Item 12.3 - Attachment 1
Minutes of Audit Committee 27 May 2010
REPORT OF THE MEETING OF THE AUDIT COMMITTEE HELD IN MEETING ROOMS 1 AND 2, GROUND FLOOR, COUNCIL CHAMBER BUILDING ON THURSDAY, 27 MAY 2010 AT 6:46 PM
Mr Neil Adams (Chair), Mike Barry, Councillor J D Finn and Councillor A Wilson (arrived 6.56 pm).
Denis Banicevic –
External Auditor (arrived 6.48 pm),
An apology was received and accepted for the absence of Dr Robert Lang - Chief Executive Officer.
CONFLICT OF INTEREST DECLARATIONS
There were no conflict of interest declarations at this meeting.
09/10 Audit Committee Minutes – 25 February 2010
That the minutes of the Audit Committee Meeting held on 25 February 2010 be received and accepted as a true record of the meeting.
MATTERS ARISING FROM MINUTES
An update was provided on the following Action Items as arose out of the previous meeting:-
Actions 12 and 16 – Incidents of Corruption, Code of Conduct Issues and Complaints
Matter listed as Item 7 on tonight’s agenda.
That Actions 12 and 16 be noted as complete.
Dennis Banicevic arrived at the meeting at 6.48pm during consideration of this matter.
Action 10 – Workshop on Contract/Procurement Review
Neil Adams sought advice on the delay with the proposed workshop.
Emily Tang responded that the related audit report was being drafted but advice was also to be sought from the Committee on format of the workshop.
Neil Adams responded that the workshop should be held in the normal Council Workshop format with Audit Committee members simply being invited to attend.
Maurice Doria added that workload had prevented holding of the workshop to date.
That it be noted the procurement report should be completed by mid June which will then be subject to liaison with the procurement team in relation to the setting of a workshop date. A date is likely to be set by the end of June.
That this item remain as an open Action Item.
Action 11 – IT Systems Contract
Update to be provided on this matter during the meeting. Action 11 can be closed (see also Action 21).
Action 17 - Future Meeting Dates (Minute 24/09 and 2/10 refers)
That the October Meeting date of the Audit Committee remain as 7 October 2010 and Action 17 be closed.
Action 18 – Risk Assessment for Civic Place
Scott Gregg commented that Council’s risk assessment document was quite fluid at present.
He advised the CEO was keen to place the document in front of Grocon, however, Council was awaiting firmer commercial parameters around the Stage 1 Development and more certainty in the risk matrix.
It be noted that a Risk Assessment has been tabled for consideration at tonight’s meeting. Action 18 can be closed.
Councillor A Wilson arrived at the meeting at 6.56 pm during consideration of this matter.
Action 19 – Investment Audit
Action to remain open pending the appointment of the new Manager Service Audit and Review.
Action 20 – Revisiting of Council Resolution Compliance
Action to remain open pending the appointment of the new Manager Service Audit and Review.
Action 21 – IT Systems and Replacement Contract – Financial Position
Greg Smith provided an update on the Council Online Program and fees associated with the exit of the contract, including exit penalty and fees for access to Council data.
In addition, Mr Smith advised:-
· The disengagement agreement had been signed under Council Common Seal and was now with CapGemini.
· Council had received a copy of its data.
· The break even point, including the payment fee of $4.7M, would be achieved in 8 years, with financial benefits being realised each year after.
· There are many non financial benefits with the new system such as better response times and development to meet the demands of the organisation.
Neil Adams noted the non financial drivers towards terminating the contract and commented that these issues could have been more clearly outlined in the August 2009 report to Council.
He added that, although the related factors may have been known by most interested parties at the time, all drivers and the history should be fully documented so that any decision was justified and accountable. The report could also have included comments on what was functionally wrong with the current contract, what Council’s needs were, where the contract had failed, detailed what the new systems would achieve, whether any change was a good proposition and whether such change was in the interests of good governance.
Councillor Wilson commented that often this was the problem with Council reports when major strategic decisions were required. He proposed that better templates, incorporating more in depth analysis, needed to be developed for Council reports.
Greg Smith noted that the level of information already provided to Councillors was voluminous and some had argued that there needed to be a more succinct level of reporting that targeted the core of the issue.
Mike Barry stated that better practice report templates were available and could be overlayed on to Council reports.
That the CEO be requested to advise whether the August 2009 report received by Council in relation to the proposed exit from Council’s Online syndicate was satisfactory in detailing all material factors (other than financial considerations) and whether the form and content of the subject report have implications for future reports to Council more generally.
Dennis Banicevic noted that a detailed analysis of the OnLine Contract needed to be undertaken. It had initially been proposed that the system would be cutting edge and through sale to other Councils, making money for other syndicate members. He commented that Council must ensure it had protection in its future contracts against dissatisfaction.
A general discussion then ensued on the need to ensure due diligence in Council’s contracts and legal processes.
Mike Barry noted that the State and Federal Governments had model contracts and suggested such contracts may be useful to view.
It was agreed, and noted that Mr Smith would ensure, that contract management would be addressed in the upcoming procurement workshop.
Risk Analysis for Civic Place
Scott Gregg distributed a copy of the risk analysis for
Mr Gregg noted that Council was working hard to complete its acquisition requirements and until that time, Grocon was not required to commence Stage 1.
Mr Gregg then touched on each of the items that had changed
in risk including
Mr Adams asked whether reputational risk was a factor and whether Council was undertaking a concerted media management strategy.
