Agenda of Te Miromiro - Assurance, Risk and Finance Committee Meeting

	Authorising Body	Mayor/Council
	Status	Standing Committee
COUNCIL COMMITTEE	Title	Te Miromiro – Assurance Risk and Finance Terms of Reference
	Approval Date	15 December 2022
	Responsible Officer	Chief Executive

Purpose

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

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 member must develop and maintain his or her skills and knowledge, including an understanding of the Committees responsibilities, and of the Council’s business, operations and risks.

Membership

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

The Committee will comprise of all elected members, and one independent appointed member, appointed as Chair with full voting rights.

Mr Graeme McGlinn – Chairperson and Independent Member

John Vujcich – Deputy Chairperson

Kahika - Moko Tepania

Kōwhai - Kelly Stratford

Ann Court

Penetaui Kleskovic

Steve McNally

Quorum

The quorum at a meeting of the Committee is 4 members.

Frequency of Meetings

The Committee shall meet six weekly.

Power to Delegate

The Committee may not delegate any of its responsibilities, duties or powers.

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 the Letter of Expectation and Statement of Intent

· Receive Annual Report (s67 LGA)

· Receive quarterly financial statements (s66 LGA)

· Receive reports on FNHL strategies and plans

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.

Rules and Procedures

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

Far North District Council

Audit, Finance and Risk Committee work plan

Work Plan Dates

Terms of reference

Work stream

28-Feb

3-Apr

22-May

24-Jul

4-Sep

22-Oct

3-Dec

Internal Controls framework

Outstanding auditor recommendations, progress and updates

Issues arising from Audits, register of issues and risks, updates

Internal audit plans, and focus audits

Cyber security and system availability risks (PX)

Finance and reporting oversight

Budget v actual review of key areas, year end forecasts

Capital expenditure and financing

Debt, liquidity, and debtor performance, hygiene factors

Levels of service (SSP) review

Financial, Quarterly updates, including performance SOI's for CCTO's

External reporting and accountability

Review of accounting policies

Review of valuations

Review of Auditor Planning documents

Review of key audit issues

Review of Draft annual report, representation letters and recommendation to Council re signing

Review of Report to Governance

Emerging accounting issues and requirements (Green)

Changes in the legislative environment and emerging risks and changes

Key Council plans

Review of upcoming Annual Plan or LTP and key assumptions and accounting policies

Legislative compliance with LGFA / LGA

Risk management

Review of top risks - update

AFRC and Executive team risk issues and emerging risks (Horizon scan)

Risk management update on projects and work streams

Risk management workshop to update the overall risk register (annual) and brain storm

Deep dive into a risk area (cyclical)

Delegations register review

Probity, Waste, and Policies

Sensitive expenditure review, critical fraud controls and reviews of control effectiveness

Fraud risk update and work streams

Cyclical review of key fraud and internal control risk areas

Policies - cyclical review schedule

Insurance

Review of policies, processes and strategies

Review of annual insurance renewals

Treasury

Treasury policies including covenants and policy compliance

Economic update and impact on to AP/LTP

Occupational Health and Safety

Report on progress, and learnings

Stopwork notices and handling

Key risk areas and compliance

Legal issues and updates

Current legal issues in progress (Px)

Potential legal issues and risks (Px)

Legal compliance review across Council

Ratings validity review

Other

Review and confirmation of Terms of Reference

Review and update the ARFC work plan

Review of the effectiveness of the AFRC

Review of the external auditor performance (3 yearly)

Far North District Council

Te Miromiro - Assurance, Risk and Finance Committee Meeting

will be held in the Council Chamber, 5 Memorial Avenue, Kaikohe 0405 on:

