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Item 12.2 - Attachment 1 |
Minutes of Audit Committee 26 November 2009 |
REPORT OF THE AUDIT COMMITTEE HELD IN MEETING ROOMS 1 AND 2, GROUND
FLOOR, COUNCIL CHAMBER BUILDING ON THURSDAY, 26 NOVEMBER 2009 AT 6:47 PM
_________________________________________________________
PRESENT
Mr Neil Adams in the
Chair, Mike Barry and Councillor Michael McDermott.
IN
ATTENDANCE
Denis Banicevic –
External Auditor (arrived 7.51 pm),
APOLOGIES
Apologies were received and accepted for the absence of Councillors
Julia Finn and Andrew Wilson and Greg Smith – Group Manager Corporate Services.
CONFLICT
OF INTEREST DECLARATIONS
There were no conflict
of interest declarations at this meeting.
19/09 Audit
Committee Minutes – 1 October 2009
RESOLVED (Barry/Adams)
That the minutes of the Audit Committee Meeting held on 1
October 2009 be received and accepted as a true record of the meeting.
MATTERS
ARISING FROM MINUTES
The Chairman sought an update on each of the Action Items
arising out of the previous meeting:-
Action 1 - Operation of Audit
Committee
Matter listed as Item 8 on current agenda.
Action
2 – Compliance with Council Resolutions
Work currently underway and will be reported to next
meeting.
RESOLVED
This Action remain open.
Action 3 – Provision of Audit
Programs and Guidelines for Audit Committee
Matter listed for discussion on current agenda. In addition,
the Charter of Operations has been listed as part of Item 5 on the current
agenda.
Action
4 – Inclusion of Schedule 7 in Audit Program
Matter included.
Action
5 – Drainage Assets Program in Epping
Information supplied to Councillor Wilson by Manager City
Assets and Environment.
Action
6 – Additional Expenses for New IT Systems Contract
Manager Finance indicated that staff were presently in the
middle of the tender evaluation and exact figures will not be known until the
evaluation is completed.
Estimated costs were provided to Councillors via report on
24 August and a copy of this report was tabled for the information of members.
At this stage it was estimated that additional expenditures would take between
4 to 5 years to pay off.
The CEO indicated that there were considerable savings to be
achieved by moving to a new contract.
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ACTION 11 (Adams/Barry) That summary advice on the payment and timing of payments
to implement the new IT Systems contract and to achieve breakeven be provided
to the next meeting of the Audit Committee. |
Action
7 – Termination of IT Systems Contract
Matter dealt with in report to Council Meeting of 24 August
2009. A copy of this report tabled for members earlier in meeting. The Contract
Advisory Group has only met once and will meet again shortly.
RESOLVED This action item to remain open.
Action
8 – Inclusion of note in Financial Statements - Civic Place Contingencies.
A note included as appropriate. It was also noted that
Council had adopted the financial statements.
Action
9 – Depot Management Report
Matter listed as Item 7 on the current agenda.
Action
10 – Workshop on Contract/Procurement
Review
Mr Quirk advised that the workshop had not taken place as
yet as the contract/procurement audit was still in progress. On its completion,
a workshop would be arranged.
It was agreed that members of the Audit Committee would be
invited to attend this workshop.
RESOLVED This action item to remain open.
Replacement
of Position in Service Audit and Review – Minute 17/09 refers
Mr Quirk advised that funds held against the previous senior
auditor position would be utilised for the appointment of contractors to carry
out job specific tasks within Audit.
The Committee agreed with the flexible approach and noted
that the proposed outcome was satisfactory.
General
Statistical Report – ICAC, Protective Disclosures etc – Minute No. 18/09 refers
Mr Quirk advised that the information was not available at
present, however, information would be included in the regular reports to the
Audit Committee.