It was noted that there had been negative media reports; however failure to deliver the project would create the biggest reputational risk.
Mr Gregg advised that frequent discussions were held in relation to media management. Council tried to ensure that the community had no false expectations and that all reports and medial releases were carefully worded and that any incorrect facts received a response. Staff were mindful that, at times, the media sought confrontation on this issue and Council had to consider whether to give the issue ‘oxygen’.
Councillor Finn commented that Council should have made a response to the content of the 7.30 Report.
Mr Adams suggested that the risk analysis be received. He noted that it was essential for the new Manager Service Audit and Risk, once appointed, to view the document in view of the risk profile assessments for Council as a whole. In addition, the analysis should be considered in the development of the Audit Plan.
That the Risk Analysis for Civic Place be audited by the Service Audit and Review Department with a view to assessing the reasonableness of the assessments and to provide input and enhancement where possible.
Update on Civic Place Project
Mr Banicevic commented that once Council had acquired the required properties, Grocon could then put in a Development Application.
Mr Gregg advised that nothing stopped Grocon from lodging an earlier development application. He advised that once Council had completed its acquisitions, Grocon was required to make a payment to Council and then had 12 months, using its best endeavours, to seek precommittments and finance. Should the project not be financially viable, Grocon would not be required to proceed.
Mr Banicevic commented that one of the risks was that the project may not proceed.
Mr Gregg agreed but noted that Council had exit strategies in place.
10/10 Recruitment of Manager Internal Audit
Mr Doria advised that the position had been advertised
internally and externally including with the
Unfortunately, the position had not been awarded to any of the applicants and accordingly the market would be retested in due course.
Mike Barry suggested that the advertisement could be recast with not as much emphasis on local government experience. He felt this would cast a wider net and prove to be beneficial.
Mr Banicevic agreed and noted that local government auditors were strong in demand and short in supply. He suggested that Council may like to consider contracting.
Mr Adams agreed and suggested that Council should immediately look to contracting, with individuals being engaged in the short term on specific auditable areas. Mr Barry suggested that the Internal Audit Bureau be invited to undertake audit responsibilities in the short term.
(a) That individuals be engaged in the short term to undertake specific audit duties on a contractual basis, with a target date for the commencement of at least one significant audit being by the end of June.
(b) That Council undertake discussions with the Internal Audit Bureau with a view to developing the 2010/2011 Audit Plan.
Greg Smith provided a brief update on the enterprise risk management programme (ERM). Mr Doria added that the document was likely to be completed in 3 months.
That the CEO be requested to report to the next meeting on progress made in achieving the first statement of ERM and its risk assessment together with advice on any factors causing or that may cause a delay in the preparation of the document.
11/10 Arrangements for Procurement Workshop
This matter was addressed during matters arising from the previous meeting.
12/10 Statistical Report
Service Auditor Memorandum dated 14 May 2010 had previously been circulated with the agenda.
Mr Adams asked whether any of the concerns raised had been valid and found to be justified.
Mr Doria responded that he believed each of the referrals had proven to be baseless.
That the Statistical Report on the level of referrals to ICAC etc be received and noted.
13/10 Report of Internal Audit Activities
Service Auditor Memorandum dated 17 May 2010 had previously been circulated with the agenda.
Mr Adams referred to the Cash Handling and Accounting Controls at Swimming Centres Audit and noted that internal control weaknesses had been identified. He asked whether there had been potential for fraud to go undetected.
Mrs Tang agreed that the potential existed and noted that there had been variances; both in overs and unders.
Councillor Wilson expressed concern that a section of Council was not balancing with a cash register at the end of each day. He noted that point of sale software was available and referred to the need for each operator to have their own register code and float.
Mr Banicevic agreed and advised that daily reconciliations should be occurring.
Mr Barry noted that the collection of money was a high risk function and ICAC guidelines were available.
Mr Adams suggested that the recommendations made by the audit be noted and requested that the area be reviewed again in 2 months.
(a) That a further update be provided to the next meeting of the Audit Committee advising whether the recommended procedures for Cash Handling at Council’s pools are being followed.
(b) Further that the Finance Section be commended on identifying the irregularities.
14/10 Revised Audit Charter
A copy of the revised Audit Committee Charter had been distributed with the agenda.
Mike Barry noted that the revised Charter compared well with the Department of Local Government Sample Charter.
That the revised Audit Committee Charter be adopted.
15/10 Collection of Cash at Car Parking Stations
Councillor Wilson referred to the practice of fee collection by machines at Council’s Car Parking Stations and sought advice as to how Council could be sure it was receiving its correct share of the take. He also questioned whether it would be possible to carry out reconciliation between moneys collected as compared to daily arrivals and departures at the car parks.
Greg Smith noted that information was received by Council in relation to arrivals, departures and vacancies to ensure that there was a correlation between usage and cash received.
That a report be provided to the next meeting of the Audit Committee on the integrity of the cash collection at Council Car Parking Stations.
16/10 Contact Details for Members
Neil Adams requested that a list of contact details for each member and observer for the Audit Committee be circulated to members via email.
17/10 GST Certificate
Council at its meeting held on 24 May 2010 had considered a Manager Finance Report seeking approval to sign off the GST Tax Certificate.
Council had subsequently agreed to sign off the Certificate and to advise the Audit Committee accordingly.
A copy of the subject report and the Council’s decision had been circulated to all members.
That the information be noted and any comments from members be offered at the next meeting of the Committee.
The meeting terminated at 8.46 pm.