Audit Committee Meeting - The Hills Shire · 2020-03-11 · MINUTES of the duly convened Audit Committee Meeting of The Hills Shire Council held in the Council Chambers, Castle Hill

Audit Committee Meeting

Thursday, 03 April 2014

THE HILLS SHIRE CO

UNC

IL

AUDIT COMMITTEE MEETING 03 APRIL, 2014

ITEM SUBJECT PAGE ITEM-1 CONFIRMATION OF MINUTES

ITEM-2 INTERNAL AUDIT REPORT 9

ITEM-3 GENERAL MANAGERS EXPENSES 25

ITEM-4 QUESTIONS AND ANSWERS - AUDIT COMMITTEE MEETING 5 DECEMBER 2013

26

MINUTES of the duly convened Audit Committee Meeting of The Hills Shire Council held in the Council Chambers, Castle Hill on 5 December 2013

This is Page 1 of the Minutes of the Audit Committee Meeting of The Hills Shire Council held on 5 December 2013

ITEM SUBJECT PAGE ITEM-1 CONFIRMATION OF MINUTES 3

ITEM-2 INTERNAL AUDIT REPORT 3

ITEM-3 GENERAL MANAGER’S EXPENSES 3

ITEM-4 QUESTIONS AND ANSWERS – AUDIT COMMITTEE MEETING 20 AUGUST 2013

3

QUESTIONS WITHOUT NOTICE 4

CLOSED COMMITTEE 4

ITEM-5 TENDER WEIGHTING 5



83 PRESENT

Clr Dr M R Byrne (Mayor, in the Chair) Clr A J Hay Clr Dr J N Lowe Clr M G Thomas Mr Michael Blair Mr Trevor Bland Adjunct Professor Jim Taggart

84 APOLOGIES

Nil.

85 IN ATTENDANCE

Mr Dave Walker Ms Kerrie Wilson Mr Dennis Banicevic

86 TIME OF COMMENCEMENT

7.05pm

87 TIME OF COMPLETION

8.09pm

88 DECLARATIONS OF INTEREST

Nil.

89 ARRIVALS AND DEPARTURES

7.09pm Adjunct Professor Jim Taggart arrived at the meeting during Item 2 7.17pm Councillor Thomas arrived at the meeting during Questions Without Notice

90 DISSENT FROM COUNCIL'S DECISIONS

Nil.

91 ADJOURNMENT & RESUMPTION

Nil.



ITEM-1 CONFIRMATION OF MINUTES A MOTION WAS MOVED BY MR MIKE BLAIR AND SECONDED BY MR TREVOR BLAND THAT the Minutes of the Audit Committee Meeting held on 20 August 2013 be confirmed. THE MOTION WAS PUT AND CARRIED.

92 RESOLUTION

The Minutes of the Audit Committee Meeting held on 20 August 2013 be confirmed.

ITEM-2 INTERNAL AUDIT REPORT

A MOTION WAS MOVED BY COUNCILLOR DR LOWE AND SECONDED BY COUNCILLOR HAY THAT the Recommendation contained in the report be adopted. THE MOTION WAS PUT AND CARRIED.

93 RESOLUTION

The report be received.

ITEM-3 GENERAL MANAGER'S EXPENSES

A MOTION WAS MOVED BY MR MIKE BLAIR AND SECONDED BY ADJUNCT PROFESSOR JIM TAGGART THAT the Recommendation contained in the report be adopted. THE MOTION WAS PUT AND CARRIED.

94 RESOLUTION

1. The report be received. 2. The expenses tabled (which outlines a total of $2,573.25) be noted.

ITEM-4 QUESTIONS AND ANSWERS - AUDIT COMMITTEE MEETING 20 AUGUST 2013

A MOTION WAS MOVED BY COUNCILLOR DR LOWE AND SECONDED BY ADJUNCT PROFESSOR JIM TAGGART THAT the Recommendation contained in the report be adopted. THE MOTION WAS PUT AND CARRIED.

95 RESOLUTION




QUESTIONS WITHOUT NOTICE

96 EXPRESSION OF INTEREST – DON MOORE COMMUNITY CENTRE

Councillor Hay noted that Council is responding to its own Expression of Interest to operate the Don Moore Community Centre at North Rocks and asked what process has been determined to provide for the competitiveness, neutrality and evaluation of such a Tender? The General Manager advised that it was an Expression of Interest and not a formal Tender however Council has a Code of Tendering which can be provided to the Audit Committee and a guide for in house tendering as well. In regard to this particular one, the best approach at this stage is to stay with the current people however will look at other options within the next twelve months. The Internal Auditor advised that she was the Probity Officer for this EOI and also advised that the guide for In House tendering was used. Structures were put in place in Council as required by the Guidance and the Code of Tendering to make sure that there was a separation of the group that was going to put in an in house tender and the Evaluation panel (which included a member independent of Council). Councillor Hay asked is there a move to be doing more of this? The General Manager replied no.

