shovel ready, economic stimulus employment opportunity projects		ü

MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

We are operating in a very dynamic context

The Council needs to plan for disruption to cope with an uncertain and fast-changing environment characterized by less stability and predictability.

A number of our organisational risks require a diverse skill mix, collaboration, and adaptability, to deliver the required treatments to achieve elected members’ risk appetite (residual risk). Cross functional, multi-skilled teams (such as risk reference groups), with clear accountability on end-to-end delivery will reduce time and effort waste, improving collaboration and alignment.

The World Economic Forum 2021-2022 Global Risks Perception Survey (nearly 1,000 global experts and leaders responded) included a reviewed the implications of the COVID-19 pandemic on risk. The graphic below identifies the risks which respondents have assessed as “worsened” since the start of the pandemic. The survey also included a question on international risk mitigation efforts. “Artificial intelligence”, “space exploitation”, “cross-border cyberattacks and misinformation” and “migration and refugees” are the areas where most respondents believe the current state of risk mitigation efforts fall short of the challenge—that is, efforts are “not started” or in “early development”. Meanwhile, for “trade facilitation”, “international crime” and “weapons of mass destruction”, large majorities perceived risk mitigation efforts to be “established” or “effective”. The graphic below ranks international risk mitigation efforts in ascending order of the combined total of established and effective mitigations.

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International Risk Mitigation Efforts

Current state of international risk mitigation efforts in each area

In ascending order by combined total Established + Effective

Organisational risk management

Council continues to experience external environment influences which are aggravating three organisational risks. The graphic below provides a picture of the environmental impacts on these risks.

A picture containing chart

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Progress to establish a legal compliance system to assist in the management of legislative risk and compliance:

This work has been placed on hold.

Emergent risk:

Table 3: Table of identified emergent risk

Emergent risks	Presented to ARF:	Progress
1. The risk of externally funded shovel ready, economic stimulus employment opportunity projects due to the impact of the COVID-19 pandemic.	October 2020	The Assurance, Risk and Finance Committee received a report at the March 2022 meeting.
2. District Services have proposed to escalate one of their top group risks for consideration of inclusion on the top organisational dashboard.	October 2020	A decision report is included on the Assurance, Risk and Finance Committee agenda.
3. The risk of not fit for purpose business continuity arrangements.	October 2020	A progress up-date is provided under the group risk section.
4. Government’s Three Waters Reform programme.	December 2020	Progress on the three waters reform programme does not form part of the Assurance, Risk and Finance Committee agenda.
5. Potential impact of the Worksafe decision, in December 2020, to charge 13 parties over the Whakaari/White Island tragedy; and the government review of WorkSafe New Zealand’s performance of its regulatory functions in relation to activities on Whakaari White Island.	February 2021	Impact to be considered when further information is to hand.
6. Ngapuhi Mana Whakahono ā Rohe.	Feb 2022	This emergent risk is focussed on our ability to meet the statutory timeframe to review all Council policies and process within six months of completing a Mana Whakahono ā Rohe. An internal hui /workshop with a cross-functional team of 17 staff, supported by the Principal Advisor Organisational Performance & Transformation and the Project and Change Specialist, is planned.

Organisational risk progress reports:

There is no scheduled ARF005 Affordability Risk progress report as we continue to workshop with risk with Assurance, Risk and Finance Committee.

Risk progress reports – highlights and analysis:

1. ARF007 Compliance NRC Abatements risk progress report. The inherent risk rating trend has been assessed as increasing due to the legislative and regulatory change currently being faced.

2. ARF010 Data Governance Risks Progress Report. The inherent risk rating trend has been assessed as increasing. Three active programmes of work will result in improved data governance.

3. ARF013 Drinking Water Resilience Risk Progress Report. The inherent risk rating trend has been assessed as stable as Council continues progress water safety management action plans.

4. Climate Change Risks (ARF015, ARF016 and ARF018) The inherent risk rating trend has been assessed as stable for these three Climate Change risks. Climate Change active treatment plan in place with treatment pipeline.

Programme Darwin

No risk reporting has been provided.

Group Risk Up-date

Corporate Services have established three lines of defence. The Corporate Services risk register is in the process of being refreshed.

Group Risk dashboards

The dashboards provide information on:

· the total number of identified risks;

· the percentage of risks assessed categorised as high, medium or low impact score;

· the level of the risk within Council (Department, Group or Organisation level risk); and

· the risk description by category (see table 4):

o Health, Safety & Wellbeing

o Legal

o Operational / Financial

o Optimising efficiency

o People and culture

o Regulatory and Compliance

Assurance, Risk and Finance Committee Meeting Agenda

23 June 2022

6.3 Far North Holdings Ltd - Third Quarter Financial Report

File Number: A3727235

Author: Janice Smith, Chief Financial Officer

Authoriser: William J Taylor MBE, General Manager - Corporate Services

TAKE PŪRONGO / Purpose of the Report

To present the Far North Holdings Limited (FNHL) third quarter financial report

WHAKARĀPOPOTO MATUA / Executive SummarY

This report is the third quarter report for the financial year 2021/22.

