audit, risk and improvement committee annual report · 2019-11-26 · audit, risk and improvement...

Audit, Risk and Improvement Committee Annual Report2018/19

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BLACKTOWN CITY COUNCIL AUDIT, RISK AND IMPROVEMENT COMMITTEE ANNUAL REPORT 2018/19

01AUDIT, RISK AND IMPROVEMENT COMMITTEE ANNUAL REPORT 2018/19 BLACKTOWN CITY COUNCIL

ContentsABOUT THIS REPORT 02

BLACKTOWN CITY COUNCIL 03

THE COMMITTEE 06

COMMITTEE REPORT CARD 10

INTERNAL AUDIT 11

EXTERNAL AUDIT 14

AUDIT COMMITTEE ACTIVITIES 15

This annual report documents the operation and activities of the Audit, Risk and Improvement Committee for Blacktown City Council from 1 July 2018 to 30 June 2019.

Blacktown City Council’s Audit, Risk and Improvement Committee provides Council with independent assurance and assistance on its control framework, risk management, governance and external reporting responsibilities.

There are 4 independent members on the Committee and 2 Councillors who are nominated by Council.

During the 2018/19 financial year, the Committee’s membership changed. Independent member Mr Alan Travers PSM completed his term of appointment in August 2018. Dr Philip Ross completed the term of his appointment in December 2018. Independent member Mr Dennis Banicevic was appointed in November 2018 and Mr Peter Jackson was appointed in April 2019.

All Committee member profiles are featured on page 6 of this report.

About this report

Blacktown International Sportspark Sydney.

02 BLACKTOWN CITY COUNCIL AUDIT, RISK AND IMPROVEMENT COMMITTEE ANNUAL REPORT 2018/19

Vision

Our vision for the City of Blacktown is ‘City of Excellence – diverse, dynamic and progressive’.

Mission

To provide our community with the best living and working environment through commitment to services.

Blacktown City is responsible for a wide range of functions and activities. We deliver services and provide facilities needed by our expanding, dynamic and diverse City.

Functions are split across 5 directorates, 1 project function, and the Chief Executive Officer’s unit:

Blacktown City Council

City Architect and Director

Transformational Design

City Assets

City Living

Corporate Services

Planning and Development

Project Director and Liaison


Organisational structure

Manager Access and Transport Management

Manager Plant and Energy

Manager Asset Planning and

Support

Manager Asset Construction

Manager Civil Asset

Maintenance

Manager s. 711 Projects

Manager Open Space

Maintenance

Manager Building Construction and

Maintenance

Manager Arts and Cultural

Development

Manager Community

Development

Manager Library Services

Manager Environment

Manager Key Venues

Manager Animal Rehoming Centre

Manager Community Law Enforcement

and Waste

Manager Kids’ Early Learning

Manager Asset Design Manager Recreational Planning and Design

Transformational Projects Program

TeamCity Architect Team

Chief Executive

Officer

Audit CommitteeExecutive Manager

Communications and Marketing

City Architect and Director

Transformational Design

Project Director and Liaison

Director City Living

Director City Assets

Director Planning and Development

Director Corporate Services

Manager Governance

and Corporate Service

Manager Strategic Planning

Chief Financial

Officer

Manager Development Policy

and Regulation

Executive Manager

People and Culture

Manager Building and Engineering

Assessment

Chief Safety Officer

Manager Development Assessment

Manager Corporate

Strategy and Economic

Development

Manager Land Information and Spatial

Services

Manager Developer

Contributions

Chief Digital Officer

Chief Property

Officer

Manager Events and

Sister Cities

Executive Secretariat

Executive Corporate

Counsel

Organisational structure

04 BLACKTOWN CITY COUNCIL AUDIT, RISK AND IMPROVEMENT COMMITTEE ANNUAL REPORT 2018/19 04 BLACKTOWN CITY COUNCIL AUDIT, RISK AND IMPROVEMENT COMMITTEE ANNUAL REPORT 2018/19

Values, leadership and guiding principlesBlacktown City Council is committed to ensuring our operations, service delivery and strategic planning show integrity. We strive at all times to be equitable, transparent and accountable. Our organisational values are teamwork, customer focus, innovation and safety.