97 FURTHER EDUCATION

Adjunct Professor Taggart acknowledged that Council takes seriously learning through tutorials/quizzes etc and asked could Council buddy up with an institution that gives RPL’s for that, so that there is some type of lifelong learning that’s being done here that can then go into some type of Diploma, Graduate Diploma or Degree as a form of giving increased credentials. The General Manager advised that Council does have in-place certificate courses and post graduate courses through UNE.

98 LOWER PORTLAND FERRY

Councillor Thomas referred to a question regarding the Lower Portland Ferry he asked at the Audit Committee Meeting of 13 December 2012 and asked whether a response has been provided. The General Manager advised he would check on that question. CLOSED COMMITTEE A MOTION WAS MOVED BY COUNCILLOR HAY AND SECONDED BY COUNCILLOR DR LOWE THAT 1. The press and public be excluded from the proceedings of Closed Committee in

respect of Item 5 pursuant to the relevant Clauses of Section 10A, Clause 2 of the Local Government Act, 1993, as detailed in the following table.

2. Council withhold access to Item 5 in accordance with the following table and Section 11(2) of the Local Government Act.

ITEM NO.: 5



SUBJECT: TENDER WEIGHTING Associated Report: N/A Reason for Confidentiality:

Information that would, if disclosed, confer a commercial advantage on a person with whom the council is conducting (or proposes to conduct) business.

Section: 10A(2)(c) Public Interest On balance, the public interest in preserving the confidentiality

about the compensation claim and other details mentioned in the report outweighs the public interest in maintaining openness and transparency in Council decision-making because the disclosure of this information would put the Council at a competitive disadvantage in its negotiations with the contractor, preventing it from achieving a “best value for money” outcome for the wider community.

THE MOTION WAS PUT AND CARRIED

99 RESOLUTION

1. The press and public be excluded from the proceedings of Closed Committee in respect of Item 5 pursuant to the relevant Clauses of Section 10A, Clause 2 of the Local Government Act, 1993, as detailed in the above table.

2. Council withhold access to Item 5 in accordance with the above table and Section 11(2) of the Local Government Act.

7.42pm Council entered into Closed Session. A MOTION WAS MOVED BY COUNCILLOR THOMAS AND SECONDED BY COUNCILLOR DR LOWE THAT the meeting resume in Open Council to consider Item 5.

100 RESOLUTION

The meeting resume in Open Council to consider Item 5. OPEN COUNCIL At 7.48pm members of the gallery were invited back into the Council Chambers.

ITEM-5 TENDER WEIGHTING

A MOTION WAS MOVED BY COUNCILLOR DR LOWE AND SECONDED BY COUNCILLOR THOMAS THAT the Recommendation contained in the report be adopted. THE MOTION WAS PUT AND CARRIED.

101 RESOLUTION




The Minutes of the above Meeting were confirmed at the Meeting of the Council held on 11 February 2014.

MAYOR GENERAL MANAGER


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ITEM-2 INTERNAL AUDIT REPORT

THEME: Proactive Leadership

OUTCOME: 3 Sound governance based on transparency and accountability.

STRATEGY: 3.1 Ensure Council is accountable to the community and meets legislative requirements and support Council’s elected representatives for their role in the community.

GROUP: EXECUTIVE GROUP

AUTHOR: INTERNAL AUDITOR

KERRIE WILSON

RESPONSIBLE OFFICER: GENERAL MANAGER

DAVE WALKER

HISTORY At the Audit Meeting of 8 September 2005, the Audit Committee adopted the following:-

1. The suggested format of the ‘Internal Audit: Quarterly Report’ to the Audit Committee be adopted.

Since this time the structure of the reporting format has been modified to reflect the recommendations made by the Division of Local Government (DLG) in their report titled: Internal Audit Guidelines, released September 2010. REPORT Attached is the Annual Internal Audit Report for the period from 15 November 2013 to 15 March 2014. The attached report outlines the audit tasks undertaken by the Internal Audit function in the abovementioned period. IMPACTS Financial The matter has no direct financial impact upon Council’s adopted budget or forward estimates. The Hills Future - Community Strategic Plan This report outlines the results of Audit’s review of Councils high risk activities as identified in the Internal Audit Plan adopted by Council. The recommendations resulting from audit activities are aimed at ensuring that Council stated outcomes are achieved efficiently and effectively and meets the Councils legislative requirements. RECOMMENDATION The report be received. ATTACHMENTS 1. Internal Audit Report (15 pages)