Wednesday 4 September 2024 at 10.00am

Te Paeroa Mahi / Order of Business

1 Karakia Timatanga / Opening Prayer. 11

2 Ngā Whakapāha Me Ngā Pānga Mema / Apologies and Declarations of Interest 11

3 Ngā Tono Kōrero / Deputation. 11

4 Te Whakaaetanga o Ngā Meneti o Mua / Confirmation of Previous Minutes. 12

4.1 Confirmation of Previous Minutes. 12

5 Ngā Pūrongo Taipitopito / Information Reports. 19

5.1 Treasury Update. 19

5.2 People and Capability Report - April - June 2024. 22

6 Te Wāhanga Tūmataiti / Public Excluded. 30

6.1 Risk Management Update. 30

6.2 Confirmation of Previous Minutes Public Excluded. 30

6.3 Far North Holdings Governance Review.. 30

6.4 FNDC Current Legal Action Potential Liability Claims. 30

7 Karakia Whakamutunga / Closing Prayer. 31

8 Te Kapinga Hui / Meeting Close. 31

Te Miromiro - Assurance, Risk and Finance Committee Meeting Agenda

4 September 2024

5 Ngā Pūrongo Taipitopito / Information Reports

5.1 Treasury Update

File Number: A4844335

Author: Jonathan Slavich, Chief Financial Officer

Authoriser: Charlie Billington, Group Manager - Corporate Services

TAKE PŪRONGO / Purpose of the Report

The purpose of this report is to provide a treasury update to the Far North District Council Te Miromiro - Assurance, Risk, and Finance Committee (the Committee)

WHAKARĀPOPOTO MATUA / Executive SummarY

Throughout the 2023-24 financial year, Council was fully compliant across all treasury policies.

TŪTOHUNGA / Recommendation

That Te Miromiro - Assurance, Risk and Finance Committee receive the report Treasury Update.

tĀHUHU KŌRERO / Background

Treasury compliance is adherence to policies, legislation, and best practice governing the management of Council's financial assets, liabilities, income and expenditure. It ensures that Council's funds are managed prudently, safeguarding public resources and provides a framework against which financial risk can be monitored. Maintaining strict treasury compliance is crucial as it upholds public trust, ensures legal and regulatory adherence, and supports the council's ability to deliver services efficiently by ensuring financial stability and sustainability.

As at 30 June 2024, Councils borrowings was $131m, with $61m due within 12 months (current), and $70m due beyond 12 months (non-current).

Current council borrowings (draft unaudited as at 30 June 2024)

	Council
	2024 $000s	2023 $000s
Maturity periods
Payable no later than 1 year	61,000	55,500
Later than 1, not later than 2 years	10,000	20,000
Later than 2, not later than 5 years	40,000	20,000
Later than 5 years	20,000	10,000
	131,000	105,500

This maturity profile is shorter than might normally be expected, due largely to expectations decreases in interest rates in the short term.

The weighted average effective interest rates on secured loans (current and non-current) were:
	2024	2023
Secured loans and debentures	4.62%	3.95%

Financial ratios

Ratios are key tools in measuring treasury compliance as they provide a clear and quantifiable insight into the financial health and performance of Council. Key ratios include:

· Debt affordability benchmark (Net debt as a % of total revenue):

Indicates Council's leverage and its capacity to manage debt relative to its income, for assessing long-term financial sustainability.

· Balanced budget benchmark (Total revenues over total expenses): The balanced budget benchmark demonstrates Council's financial management by confirming that it has funded its operations without incurring deficits.

· Debt servicing benchmark (Net annual interest to total revenue): Evaluates the burden of interest payments on total revenue, reflecting the cost and efficiency of debt servicing.

· Debt control benchmark (Actual net debt over planned net debt): The debt control benchmark assesses whether the council's actual net debt is within the limits of its planned net debt, ensuring effective debt management and adherence to financial plans.

· Current ratio (Current assets over current liabilities): Measures the council's ability to meet its short-term liabilities with its short-term assets, providing insight into liquidity and operational efficiency.

Council demonstrates compliance with these key financial ratios.
Ratio	2023/24	Limit	Headroom
Debt affordability	66%	Statutory limit: Debt not greater than 280% of revenue	Increase debt: $393m Decrease revenue: $140m
Debt affordability	66%	Policy limit: Debt not greater than 175% of revenue	Increase debt: $200m Decrease revenue: $114m
Balanced budget	1.01	Statutory limit: > 1 Revenue exceeds operating expenses	Increase operating expense: $1m Decrease in revenue: $1m
Debt servicing	3%	Statutory Limit: Less than 10%	Increase interest: $12m Decrease revenue: $122m
Debt control	0.81	Statutory limit: < 1 Actual net debt is less than or equal to planned net debt	Increase in actual net debt: $36m Decrease in planned net debt: $36m
Current ratio	118%	Policy Limit: Equal to or greater than 110%	Increase debt: $10m Decrease cash: $9m

The above information is subject to audit finalisation.

Bancorp Treasury Market Update

As part of Council treasury management, Council consults with treasury advisors Bancorp for refinancing and new borrowings. Bancorp provides professional advice around the debt terms, considering various factors including market assessment, current debt portfolio and associated maturities, treasury policies, and best practice.

Bancorp provides a full range of independent corporate treasury and cash management services, delivered by a team of professional treasurers.