Our community has respect for, and takes great pride in, their City. We advocate for our community’s interests and provide opportunities to involve them in creating a dynamic city. We support our community’s diversity by building relationships based on tolerance, fairness and respect.

SUSTAINABILITY LEADERSHIP INNOVATION

EQUITY PARTNERSHIP EXCELLENCE

Warrick Lane redevelopment in Blacktown CBD.Blacktown City Running Festival. Leo Kelly Blacktown Arts Centre.

Rev Up Riverstone Car Festival.


Mr Stephen Horne COMMITTEE CHAIR

Council’s Audit, Risk and Improvement Committee (formerly the Audit Committee) was established under section 428A of the Local Government Amendment (Governance and Planning) Act 2016 as an advisory committee of Council to provide independent assurance on risk management, control, governance and external accountability.

Council’s Internal Audit team reports to the Committee. The Committee’s charter requires the Chair to report to the governing body (Blacktown City Council) at least annually.

In 2018/19 the Blacktown City Audit, Risk and Improvement Committee met 5 times to review internal audit reports, the internal audit program, and audited financial statements for Blacktown City Council.

The Committee also met 3 times as advisors to analyse and comment on the Better Practice Review method, findings and recommendations.

Mr Horne joined the Committee in February 2017. He is an independent member of 9 audit risk and improvement committees, covering councils in NSW and Victoria, and large NSW Government bodies. After a 38-year career in the NSW Government, Mr Horne established himself as a professional director, consultant and trainer in 2015. His last 2 government roles were Chief Executive of the NSW Internal Audit Bureau, and the NSW Assistant Auditor-General (Performance Audit).

Mr Horne is also a recent National President and Chairman of the Board of the Institute of Internal Auditors (Aust), Chair of the Institute of Internal Auditors (IIA) Global Public Sector Internal Audit Guidance Committee, Independent Director for the Global Board of the IIA, and Chair of the National Public Sector Governance Committee of the Governance Institute of Australia.

A qualified company director, company secretary and internal auditor, Mr Horne holds a Bachelor of Business Studies, Graduate Certificate in Management Communication, Graduate Certificate in Fraud Control and a Certificate in Public Administration.

Committee profiles

The Committee


Mr Dennis Banicevic INDEPENDENT MEMBER

Mr Robert Lagaida PSMINDEPENDENT MEMBER

As a senior executive with over 26 years’ experience, Mr Lagaida has provided strategic advice and managed recurrent budgets of over $1.5 billion, capital projects of over $300 million per annum, as well as state-wide contracts with a total annual spend of $600 million. In recognition of his financial management contributions to the NSW public hospital system, Mr Lagaida was awarded a public service medal in the Australia Day 2018 Honours List.

Before retiring in 2017, he served for 5 years as Director, Finance, Commercial and Corporate Services at HealthShare NSW following 18 years with NSW Health in various financial, clinical and corporate management roles. Mr Lagaida has a Master of Commerce, a Bachelor of Economics and a Graduate Diploma in Information Systems. He is also a graduate and a member of the Australian Institute of Company Directors (GAICD) and a Fellow of the Certified Practising Accountants (FCPA).

Mr Lagaida was admitted to the NSW Government pre-qualified panel for Member of Audit and Risk Committee through the NSW Department of Finance.

He is a current board director of Arthritis NSW and NSW Local Government Procurement.

A local government specialist for over 40 years, Dennis Banicevic has provided audit and financial services to many councils including the City of Sydney, Blacktown, Sutherland, Parramatta, Wyong, Bankstown, Penrith, Wollongong, the Hills and Hornsby. He worked with PricewaterhouseCoopers for most of this time and held the position of Director-Local Government Services. Currently he runs a consulting business specialising in local government.

He has also worked with the Office of Local Government, Local Government NSW and the Institute of Municipal Management on projects including development of the code of accounting practice, financial training for councillors, and financial and operational performance indicators.

With his deep understanding of local government from both the management and political perspective, Mr Banicevic has also undertaken consulting exercises around financial sustainability, Internal control, accounting standards, asset management and long term financial planning.

Mr Banicevic was involved in advising councils on the NSW Government’s Fit for the Future initiative. He also provides a Financial Issues in Local Government course for councillors to help them better understand strategic issues around asset management, borrowing, budgeting, projections,understanding key indicators and risk.