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ACTION 12 – A statistical report be provided to the next
and all future meetings of the Audit
Committee on the level of Section 11 reports, ICAC reports, protective
disclosures and referrals to the Police over the past 3 years. |
AGENDA
ITEMS
20/09 Approved Internal Audit Program and
Charter of Operations
Internal Audit Program
A copy of Manager Service Audit and Review Memorandum dated
20 November 2009 enclosing the audit program and the Charter of Operations had
previously been circulated to members.
Mr Quirk noted that the program and Charter had been updated
as a result of the Committee’s previous discussions and the CEO had approved of
the changes.
Mr Quirk added that the credit and cab charge audits
together with the park committee grants audit had been placed on the 3 year
rolling program rather than carried out annually.
The CEO noted, in response to a question from Councillor
McDermott, that he had strong views on the use of credit cards and had reduced
their number across the organisation. Any large expenditure items were required
to be invoiced and accordingly, their usage had dropped off significantly.
Councillor McDermott asked whether there may be some risk in
3 yearly audits.
It was advised that all expenses were reviewed monthly by
managers and whilst audits would be carried each 3 years, trends over the past
few years would be examined.
Mr Barry sought further information on ‘man days’ for these
audits and Mr Quirk responded that information on this issue would be built up
over time.
Mr Adams advised that he, in conjunction with Mr Quirk, would
expect that the audit program from next year will be based on risk profiles
developed through the formal Enterprise Risk processes of Council and in line
with the strategic objectives of Council, together with an explanation of how
the objectives and profiles fitted together.
RESOLVED (Adams/Barry)
That
the Internal Audit Program be endorsed.
Charter of Operations
The Committee sought the following changes:-
· Page 5 – Item 1.3
last dot point - inclusion of a more accurate statement indicating that the
services are performed rather than facilitated.
· Page 7 – Item 3.1 –
first dot point – Inclusion of a reference to the 3 year rolling program and
adding that the information will be provided to the Audit Committee for
endorsement.
· Page 10 – Item 7.3 –
Inclusion of a reference as to how this issue will be communicated to the Audit
Committee.
RESOLVED (Adams/Barry)
That
the Service Audit and Review Charter of Operations be accepted with the changes
as outlined above.
21/09 Report of Internal Audit Activities
A copy of Manager Service Audit and Review Memorandum dated
13 November 2009 regarding the Internal Audit Activities had previously been
circulated to members.
Mr Quirk noted that Credit Card and Cabcharge Audits had
been completed and whilst no significant issues had arisen, a number of
improvements were recommended. Copies of both Audits were available for
members.
The only outstanding audit from 2008/09 related to Council
resolution compliance. Audit had also been involved in a number of Inquiries.
Information on these issues will be tabled at the next meeting.
The Committee discussed whether it would be appropriate for
those issues which are affected by organisation or system changes to be best
dealt with by accepting the position and deleting from the Implementation
Schedule with further consideration being given in the Audit Program.
Ms Fett advised that a member of the Finance Team had been
working with the Development Unit to assist in the recommendations relating to
the Section 94 Audit. This matter will be reviewed over the forthcoming years
to see how the changes are working and hence the issue has been left open.
Mr Adams noted that Contract Management had been rated as 2
– Below Acceptable Standards.
Mr Quirk indicated that this was a recent audit and
significant work had been carried out in relation to the building of policies
and in relation to procurement; however, there were areas available for
improvement in relation to the management of contracts. When combined with the
inherent risk in procurement, the rating became quite significant.
Ms Fett noted that Finance had placed a budget bid for the
employment of a procurement position in the contract area and work was
progressing on other identified issues.
RESOLVED (Adams/Barry)
The
information be noted.
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ACTION 13 – As agreed with the CEO, that, on an ongoing
basis, the CEO will establish arrangements so that the Audit Committee is
notified of any significant Council related issues that arise in the media. |
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Action 14 – That electronic copies of the Cabcharge and
Credit Card audits be supplied to all members within the next week. |
22/09 Depot Management Improvement Program
A copy of Chief Executive Officer’s Memorandum dated 2
November 2009 regarding the update on the Depot Process and Business
Improvements had previously been circulated to members.