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ATTACHMENT 1

Internal Audit Report

For the period from 15 November 2013 to 15 March 2014


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Part A: Executive Summary A.1 Introduction This report provides the Audit Committee with a summary of the activities of the Internal Audit Function over the period from 15 November 2013 to 15 March 2014. The structure of this report reflects the recommendations made by the Division of Local Government (DLG) in their report titled: Internal Audit Guidelines, which was released in September, 2010: (http://www.dlg.nsw.gov.au/dlg/dlghome/documents/Information/Internal%20Audit%20Guidelines%20-%20September%202010.pdf) Attachment A provides background to the Internal Audit Function, the Audit Committee, and the audit reporting practices at The Hills Shire Council. A.2 Scope The aims of the Internal Audit Report are to:

• Summarise the work undertaken by the Internal Audit Function in the period;

• Highlight areas of improvement within Council’s operations;

• Report the extent to which the work carried out by the function met the requirements of the approved Internal Audit Plan 2013/14;

• Report the measures taken by The Hills Shire Council (THSC) to implement the

recommendations of the internal audit reports;

• Provide an overview to the Audit Committee of the status of Councils internal control, risk management and governance processes.

A.3 Summary As outlined at Part B. and E. of this report, Internal Audit has completed 69% or 18 of its planned 26 activities for 2013/14. Currently Internal Audit has commenced audit activity on 31% or 8 of its planned audit activities. The significant audit activities currently being undertaken includes: Recruitment Audit: Audit is reviewing the Councils recruitment processes for the period

from 1/1/2013 to 30/3/2014 to ensure that all eligible members of the community have a fair chance to gain a job with the Council; selection is based only on a person's ability to perform the work and the best person is selected. This is a regular compliance review undertaken by Internal Audit.

Payroll: Audit is currently reviewing the payments of salary, allowances, higher

grade pay and leave for the period to 30/3/2014 to ensure that Councils employment activities reflect the requirements of the Local Government (State) Award 2010 (Award) and the Enterprise Agreement 2 (EA) and Fair Work Australia. This is a regular compliance review that is undertaken by Internal Audit.


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Facilities Policy: This audit is aimed at ensuring that the policy is in place. The fieldwork for this review was recently completed. Audit is currently in the processes of finalising the report.

Other: Fieldwork is currently being undertaken with respect to facilities

management; information technology; budget and management reporting; and tendering.

The results of the finalised audits will be included in the next audit report to the Audit Committee. Currently all audit activities have been undertaken within budgeted resources and it is expected that the Audit plan will be completed in 2013/14 within budgeted resources and timeframes. The outcomes of the reviews completed in the period are outlined in Part C of this report. A.4 Areas of improvement within Councils Operations Where identified, the areas of improvement in the Council have been documented in this report at Part C. The review of the efficiency, effectiveness and economy of Councils processes are inherent in all audits undertaken. A.5 General Information For the Information of the Audit Committee:

• In the period, the ICAC released 2 investigation reports and are currently undertaking 5 investigations. As outlined in Part C. of this report, one of the continuing investigations is ‘Operation Cavill’ which concerns allegations concerning the City of Ryde Mayor, Councillor Ivan Petch.

• In May 2014 the ICAC is to present a practical workshop for Council Managers concerning corruption prevention. This will be the first step in the update of the Councils corruption prevention plan and will be aimed at assisting managers identify the key corruption risks and controls relating to their individual areas. The results of this process will be recorded in the Councils risk management module to allow the ongoing management of the risks identified.

• Significant improvements have been identified with respect:

o To the management of cash and related activities with respect to petty cash and staff reimbursements (Refer C1.3 Cash and Cash related activities), and

o Councils restoration process (Refer C 2)

A.6 Overview of the status of Councils internal control, risk management and governance processes.

• Governance: The Councils Governance Action Plan is currently being reviewed by

Audit and the Public Officer to ensure that the Councils Governance processes reflect better practice. Once the review is complete the findings will be reported to the Audit Committee.


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• Risk Management: As discussed in the last report to the Audit Committee, the Council has implemented a risk management system that is being updated by responsible staff on a ‘real time’ basis. To reflect best practice and the recommendations of the DLG, the risks identified and maintained in this system are compared to the Internal Audit Plan on a quarterly basis to ensure that risks identified as high are incorporated into the internal audit plan. An independent health check is currently being performed of the Councils risk management processes to ensure that they reflect best practice. Once complete, the results will be reported to the Audit Committee.

• Internal Controls: These are reviewed in all audits undertaken. Exceptions are noted at Part C. of the report.

The structure of this Internal Audit Report is as follows. This structure reflects the recommendations of the DLG in the Internal Audit Guidelines (refer A.1): Part B: Comparison of the Actual and planned Audit activity undertaken in 2013/14 period; C: Details of the actual internal audit work undertaken in the period from 1 July 2013 to 15

March 2014; D: Detail of recommendations outstanding at the date of this report and the action taken by

Management to implement these recommendations; E: Internal Audit Key Performance Measures. Attachment A: Background to the Internal background to the Internal Audit Function, the Audit Committee, and the audit reporting practices at The Hills Shire Council.