Earl White, Executive Advisor at Bancorp, the Far North District Council’s treasury advisors, will share a treasury update to the Committee. The presentation will focus on a market update and current and projected borrowing outlook.

MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

N/A

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

N/A

Āpitihanga / Attachments

Nil

Te Miromiro - Assurance, Risk and Finance Committee Meeting Agenda

4 September 2024

5.2 People and Capability Report - April - June 2024

File Number: A4846407

Author: Kerry Brett, Systems Support Officer

Authoriser: Emma Healy, Chief of Staff

TAKE PŪRONGO / Purpose of the Report

The purpose of this report is to present Te Miromiro - Assurance, Risk and Finance Committee with the quarterly update on People and Capability activities.

WHAKARĀPOPOTO MATUA / Executive SummarY

Included in the report is information on:

· Exit Interviews and Analysis.

· Recruitment activity; and

· Employment Relations.

TŪTOHUNGA / Recommendation

That Te Miromiro - Assurance, Risk and Finance Committee receive the report People and Capability Report - April - June 2024.

tĀHUHU KŌRERO / Background

This report will be presented to Te Miromiro - Assurance, Risk and Finance Committee on a quarterly basis.

MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

This report is Information only.

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

Nil

Āpitihanga / Attachments

Nil

23 employees left FNDC in Quarter 4.

The turnover rate for this quarter is 4.88% (compared to 7.67% for the same quarter last year).

TURNOVER YEAR TO DATE (July 2023 – June 2024)

82 employees have left the organisation.

In the 2023-2024 financial year a total of 82 staff left FNDC which accounted for a total turnover of 22.22% - compared to the 82 staff that left in the 2022-2023 Financial Year which accounted for a total turnover of 21.81%.

Formal comparative turnover information for the local government sector could not be sourced. However, information shared informally amongst ten People & Capability local government teams shows an average turnover rate of 15.8% for these Councils in 2023.

Lawson Williams Employment & Staff Turnover Survey Report notes an average national staff turnover of 21.4% for 2023. Te Kawa Mataaho (Public Service Commission) reports on unplanned turnover which measures the rate that organisations lose permanent staff due to reasons they had not planned for, such as resignations, retirements and dismissals. The 2023 figure is 15.9% (excluding planned turnover which would account for structural change impacts).

2022/23

2023/24

Key reasons for Leaving FNDC

Career opportunity

Salary

Family Commitments

Career opportunity

Salary

Relocating

What staff liked most about FNDC

Team environment

Flexible/remote working

Job satisfaction

Team environment

Flexible/remote working

Workplace culture

5 exit interviews were completed for this quarter. 32 exit interviews have been completed for this financial year, and the main themes are:

· What staff liked most about working at FNDC:

o Team Environment

o Flexible/Remote Working

o Workplace Culture

· Top reasons to leave FNDC:

o Salary

o Job Satisfaction

o Workplace Culture

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Response to Exit Interview Analysis

What staff liked most about working at FNDC:

· Team environment – this continues to be in alignment with the top-rated question from the engagement survey. The CE Workshop actions have picked up this key piece of feedback as well, looking to how we can leverage this to further improve our working spaces in the physical offices as more teams are spending “group days” in various offices, fostering these relationships further.

· Flexible/Remote working – A refreshed remote and hybrid working policy has crystalised our ‘business first, digitally supported’ and continues to allow us to give our staff some flexibility their lives require as well as attracting specialised talent beyond the district. Work is also ongoing with people leaders on how to lead in this environment.

· Workplace culture – this has continued to be an area of focus over the past 12 months, with more mahi coming from the Organisational Development (previously named Projects & Transformation) team in this space.

Top Reasons to Leave FNDC:

· Salary & job satisfaction – Recognizing that job satisfaction is unique to each individual, our CE workshops provided a valuable opportunity for staff to engage directly with the Chief Executive and share their perspectives and ideas for improvement to help in this space. Salary will continue to be a pressure point for some and is a reality of working in the public sector as opposed to private. Salaries are aligned with the rest of Local Government and are evaluated by Strategic Pay to ensure consistency. Part of this year’s work programme, and responding to the Engagement Survey and CE workshop feedback, is to review the employee benefits package.

· Workplace Culture – as stated above, it is a key focus area and one of continuous improvement and evolution. Working within specific teams to address where this is a concern is ongoing with the People & Capability Advisors.