Mr Banicevic was appointed to the Committee in November 2018. He holds a Bachelor of Economics and is a Member of the Institute of Chartered Accountants.


DEPUTY MAYOR

Councillor Tony BleasdaleOAM, JP

Mr Peter JacksonINDEPENDENT MEMBER

Councillor Tony Bleasdale OAM was first elected to Blacktown City Council in November 1996, and has served several terms. He was awarded the Order of Australia Medal (OAM) in the Queen’s 2010 Honours List for his service to the community as a supporter of charitable organisations, and for his contribution to local government in the Blacktown City area.

Councillor Bleasdale’s charity work includes Financial Supporter, Gynaecological Cancer Research Fund, Westmead Hospital; Supporter, Blacktown Relay for Life, Cancer Council NSW; Financial Contributor and Fundraiser, Schizophrenia Research

Institute; Sponsor, Construction Industry Breast Cancer Awareness Campaign (since 2005); Financial Supporter, Mount Druitt Town Rangers Soccer Club, since 2007; Financial Sponsor, Matt McFadyen, Antarctic Explorer, 2003. Councillor Bleasdale has also had a long involvement with the West Tradies Club at Mount Druitt.

Before becoming Managing Director of the major construction industry labour hire firm, National Contractors, Councillor Bleasdale was Group Industrial Relations Manager with the McNamara Group and Assistant Secretary at the Building Workers Industrial Union (BWIU).

Independent member of the Committee, Peter Jackson has had 44 years’ local government experience, including 9 years as General Manager, Hawkesbury City Council. He also served for 20 years as Director at Hurstville City and Hawkesbury City Councils. Previously he held roles with the NSW Ombudsman’s Office and the Independent Commission Against Corruption (ICAC).

Mr Jackson holds a Local Government Town Clerks Certificate, an Associate Diploma in Local Government Administration and a Bachelor of Business (Local Government).

Mr Jackson was appointed to the Committee in April 2019.


Councillor Kevin Gillies

Councillor Kevin Gillies has lived in Blacktown City for more than 40 years and was elected to Council in 2017. Councillor Gillies has a background in senior management and advocacy in the private and public sectors. He has worked in the printing and entertainment industries, the NSW health sector and in employer and employee organisations.

Roles include Printing and Kindred Industries Union Executive, a federal industrial relations advocate, and a human resources, risk and organisation consultant. At Western Sydney Area Health Service he was Director of

Human Resources and Risk as well as Director of Workforce as part of the management team responsible for the public hospitals and related health services in Auburn, Westmead, Cumberland, Blacktown, Mount Druitt, Nepean, Blue Mountains and Lithgow. Councillor Gillies was also responsible for mental health, multicultural health and drug and alcohol services.

For the past 42 years, Councillor Gillies has been actively involved with, and served on, executive committees for local sporting clubs, including rugby union, rugby league and little athletics.

Hundreds of people attend Blacktown City’s Lunar New Year celebrations each year.


Committee report card Committee charter Compliance

Committee meetings A quorum was maintained at every meeting.An invitation to attend meetings was extended to all directors and managers who were subject to an audit review.

Composition 4 independent members2 Councillors

Broad range of skills and experience Committee members are diverse with strong local government and commercial experience.

Functional separation The Committee has no executive powers.

Sufficient time allocated to tasks The Committee agenda allowed equal time to discuss all audit reviews, the strategic audit plan and the status of implementation of audit recommendations.

Consultation The Chair invited directors and managers to address audit reports; the Chief Executive Officer, Director Corporate Services, External Audit and Council internal audit officers attend meetings as advisors.

Probity Members declare conflicts of interest if they arise.

Risk management Enterprise Risk Management (ERM) framework review, including planning, implementation, policy and procedures are reported to the Committee.

Control framework Controls and policies and procedures are effectively reviewed through audit reports and briefings received.

External accountability The Committee provides input and feedback on the financial statements and control issues identified by the external auditor.

Compliance Compliance with legislative requirements is considered in every audit included in the 3-year strategic internal audit plan. Corporate Counsel maintains a register of Council’s legislative compliance requirements.

Internal audit There was 100% delivery of audit program.