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Part B 2013/14 Audit Activity: Actual compared to Planned. Table 1.1 outlines the internal audit activity that has occurred in the period from 1 July 2013 to 15 March 2014, compared to the planned 2013/14 internal audit activities outlined in the adopted Strategic Audit Plan. B.1 Background and Reference Refer Attachment 1. B.2 Audit Activity in the period from 1 July 2013 to 15 March 2014 For each activity identified in the Strategic Audit Plan to be undertaken in 2013/14, the current status of the audit activity is indicated. For all audit tasks the status is either:

1. complete; 2. in progress (audit procedures still being undertaken); or 3. not yet commenced.

Table 1.1 Risk Budgeted Actual

Days for Days

incurred Status

2013/14* (To

15/3/14) 15/3/2014 Council Wide Reviews 1. Governance Structures/Code Of Conduct H 20 20 2. Risk Management/Corruption Control Strategy H 15 15

3. Corporate Planning and KPI’s H 10 10

4. Budget and Management Reporting H 10 5

5. Investigations H 20 10 6. Special Projects/Assignments H 20 20 7. Recruitment H 5 3 8. Resolutions H 5 5 9. Community Engagement H 5 5 10. S355 Committees M 5 5 11. Mobile Phones – quarterly review L 2 2 Regulatory Audits 12. RMS Drives System H 5 5 13. Grants Financial Statements H 5 5 Audit of Councils Core Systems 14. Revenue Activities H 5 5 15. Donations and Sponsorship H 10 10 16. Procurement (including tendering) H 10 8 17. Use of Consultants H 5 5 18. Payroll H 10 5 19. Councillor Facilities Policy H 3 2 20. Cash and Cash related activities H 10 10 21. Information Technology H 10 5 22. Fleet Management M 10 10 23. Facilities Management M 10 5 24. Disposal of Assets M 5 5 25. Information Management M 10 10 Audit of Councils Business Operations


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26. Complaints Handling M 10 10 Administration Audit Committee 8 6 Audit Planning and Reporting 2 2 Liaison with LGIAN/External Auditor 4 2 Follow up of reports previously issued 6 4 Professional Development/training 5 1 Total Days 260 215

Legend Status of audit Activity In progress Completed Not yet commenced

Chart 1: Summary of the Status of the 2013/14 Audit Plan at 15/3/2014

31%

69%

0%

In progress

Completed

Not yet commenced


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Part C. Details of the Internal Audit Activity undertaken in the period from 15 November 2013 to 15 March 2014

The following is a summary of the Audit Activity undertaken in the period from 15 November 2013 to 15 March 2014. This summary outlines:

• Internal audit engagements completed or in progress • Outcomes of each internal audit engagement undertaken • Remedial action taken or in progress

C.1: Audit engagements completed in the period C1.1 Information Management (Audit item 25) Objective and Scope: This audit was undertaken to ensure that the Councils corporate records are complete and satisfy the Councils legislative requirements. The audit reviewed the period to 31 December 2013. Findings: The following findings were made as a result of the audit:

• The audit recommended a strategic plan be developed to ensure record keeping compliance with legislative requirements. A plan would ensure that a consistent approach is in place with respect to the management of corporate records received and maintained in auxiliary systems of Council such as email etc.

• Council’s procedures needed to be updated to refer to include Councils processes concerning the destruction of records and to outline who in Council has the delegated authority to authorise this action. It was recommended that this delegation be included in the Councils delegation instrument.

• Training to be put in place.

For the Information of the Committee: These recommendations have been agreed with management and are currently being implemented. The recommendations resulting from this review will be followed up in June 2014. C1.2 Disposal of Assets (Audit item 24) Objective and Scope: This audit was undertaken to ensure that the Council disposed of its assets in accordance with the adopted procedure. The audit reviewed the period to 31 December 2013. Findings: The following findings were made as a result of the audit:

• The ‘Disposal of Plant and Equipment’ procedure needed to be updated to reflect agreed limits

• Council’s delegation instrument needed to be updated.


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For the Information of the Committee: These recommendations have been agreed with management and are currently being implemented. The recommendations resulting from this review will be followed up in June 2014. C1.3 Cash and Cash related activities (Audit item 20) As reported to the last Audit Committee meeting, Internal Audit has incorporated into its plan a six monthly review of procurement cards usage. Also Internal Audit periodically reviews petty cash activities and the reimbursement of staff expenses by Council. Objective and Scope: to ensure that expenses reimbursed or incurred by Council relate to Council activities and are in line with Councils purchasing procedures and delegations. In short the review was aimed at ensuring that ‘personal expenditure’ was not reimbursed by Council and Section 24 of the Local Government Act was adhered to. Findings: Petty cash and staff reimbursements are reviewed annually by audit. Both forms of reimbursements occur because of the nature of the transaction and may reflect where the Councils purchasing system is not responsive to its purchasing needs. In these circumstances the controls inherent in the Councils purchasing system may also be circumvented. The aim is to have the level of reimbursements minimised. Over the period since 2010 the level of staff reimbursements incurred by Council was found to have decreased by 74%; the level of petty cash reimbursements incurred by Council has also decreased by 77%. These improvements reflect the Councils adoption of procedure concerning reimbursements and the ongoing review of these transactions to ensure that are planned and appropriately managed through the Councils procurement system. The review identified that:

• Purchasing structures needed to be implemented concerning technology as staff were being reimbursed for IPAD covers etc. which could be obtained by Council more cost effectively.