Recruitment Activity

Recruitment has slowed over the last quarter following numerous successful key appointments earlier in the year. There are still a number of vacancies within the Infrastructure Strategy Group, with work underway to re-purpose those positions, create new and additional roles and optimize the Group's capacity to deliver over the next three years. Recruitment activity will increase upon its completion.

The 2023-24 cadet program has concluded successfully at the end of June, with all five cadets securing continued employment within FNDC, demonstrating the programme’s effectiveness in nurturing and developing the talent we have in our communities.

Finally, planning is beginning with Mayors Taskforce for Jobs (MTFJ), Tertiary Education Commission (TEC), and Ministry of Education (MoE) on an innovative initiative called "Te Reo Māori Inspiring the Future." This upcoming event will provide an immersive Te Reo Māori experience for students, allowing them to interact with role models, offering an exciting new direction for youth engagement in the Far North District.

Quarterly New Starters

During this quarter 19 new employees started.

Group Manager – Corporate Services	15^th April 2024
Team Leader – District Plan	15^th April 2024
Property Information Officer	15^th April 2024
Casual – i-Site (Ōpononi) returning staff member	29^th April 2024
Manager – Contact Centre	29^th April 2024
Building Support Officer - Bookings	29^th April 2024
Casual – i-Site (Ōpononi) returning staff member	29^th April 2024
Casual i-Site (Paihia) returning staff member	13^th May 2024
Team Leader – Resource Consents	13^th May 2024
Casual – i-Site (Kaitāia)	13^th May 2024
Infrastructure Planner	10^th June 2024
Museum Assistant	10^th June 2024
Customer Service Officer - Multiskilled	10^th June 2024
Casual i-Site (Paihia)	10^th June 2024
Process Design Specialist	24^th June 2024
Casual – Libraries (Kaitāia & Kāeo)	24^th June 2024
Casual – Publications	24^th June 2024
Resource consents Engineer	24^th June 2024
Senior Building Specialist returning staff member	24^th June 2024

Culture

Quarterly Celebration – Took place Monday, 22 July in Chambers. This celebration welcomes our New Starters over the past Quarter with a pōwhiri, and combines with FNDC’s Love Your Work awards and Long Service recognition. This quarter nine recipients received a Love Your Work Award, including one Team Award for two staff members who were first on the scene of a serious motor vehicle accident, providing first aid and managing busy morning traffic. One staff member was recognised for serving FNDC and their community for 32 years. Certificates were also awarded to Te Reo course graduates.

Staff Engagement – Our engagement survey was held for a two-week period for completion, closing on 2 June 2024. An increase in participation at 87% resulted in 347 employees taking the time to give feedback. There was an increase in the engagement score from 6.8 to 6.9. Submitted comments have been reviewed and acknowledged by People Leaders. The results have been discussed by People Leaders and their teams, with relevant focus areas identified and agreed action plans implemented. The Strategic Leadership Team have continued to set Strategy as a focus area which is actively being addressed.

CE Team Workshops – The CE Workshops have continued to be delivered to 40 Teams across Council. The Chief Executive communicated objectives and updated on the organisational strategy while getting to know each individual teams' contribution to Council. This also gave the opportunity for teams to offer firsthand continuous improvement ideas which have been collated for the Service Improvement Programme. These ideas have been reviewed for trends with some initiatives implemented straight away.

Team Building - Workshops for Team Management Profiles have been undertaken by three teams including the Strategic Leadership Team during this quarter, with more booked, to assist with team building. The workshops give insights for work preference behaviours resulting in greater awareness for more effective communication and collaboration.

People Leaders Hui - Our people leaders were brought together to share information, network and to give feedback on objectives. Topics covered included the Chief Executive's key messages, Te Pae o Uta, Organisational Strategy and Leadership. Feedback was sought on the draft organisational strategy from activities associated with the strategic goals.

Organisational Strategy – Work on the draft organisational strategy is continuing, with feedback taken onboard. Three strategic goals have been set:

· Employer of Choice

· We are capable, credible, and provide high quality service

· We thrive together to achieve shared success.

The Strategic Leadership Team have contributed their thoughts on priority areas with next steps to create actions associated with objectives.

Employment Relations

	Quarter Four (Apr - Jun 2024)	Financial Year to Date (Jul 2023 – Jun 2024)
Number of personal grievances (completed)	1	4 (3 are as a result of the April 2023 restructure)
Negotiated exits & medical retirements	1	9

Note: Collective Bargaining with the PSA and FNDC representatives is currently underway.

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	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. State the possible implications and how this report aligns with Te Tiriti o Waitangi / The Treaty of Waitangi.	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.