The CEO noted that there had been further savings and
reforms at the Depot since the date of his Memorandum.
Mr Adams sought details on incentives given to staff and
also whether any corrupt practices had been discovered.
The CEO advised that a responsible approach had been
undertaken including engagement with staff, the mapping of processes and the
removing of bottlenecks or redundant processes.
He added that no corrupt practice had been discovered though
in instances, a segregation of duties had been implemented to remove any
opportunity for mismanagement. Also, certain practices, such as the ordering of
concrete by phone, had been changed to ensure that better documentation was
available.
Councillor McDermott asked whether any rorts had been
discovered perhaps pertaining to sick leave, time sheets or use of equipment.
The CEO advised these areas had been checked and no evidence
had been detected. He added that practices had been improved including staff
now being required to clock in at the depot each day, rather than starting on
site, which made any inappropriate conduct more difficult.
Note
Mr
Banicevic arrived at the meeting at 7.51 pm during consideration of this
matter.
Further, the CEO commented that Council’s processes had been
made inherently more robust.
RESOLVED (Adams/Barry)
The
report be received and it be noted that the Committee is pleased to see the
positive changes.
23/09 Review of Audit Committee Operations
A copy of Manager Service Audit and Review Memorandum dated
19 November regarding the assessment of the Audit Committee had been circulated
previously to Members.
The Committee discussed each of the areas, as indicated on
the circulated assessment, where the Committee did not meet the guidelines
issued by the Department of Local Government.
Majority
of Independents
The Committee discussed the possibility of having a majority
of independents on the Audit Committee in line with the Model Charter.
Councillor McDermott indicated that whilst this suggestion
could be recommended to Council, Councillors were answerable to the rate payers
and might wish to retain the majority. Mr Adams indicated that an independent
majority is today regarded generally as ‘best practice’.
Mr Banicevic noted that he was aware of Sydney, Wyong and
Penrith Councils that had a majority of independents on their respective Audit
Committees. He added that Council should not feel threatened by such a
composition as the Committee only made recommendations to the Council who could
then accept or refuse those recommendations as it saw fit.
Final Outcome – That a recommendation be prepared for a majority
of independents to be appointed to the Audit Committee with all Councillors
welcome to attend and to participate in meetings.
Calling
of Audit Meetings by Chair, Member, CEO or Member
Final Outcome – No objection to amendment of Charter to
comply with Guidelines.
Ability
for Members to Internal and External Auditors Privately
The Committee desired a direct line between the Chair and
Auditor though any such meeting did not need to be structured.
Final Outcome – Charter may be amended to permit private
access between the Chair and the auditors.
Approval
of Internal Audit Charter
It was noted that it was unlikely Council would be willing
to relinquish approval of the Audit Charter. The Committee could, however, make
recommendations to the Council and endorse the Charter.
Input
into Appointment and Remuneration of Auditor
The CEO noted that this could not occur under the Local
Government Act, however, a level of consultation could take place.
Note
Ms
J Fett retired from the meeting at 9.17 pm during consideration of this matter.
Assessment
of Internal Audit and Audit Committee Performance
Mr Adams advised that it was desirable to have an annual
deadline for the self assessment requirements for the Committee and, in line
with the
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ACTION 15 (Adams/Barry) – That the Manager Service Audit
and Review prepare a draft submission to Council for consideration at the
next meeting which reflects the above discussions and recommends changes
where the current Charter does not meet the Model Charter. |
24/09 Future Meeting Dates
RESOLVED (Adams/Barry)
That
the following dates for the Audit Committee be endorsed:-
Thursday,
25 February 2010
Thursday,
27 May 2010
Thursday,
26 August 2010
Thursday,
7 October 2010 (Special Meeting to consider Audited Financial Reports)
Thursday,
25 November 2010
The meeting terminated at 8.30 pm.