• Councils procurement card procedure and delegation instrument needed to be updated for current staff

• Petty cash floats within Columbia Court be consolidated and managed by the front Counter (Customer Services).

• Training needed to be provided

For the information of the Committee: The recommendations of the review are currently being addressed by Management. Quotes are currently being received concerning IPAD covers which represent a saving of approximately 68% on retail cost. C1.4 Corruption Mitigation Strategy and processes (Audit item 2) Objective and Scope: As identified in the Councils fraud and corruption mitigation strategy, internal audit has:

• Reviewed ICAC reports relevant to local government in the period to the date of the Audit Committee;

• Followed up with Council management those recommendations made by the ICAC that relate to activities that are undertaken by Council. This follow up is undertaken to ensure that Councils processes are corruption resistant;


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• Worked with management to implement or modify processes where relevant, to

mitigate the corruption risk. For the information of the Committee:

• Since 2008 the ICAC has made 227 recommendations that relate to activities undertaken by Council. Audit has followed up the recommendations made by the ICAC when the relevant reports have been published.

• Council manages its corruption risks through its risk management system.

Investigations in progress

• In the period since 15 November 2013 the following ICAC investigations have commenced. Please note that the following extracts are copied directly from the ICAC website.

• Where the final published ICAC reports include recommendations, the recommendations are addressed by Council through Councils Risk Management system.

NSW public officials and members of parliament – allegations concerning corrupt conduct involving Australian Water Holdings Pty Ltd (Operation Credo) and allegations concerning soliciting, receiving and concealing payments (Operation Spicer)

In Operation Credo, the ICAC is investigating allegations that persons with an interest in Australian Water Holdings Pty Ltd (AWH) obtained a financial benefit through adversely affecting the official functions of Sydney Water Corporation (SWC) by: including expenses incurred in other business pursuits in claims made on SWC for work on the North West Growth Centre; drawing from funds allocated for other purposes; and preventing SWC from ascertaining the true financial position, including the level of the executives’ remuneration.

The Commission is also investigating whether public officials and others were involved in the falsification of a cabinet minute relating to a public private partnership proposal made by AWH intended to mislead the NSW Government Budget Cabinet Committee and obtain a benefit for AWH, and other related matters.

In Operation Spicer, the ICAC is investigating allegations that certain members of parliament and others corruptly solicited, received and concealed payments from various sources in return for certain members of parliament and others favouring the interests of those responsible for the payments. It is also alleged that certain members of parliament and others solicited and failed to disclose political donations from companies, including prohibited donors, contrary to the Election Funding, Expenditure and Disclosures Act 1981.

In both of these matters, the Commission is also investigating the circumstances in which false allegations of corruption were made against senior SWC executives.

As there are common elements to both operations Credo and Spicer, the evidence taken in each operation will be taken as evidence in both operations.

Operation Credo - Amended Scope and Purpose - 13 March 2014

RailCorp and Department of Family & Community services – allegations of public officials corrupting soliciting funds (Operation Spector)


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The ICAC is investigating allegations that Joseph Camilleri, former RailCorp general manager, maintenance contracts, and his sister, Carmen Attard, an employee at the Department of Family & Community Services, used their positions as public officials to corruptly solicit funds from other people including public officials and government contractors

As reported to the Audit Committee in the audit report dated 5 December 2013, the following investigations (reported to the last Audit Committee) are still continuing: NSW State Emergency Service – allegations concerning SES Commissioner (Operation Dewar) The ICAC is investigating allegations that the NSW State Emergency Service (SES) Commissioner, Murray Kear, took detrimental action against Deputy Commissioner Tara McCarthy, including dismissal from her position on 14 May 2013, in reprisal for Ms McCarthy making allegations to Mr Kear that SES Deputy Commissioner Steven Pearce had engaged in corrupt conduct.

The ICAC is also examining allegations that Mr Kear improperly showed favour to Mr Pearce by failing to appropriately investigate allegations made by Ms McCarthy that Mr Pearce had engaged in corruption. It is also alleged that in relation to the above allegations, Mr Kear made false statements or attempted to mislead an officer of the ICAC in their exercise of their functions under the Independent Commission Against Corruption Act 1988. NSW Public Sector – allegations concerning Circular Quay retail licences and other matters (Operations Cyrus, Meeka and Cabot) The ICAC is investigating allegations that, between 2000 and 2011, then Member of Parliament (MP), the Hon Edward Obeid MLC, misused his position as an MP to attempt to influence other public officials to exercise their official functions with respect to retail leases at Circular Quay, without disclosing that he, his family or a related entity had an interest in some of those leases. It is also alleged that during the same period, certain public officials improperly exercised their official functions, with respect to retail leases at Circular Quay, to benefit Mr Obeid or his family (Operation Cyrus).