External audit Financial statements are reviewed for compliance with local government regulatory requirements and resolution of audit findings.

Performance reviews Performance reviews provide independent insights into Blacktown City’s Better Practice Review initiative.


Internal Audit Internal auditing is a systematic, disciplined approach that provides independent, objective assurance designed to add value to Blacktown City’s operations. Internal auditing helps us achieve our objectives by evaluating our risk management, control and governance.

The Coordinator Audit and Risk is responsible for internal audit activities. Audits are completed in accordance with the International Standards for the Professional Practice of Internal Auditing (Standards) issued by the Institute of Internal Auditors. Although the coordinator is an administrative position within a division of Blacktown City, the coordinator’s independence is assured through a direct reporting relationship to the committee and, through the committee, to the Chief Executive Officer.

To achieve Council’s business objectives, Internal Audit is authorised to direct a comprehensive program of reviews, previews, consultancy advice, evaluations, appraisals, assessments and investigations of functions, processes, controls and governance frameworks. All Internal Audit members have authority for full, free and unrestricted access to all functions, property, personnel, records, information, accounts, files, monies and other documentation that are needed to do their work, unless there is a restriction imposed by legislative requirements such as the Public Interest Disclosure Act 2013.

A charter governs the Internal Audit function at Blacktown City. The charter, which is reviewed every 4 years, outlines the purpose, authority and responsibility of management and the internal audit team. Auditors present their findings and recommendations to the Committee in an audit report. To monitor the effectiveness of the control environment, the Audit, Risk and Improvement Committee reviews the reports. Directors and Managers are also invited to discuss improvement opportunities.

Acting on Internal Audit report recommendations is a critical element of an effective internal control framework. Based on Internal Audit reports provided to the Committee during 2018/19, the Committee made 128 audit recommendations to Council.

Our internal database tracks status of recommendations. At each Committee meeting, Committee members monitor the status of action items.

You can view the minutes from our Audit, Risk and Improvement Committee meetings on Council’s website: www.blacktown.nsw.gov.au/About-Council/How-we-work/Audit-Committee


http://www.blacktown.nsw.gov.au/About-Council/How-we-work/Audit-Committee



Audit Committee register action status 2018/19

Directorate CompletedOn

targetDeferred

target Overdue TotalOn

target

City Assets 12 5 2 0 19 90%

Planning and Development* 0 0 0 0 0 N/A

Corporate Services 22 52 4 1 79 93 %

City Architect and Director Transformation and Design 13 8 0 0 21 100%

City Living 8 1 0 0 9 100%

Totals 55 66 6 1 128 94%

* There were no audits completed within the Planning and Development Directorate during 2018/19

The above table shows action items for the 2018/19 year and whether items are on target.

Definitions Completed: Actions completed.

On target: Actions completed within original target timeframes.

Deferred target: Actions extended past their original target date but completed within deferred target date timeframe.

Overdue: Actions not completed within the agreed timeframe but subsequently completed.

Audit Committee performance Committee members’ participation in 2018/19 meetings

Name Role Eligible Attended

Stephen Horne Chair 6 6

Allan Travis Independent 1 1

Robert Lagaida Independent 6 5

Dennis Banicevic Independent 3 3

Peter Jackson Independent 2 2

Tony Bleasdale OAM Councillor 6 4

Kevin Gillies Councillor 6 5

Woodcroft Neighbourhood Centre opened to the community in June 2019.


Committee business and standing reports

DateNumber of audit reports received

Follow-up reports received

Standing reports received

28 August 2018 4 2 2

3 October 2018 1 0 0

21 November 2018 3 0 2

10 April 2019 3 1 2

26 June 2019 2 1 2

Follow-up report: Where the Committee sought additional information on a particular audit report or process.

Standing report: Information presented to the Committee at each meeting (e.g. audit progress report, status of the current audit plan, and status and risk assessment of major Council projects).

NAIDOC Week celebrations in Blacktown City attract hundreds of people each year. The annual Blacktown City Festival.


External Audit The Committee receives an annual report from the external auditor (Audit Office of New South Wales) on the status of our financial statements. Representatives from the Audit Office attend Committee meetings as advisors.