TŪTOHUNGA / Recommendation

That the Assurance, Risk and Finance Committee receive the report Far North Holdings Ltd - Third Quarter Financial Report.

tĀHUHU KŌRERO / Background

In line with the Council resolution of 23 April 2020 in which Council resolved the following:

Resolution 2020/21

Moved: Mayor John Carter

Seconded: Cr Dave Collard

That Council:

a) accept the Half Year Report from Far North Holdings Limited:

b) request that future reports contain the following information.

i) annual and Year to Date budget,

ii) commentary on any significant variances, and

iii) detail of significant income and expenditure, for example fees & charges and salaries to aid the shareholder understanding of the financial position.

The March 2022 third quarter financial report is the third report received for the current financial year.

MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

Despite constraints in the supply chain brought upon by Covid-19 and wet weather conditions, both of which are causing delays to the construction of the Ngawha Innovation and Enterprise Park, confidence remains strong for Stage 1 to open by the end of 2022. The Regent, NorthTec and Innovation Centre buildings are all under construction and the Corrections House building compound is awaiting resource consent. The search continues for other partner(s) to contribute horticultural expertise and/or equity investment.

The Kamo Road housing project has experienced delays and is now expected to open in May 2022.

The new partnership established to build 60 units on the former RSA site in Kaikohe is hoping for work to commence shortly, with the application for resource consent having been submitted.

Interest rate cover ratio represents how many times the company can pay its obligations using earnings – it improved from 2.29 at 31 March 2021 to 3.38 at 31 March 2022, but it slightly deteriorated from 3.4 at 31 Dec 2021.

Equity/asset ratio illustrates how the company pays for its assets, so the lower it is, the more debt the company has used to pay for them – it was deteriorated from 52.76% at 31 March 2021 to 51.9% as at 31 March 2022 and improved slightly from 52.4% at 31 Dec 2021.

Covid continues to hinder tourism in Northland, so rent relief is still being provided to the effected tenants, and further support is expected to be provided to those tenants that continue to be affected.

The Maritime projects have been successful, with the Hokianga projects all now completed available for use during the summer; the commercial wharves at Pukenui and Unahi are also complete; and the Bay of Islands Marina Boatyard has now been sealed, improving the environment for yard employees and marine tenants.

Operating surplus decreased from $1,519k to $1,372k between 31 Mar 2021 and 31 Mar 2022, a reduction of almost 10%, but compared to budget, it was reduced by 7% against the $1,475k budgeted due to:

· Increase in Goods Sold, from $1,506k to $1,964k, 30% - due to higher-than-expected sales for fuel, boat painting and honey operations.

· Increase in Inventories, from $1,204k to $1,642k, 36.4% - this offsets the increase in Goods Sold above.

· Increase in Commission, $9k budget to $42k actual, 364% - due to high level of domestic demand for marina berths, for which FNHL receive a commission on each sale that is made.

· Reduction in Finance income, from $5k budget to ($2k) actual, 143% - due to reversal of finance charges to debtors through non-payment.

· Increase in Employee benefit expenses, $2,655k budget to $2,976k actual, 12% - due to additional staff to maintain the level of performance required to manage several high-profile projects and continued growth of FNHL. Also, a tight labour market and wage inflation has resulted in higher salaries, together with the living wage being adopted as a minimum wage.

· Reduced Director compensation, from $136k budgeted to $106k actual, 22% - only 4 directors are currently on the Board, however additional directors are being recruited.

· Increase in Donations from $34k budget to $65k actual, 93% - due to sponsorship for the R Tucker Thomson voyages that had been delayed due to Covid.

· Decreased direct expenses from investment property, $1,211k budget to $ 1,077k actual, 11% - largely due to maintenance work delays as a result of supply chain issues, and larger projects being prioritised.

· Reduced impairment of receivables, $49k budget to $13k actual, 74% - some debt that had been allowed to be written off was recovered.

PĀNGA PŪTEA ME NGĀ WĀHANGA TAHUA / Financial Implications and Budgetary Provision

The are no financial implications arising from this report.

Āpitihanga / Attachments

1. FNHL - Third Quarter Report 31 March 2022 - A3727230 ⇩

		District Services Risk Dashboard		Review Date: 20/05/2022 25 risks (an increase of 1)


		IAM Group Risk Dashboard		Review Date: 20/05/2022 25 risks (an increase of 1)


Table 4: Key to risk category
Risk Description	Description of category		Example
Health Safety & Wellbeing	a work environment that is without risk to health and safety, so far as is reasonably practicable		Lone worker vulnerability
Legal	Application of the law (and its consequences) to FNDC actions		Court action
Operational/Financial	Whole of business view of FNDC performance including service/services delivery, risk, finance, environmental,		Affordability
Optimising efficiency	Managing the present, lineal response to what exists today such as system, Continuous Improvement, process		Born digital improvements e.g. BCA application
People and culture	Capability, mindsets, behaviour		Disability awareness workshops
Regulatory and Compliance	Conforming to rules, external = law or regulation; internal = policies		Audits
Reputational	The external estimation in which FNDC and brand is held		Customer service delivery
Strategic	Adapting to change: Innovation / create the future / selectively forget the past		Climate change / Affordability