The Commission is also investigating allegations that, between 2005 and 2008, Mr Obeid misused his position as an MP to attempt to influence other public officials to make decisions favouring Direct Health Solutions Pty Ltd, without disclosing that he, his family or a related entity had an interest in that company (Operation Meeka).

The Commission is also investigating allegations that, between 2007 and 2008, Mr Obeid misused his position as an MP to influence other public officials to exercise their official functions with respect to the review and grant of water licences at Cherrydale Park, without disclosing that he, his family or a related entity had an interest in the licences. It is also alleged that during the same period, certain public officials improperly exercised their official functions with respect to the review and grant of the water licences at Cherrydale Park (Operation Cabot). Ryde City Council – allegations concerning the City of Ryde Mayor, Councillor Ivan Petch (Operation Cavill)

The ICAC is investigating a number of allegations involving the current Mayor of the City of Ryde, Councillor Ivan Petch, and others, including the alleged release of confidential council information by Cr Petch on many occasions for various reasons, including in an attempt to undermine council employees, such as the former General Manager, Mr John Neish.

Investigation Reports issued In the period since 15 November 2013 the following ICAC investigation reports have been issued:


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24 January 2014 (Operation Nickel)

Findings are made that, between June 2012 and April 2013, Mr Binos engaged in corrupt conduct by soliciting and receiving money from applicants for heavy vehicle driver licences in return for exercising his public official functions as an RMS-accredited heavy vehicle competency assessor to make false entries in their learner’s log books to the effect that he had assessed them as competent to drive heavy vehicles, in accordance with RMS requirements, in order for them to apply to the RMS for heavy vehicle driver licences. The payments received by Mr Binos on each occasion varied but were in the region of $1,500.

18 December 2013 (Operations Jasper and Acacia)

Report outlining the Commissions’ responses to issues raised by Operation Jasper and Acacia.

C.2 Other Audit Activities completed in the period to 15 March 2014. In the period since 15 November 2013, follow up reviews have been completed of:

• Restorations Review (Follow up). This follow up identified that the 7 recommendations resulting from the audit had been implemented including the clearing of a significant backlog of outstanding requests. In addition the staff involved in the restoration process had implemented significant improvements in the process which reflected a continuous improvement focus.

• S355 Gooden Drive Committee Financial Review • Review of Petty Cash, Staff reimbursements and procurement cards (Follow up –

six monthly review) • Fleet Management (Follow up) • Donations and Sponsorship (Follow up) • Revenue Activities (Audit item 14.) Reviewed the reimbursement of electricity

costs incurred by Council. • Sponsorship (Follow up). • Use of Consultants (Audit item 17).


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Part D: Details of significant recommendations outstanding at the

date of this report and the action taken by Management to implement these recommendations

Internal Audit monitors all the recommendations raised and agreed with management to ensure that they are implemented within agreed timeframes. For the period since the inception of Internal Audit (30 June 2005) to 15 March 2013, Internal Audit has raised 882 audit recommendations that have been agreed by Management. In this period there have been no recommendations that have been raised by Audit and not agreed with management. At 15 March 2014 the Council had addressed 96% (last report 96%) or 845 of the agreed recommendations satisfactorily. D.1 Status of Recommendations The following is a summary of the status of Internal Audit Reports issued. In summary, Internal Audit Reports may have internal recommendations that are still outstanding. In these cases Management may not have completed or implemented the recommendation by the Audit Committee Date. Refer D1.1 Alternatively, Internal Audit Reports may have recommendations that have been implemented or addressed by Management which are verified as complete/addressed. It should be noted that although the following audit reports may be listed as ‘finalised’ the area/audit item will still be the subject of future audits, where required. D1.1 Reports issued to 15 March 2013 where recommendations are still to be implemented:

Reports Year Report Issued Expected Closure Timeframe Information Management 2013014 30/6/2014 Donations and Sponsorship 2013/14 30/6/2014 Disposal of Assets 2013/14 30/6/2014 Review of Petty Cash, Staff reimbursements and procurement cards (six monthly review)

2013/14 30/4/2014

D1.2 Reports issued to 15 March 2013 where recommendations have been implemented in the period to 15 March 2013: The following lists the audits where all agreed recommendations have been addressed in the time period.