In October 2018, the Committee considered a report from the Audit Office and discussed the audited financial statements and audit coverage. The Committee also received and endorsed actions on control matters identified during the annual financial audit.

Council hosted 11 community festivals in 2018/19 for the local community to enjoy.


Risk management Council has a risk-based Strategic Audit Plan (SAP) which was developed by an independent contractor with input from Council management and the Committee.

Audit findings are given an appropriate risk ranking. Through the standing report and status of implementation of Audit recommendations, the Committee tracks the implementation of recommendations made by Audit to mitigate risks which have been identified and reported.

Council has an effective governance framework and in 2018/19 developed a project scope of work which aims to further strengthen our Enterprise Risk Management (ERM) framework.

Control framework To obtain assurance that internal controls were working effectively and appropriate policies and procedures were in place, the Committee reviewed the following Audit reports: • People and Culture • Key Venues (aquatic and leisure centres)• inventory management • rates, charges and debtor management • Roads and Maritime Services’ DRIVES• capital works – funding • capital works – delivery • transformational projects

• fraud and corruption risk assessment• segregation of duties • risk management assessment• property acquisitions and disposals • fees and charges – waivers or non-charging.

Completion of the SAP, implementation of Audit recommendations, and managers’ attendance at meetings, provides assurance to the Committee that Council is committed to a sound and effective internal control framework.

The Committee also reviewed a standard report at each meeting on the status of Council’s transformational projects. This included an analysis of project risks.

The City Architect and Director Transformational Design attended Committee meetings to provide an update.

External accountability and external audit The Committee commented on the financial statements and audit program of the Audit Office of New South Wales.

The Committee reviewed the report from the external auditors and endorsed actions on systems and control weaknesses identified from the Audit of the financial statements.

Legislative compliance Each internal audit includes a compliance review with the legislation that applies to the service area.

Audit Committee activities


Internal Audit Blacktown City conducts internal reviews for core operational, financial and compliance functions. Audit reviews which require specialist skills (e.g. information technology) are outsourced.

Internal Audit’s work is based on:• the accounting professional and ethical standards issued by the Australian

Accounting Professional Ethical Standards Board• the International Professional Practices Framework for the Performance of Auditing

issued by the Institute of Internal Auditors.

The Committee reviews audit reports and endorses the recommendations as appropriate. They track and report the status of audit report action items to executive and management. The Committee also provides an opportunity for Council, the Chief Executive Officer, senior management, and internal and external audit teams to communicate.

Better practice reviews In 2018/19 the Committee considered 3 Better Practice Reviews:• Arts and Cultural Development• Civil Asset Maintenance• Civil Asset Construction.

They also independently verified the review methodology and advised and commented on the findings and recommendations.

Compliance The Committee reviewed and endorsed Internal Audit’s actions on annual compliance reviews for Roads and Maritime Services’ DRIVES.

Corporate business system Internal Audit continued to review Council’s Corporate Business System (CBS) and assisted management to effectively operate it.

Following completion of the post-implementation review of the CBS, the Committee signed off on the CBS status reports.

Transformational projects In 2018, the Committee received the inaugural standing report on transformational projects’ risks and the status of mitigation strategies.

Transformational Projects are ‘breakthrough’ areas identified in Council’s community strategic plan, Our Blacktown 2036.

Blacktown City’s 8 transformational projects

Blacktown International Sportspark Masterplan and International Centre of Training Excellence

Warrick Lane redevelopment

A university campus for Blacktown Health precinct

1

3

2

4


INTERNAL AUDIT REVIEWS – INTERNAL CONTROLS

70%

EXTERNAL ACCOUNTABILITY –

YEAR‑END FINANCIAL REVIEW

10%

2018/19 activities

Council accommodation Riverstone Town Centre Masterplan

Animal Rehoming Centre St Bartholomew’s Cemetery

65

7 8

COMPLIANCE REVIEWS

10%

FOLLOW‑UP OF AUDIT ACTIONS

10%


62 Flushcombe Road Blacktown NSW 2148

PO Box 63 Blacktown NSW 2148

Ph: 02 9839 6000 Fax: 02 9831 1961

Email: [email protected] Website: www.blacktown.nsw.gov.au

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audit, risk and improvement committee annual report · 2019-11-26 · audit, risk and improvement...

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