Reports Year Report Issued Closure Timeframe Asset Management 2011/12 31/12/2013 Rates 2013 30/1/2014 Sponsorship 2013 30/1/2014 Complaints 2013 31/12/2013 Fleet Management 2013 30/1/2014 HCC Client testing/HCC 2013 30/1/2014 Restorations 2013 30/1/2014 Review of Bunning’s Cards 2013 31/12/2013 Management of Culverts 2013 31/12/2013


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Part E Internal Audit Key Performance Measures These indicators have been developed to measure the performance of internal audit. These were reviewed and agreed by the Audit Committee on 8 September 2005. E.1 Service Delivery Benchmarks. • 18 or 69% of the audits listed in the Strategic Internal Audit Annual Plan for

2013/14 has been ‘completed’ to date (refer Part B, Table 1.1 and Chart 1).

• Number of findings implemented to date as a % of items raised in the Audit

reports. As discussed at Part D., of the 882 Audit recommendations agreed with Management 96% (or 845) have been implemented. Timeframes for the remaining 37 outstanding recommendations are currently being followed up and have not been exceeded.

• On average the number of days between the end of fieldwork to the issue of the

final audit reports is approximately 11 working days (Prior report: 11 days). This time includes the drafting of the audit report/finalisation of report; discussion of audit findings; and agreement of management action.

E.2 Cost Control benchmarks • The actual costs of the Internal Audit function to date have been made up of the

salary and on costs of the Internal Auditor and the Risk Coordinator. In the period to 15 March 2014, the budget of the Internal Audit function was not exceeded.

• The number of direct days spent on internal auditing (excluding hours spent on professional development and training) is 99% of the total days available.


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Attachment A.: Background to the Internal Audit Function; the Audit Committee; and the audit reporting practices at The Hills Shire Council. Background Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations.

Internal audit’s role is primarily one of providing independent assurance over the internal controls and risk management framework of the council. It should be noted that Management has primary day-to-day responsibility for the design, implementation, and operation of internal controls.

Within THSC the functions, powers, and accountabilities of Internal Audit are set out in the Internal Audit Charter which has been adopted by Council. Internal audit’s core competencies are in the area of internal control, risk and governance. Internal audit’s scope includes the following areas:

• Reliability and integrity of financial and operational information

• Effectiveness and efficiency of operations and resource usage

• Safeguarding of assets

• Compliance with laws, regulations, policies, procedures and contracts

• Adequacy and effectiveness of the risk management framework. The Internal Audit function was created in June 2005. Within Local Government Internal Audit, is typically made up of 1 or 2 members (where in place). Within THSC the Internal Audit Unit consists of the Internal Auditor. Projects are often undertaken with the assistance of the Risk Management Coordinator.

The Audit Committee plays a pivotal role in the Councils governance framework. It provides council with independent oversight and monitoring of the council’s audit processes, including the council’s internal controls activities. This oversight includes internal and external reporting, internal and external audit, and compliance. Given the key role of the Audit Committee, for it to be most effective it is important that it is properly constituted of appropriately qualified independent members. In Audit Committee within THSC has been in operation since 2004. Councils Audit Committee is unique in Local Government in that the Committee meets in the public forum (times and dates of meetings are advertised on the Councils webpage) and currently has 3 independent community representatives on the Committee to ensure that there is transparency in Councils processes and the Council remains accountable to the community. Current members of the Audit Committee include: Clr Dr MR Byrne (Mayor, Chair), Clr AJ Hay, Clr Dr JN Lowe, Clr MG Thomas, Mr Michael Blair, Mr Trevor Bland and Adjunct Professor Jim Taggart. Every 4 years the Council undertakes an EOI to obtain interests from suitably qualified community members to be part of the Audit Committee.


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The functions, powers and accountabilities of the Audit Committee is outlined in the Audit Committee Charter that has been adopted by Council. Best Practice In 2010 the DLG released the Internal Audit Guidelines (http://www.dlg.nsw.gov.au/dlg/dlghome/documents/Information/Internal%20Audit%20Guidelines%20-%20September%202010.pdf. This guideline (the guideline) identifies best practice in local government with respect to Internal Audit and the Audit Committee. As outlined in the introduction, the guidelines were developed to encourage the creation of Internal Audit and Audit Committees in those Councils that did not have the function and to outline how the function should be developed (note: that at the time of the guideline only approximately 20% of Councils had an Internal Audit function). The Strategic Audit Plan

As identified at 3.5 of the guideline, the Internal Audit function within THSC has a strategic plan in place which is supported by annual plans.

The Strategic plan is based on a risk assessment of the council’s key strategic and operational areas to determine the appropriate timing and frequency of coverage of each of these areas. The plan includes audit judgment of areas that will also be reviewed despite not appearing as a high priority in the council’s risk profile. The plan is developed on a rolling four year cycle to reflect the terms of Council. The plan is also reviewed annually to ensure that it still aligns with the council’s risk profile. The current Strategic Plan (2011 – 2014) was adopted by the Audit Committee on 20 September 2011. Reporting

Internal audit regularly communicates its findings and recommendations to the Audit Committee, General Manager and management of the areas audited through the Internal Audit Report.

The Internal Audit report normally includes background information, the audit objectives and scope, observations/findings/conclusions, key recommendations/ agreed management actions.

Detailed audit working papers are not distributed to the Audit Committee as they are intended for internal use only. Where audit working papers have findings that are useful to other areas of council, internal audit will share this information on a limited basis. Internal audit working papers are shared with the council's external auditor, where requested, to assist them in the course of their work.

Councillors and the community have access to the minutes of the Audit Committee (and the Internal Audit Report) as these are published on the Councils web page. The Internal Audit Report (and Audit Committee papers) is also referred to the Council for adoption to provide greater transparency and accountability.


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ITEM-3 GENERAL MANAGERS EXPENSES


OUTCOME: 3 Sound governance based on transparency and accountability.

STRATEGY:

3.1 Ensure Council is accountable to the community and meets legislative requirements and support Council’s elected representatives for their role in the community.


AUTHOR: GENERAL MANAGER

DAVE WALKER


DAVE WALKER

HISTORY At the Council meeting of 12 October 2004, the Council adopted a Notice of Motion as follows:- 1. The General Manager’s expenses be reviewed and approved by the Mayor prior to

payment. 2. After Approval, the expenses be submitted to the Audit Committee for notation. REPORT A listing of the General Manager’s expenses incurred since last reported on 5 December 2013 will be tabled at the Audit Committee Meeting. IMPACTS Financial This matter has no direct financial impact upon Council's adopted budget or forward estimates. The General Managers expenses are met from Councils adopted budget. The Hills Future - Community Strategic Plan The disclosure of the General Managers expenses ensures that the Council is transparently governed. RECOMMENDATION 1. The report be received. 2. The expenses tabled (which outlines a total of $XX) be noted. ATTACHMENTS Nil


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ITEM-4 QUESTIONS AND ANSWERS - AUDIT COMMITTEE MEETING 5 DECEMBER 2013


OUTCOME: 1 Value our customers, engage with and inform our community and advocate on their behalf.

STRATEGY:

1.1 Facilitate strong two way relationships and partnerships with the community, involve them in local planning and decision making and actively advocate community issues to other levels of government.


AUTHOR: INTERNAL AUDITOR

KERRIE WILSON


DAVE WALKER

REPORT Attached to this report are the responses for the questions asked at the Audit Committee Meeting held on 5 December 2013. IMPACTS Financial This matter has no direct financial impact upon Council's adopted budget or forward estimates. The Hills Future - Community Strategic Plan This matter has no direct impact on any other outcomes and strategies. RECOMMENDATION The report be received. ATTACHMENTS 1. Questions & Answers - Audit Committee Meeting 5 December 2013 (2 Pages)


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ATTACHMENT 1

QUESTIONS WITHOUT NOTICE

AUDIT COMMITTEE MEETING

5 DECEMBER 2013

MINUTE NO.

QUESTION REFERRED TO

96 EXPRESSION OF INTEREST – DON MOORE COMMUNITY CENTRE

GENERAL MANAGER

Councillor Hay noted that Council is responding to its own Expression of Interest to operate the Don Moore Community Centre at North Rocks and asked what process has been determined to provide for the competitiveness, neutrality and evaluation of such a Tender? The General Manager advised that it was an Expression of Interest and not a formal Tender however Council has a Code of Tendering which can be provided to the Audit Committee and a guide for in house tendering as well. In regard to this particular one, the best approach at this stage is to stay with the current people however will look at other options within the next twelve months. The Internal Auditor advised that she was the Probity Officer for this EOI and also advised that the guide for In House tendering was used. Structures were put in place in Council as required by the Guidance and the Code of Tendering to make sure that there was a separation of the group that was going to put in an in house tender and the Evaluation panel (which included a member independent of Council). Councillor Hay asked is there a move to be doing more of this? The General Manager replied no.

RESPONSE Answered at Meeting.

MINUTE NO.


97 FURTHER EDUCATION GENERAL MANAGER Adjunct Professor Taggart acknowledged that Council takes seriously

learning through tutorials/quizzes etc and asked could Council buddy up with an institution that gives RPL’s for that, so that there is some type of lifelong learning that’s being done here that can then go into some type of Diploma, Graduate Diploma or Degree as a form of giving increased credentials. The General Manager advised that Council does have in-place certificate courses and post graduate courses through UNE.

RESPONSE Answered at Meeting.


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MINUTE NO.


98 LOWER PORTLAND FERRY GENERAL MANAGER Councillor Thomas referred to a question regarding the Lower Portland

Ferry he asked at the Audit Committee Meeting of 13 December 2012 and asked whether a response has been provided. The General Manager advised he would check on that question.

RESPONSE Memo distributed.

Documents

Audit Committee Meeting - The Hills Shire · 2020-03-11 · MINUTES of the duly convened Audit Committee Meeting of The Hills Shire Council held in the Council Chambers, Castle Hill