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AUDIT COMMITTEE

NOTICE OF MEETING

To: Presiding Member Peter Brass

Members

Peter RobertsonPaula DaviesCr Malcolm HerrmannCr John Kemp

Notice is hereby given pursuant to the provisions under Section 88 of the LocalGovernment Act 1999 that the next meeting of the Audit Committee will be held on:

Monday 31 October 20166.00pm

63 Mt Barker Road, Stirling

A copy of the Agenda for this meeting is supplied under Section 88 of the Act.

Meetings of the Council and Committees are open to the public and interestedmembers of this community are welcome to attend.

Andrew AitkenChief Executive Officer

AUDIT COMMITTEE

AGENDA FOR MEETINGMonday 31 October 2016

6.00pm63 Mt Barker Road, Stirling

ORDER OF BUSINESS

Council VisionNurturing our unique place and people

Council MissionDelivering activities and services which build a resilient community, sustain our built andnatural environment and promote a vibrant economy

1. COMMENCEMENT

2. APOLOGIES/LEAVE OF ABSENCE

2.1. Apology

2.2. Leave of Absence

2.3. Absent

3. MINUTES OF PREVIOUS MEETINGS

3.1. Audit Committee Minutes – 4 October 2016

RecommendationThat the minutes of the Audit Committee meeting held on 4 October 2016, assupplied, be confirmed as an accurate record of the proceedings of that meeting.

Audit CommitteeAGENDA

4. DELEGATION OF AUTHORITYThe Audit Committee operates in accordance with the relevant sections of the LocalGovernment Act 1999, and its Terms of Reference.

5. DECLARATION OF INTEREST BY MEMBERS OF THE COMMITTEE

6. OFFICER REPORTS

6.1. Action Report and Work Plan Update

6.2. 2015-16 Draft Annual Report

6.3. Procurement Policy

6.4. Audit Committee Self Assessment

6.5. Debtor Reporting

6.6. Final Audit Completion Report 2016

6.7. Internal Audit Quarterly Update

6.8. Election of Audit Committee Presiding Member

6.9. Risk Management Plan Update

6.10. Internal Financial Control Update 2015-16

6.11. 2017 Audit Committee Meeting Dates

7. CHAIRPERSON’S REPORT

8. CONFIDENTIAL REPORTSNil

9. NEXT MEETINGThe next Audit Committee meeting will be held on a date to be determined by theAudit Committee.

10. CLOSE MEETING

ADELAIDE HILLS COUNCIL AUDIT COMMITTEE

MINUTES OF MEETING 4 OCTOBER 2016 63 MT BARKER ROAD, STIRLING

Presiding Member ______________________________________________________________________ 31 October 2016

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Presiding Member: Peter Brass Members: Peter Robertson Paula Davies Cr Malcolm Herrmann Cr John Kemp In attendance: Andrew Aitken Chief Executive Officer Terry Crackett Director Corporate Services Paul Francis Financial Controller Lachlan Miller Executive Manager Governance & Risk Auditors Geoff Edwards Engagement Partner, BDO Linh Dao Engagement Manager, BDO

1. Commencement The meeting commenced at 5.05pm.

2. Apologies Nil

3. Previous Minutes

3.1. Audit Committee Meeting– 15 August 2016 Moved Paula Davies S/- Cr John Kemp

38

That the minutes of the Audit Committee meeting held on 15 August 2016 as distributed, be confirmed as an accurate record of the proceedings of that meeting. Carried




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4. Delegation of Authority In accordance with the Audit Committee Terms of Reference, the Committee has no delegated decision-making powers. The Recommendations in Items 6.2 and 6.3 are to be submitted to Council for adoption.

5. Declaration of Interest by Members of the Committee Nil

6. Officer Reports

6.1. Action Report & Work Plan Update Moved Cr Malcolm Herrmann S/- Paula Davies

39

The Audit Committee resolves: 1. That the report be received and noted 2. That the status of the Action Report and Work Plan be noted Carried

6.2. 2015/16 Budget Review 4 Moved Peter Robertson S/- Cr Malcolm Herrmann

40

That the Audit Committee: 1. Receives and notes the report.

2. Notes that Operating Budget variations presented in Budget Review 4 for the

period ending 30 June 2016 totalled $(639)k unfavourable and provide for an adjusted Operating Deficit for the 2015/16 year of $(323)k.

3. Notes that Capital Budget variations provided for in Budget Review 4 for the

period ending 30 June 2016 totalling $3,485k are to be carried forward from 2015/16 and included in the 2016/17 Capital program.

4. Advises Council that it has reviewed Budget Review 4 and recommends its

adoption. Carried The Audit Committee met with the External Auditors in camera (i.e. without the Administration present) from 5.32 – 5.51pm.




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6.3. 2015/16 Draft Annual Financial Statement Moved Peter Robertson S/- Paula Davies

41

The Audit Committee resolves: 1. That the report be received and noted. 2. That in accordance with Section 126(4)(a) of the Local Government (Financial

Management) Regulations 1999, the Audit Committee advises Council that it has reviewed the annual financial statements of the Council for the financial year ended 30 June 2016, and is satisfied that they present fairly the state of affairs of the Council

3. For the provision to the Audit Committee out of session of the draft Management Representation Letter.

4. For the provision of advice to the Audit Committee out of session of any adjustments to the Annual Financial Statements exceeding the External Auditor’s materiality threshold.

5. That the Presiding Member of the Audit Committee be authorised to sign the Certificate of Auditor Independence in accordance with the requirements of Regulation 22(3) Local Government (Financial Management) Regulations 2011.

Carried

7. Next Meeting The next ordinary meeting of the Audit Committee will be held at 6.00pm on Monday, 31 October 2016 , at 63 Mount Barker Road, Stirling.

8. Close Meeting The meeting closed at 6.50pm.

ADELAIDE HILLS COUNCILAUDIT COMMITTEE MEETING

Monday 31 October 2016AGENDA BUSINESS ITEM

Item: 6.1

Originating Officer: Lachlan Miller, Executive Manager Governance & Risk

Responsible Director: Terry Crackett, Director Corporate Services

Subject: Action Report, 2016 Work Plan Update and Adoption of 2017Work Plan

For: Decision

SUMMARY

A formal Audit Committee Action Report is maintained to record the items requiring ‘actioning’ thatresult from each of the Audit Committee meetings.

The Audit Committee Work Plan assists the Committee members and staff in scheduling bothdiscussion and reports to ensure appropriate coverage of the Committee functions over the 12month period.

RECOMMENDATION

The Audit Committee resolves that the:

1. Report be received and noted2. Status of the Action Report and Work Plan be noted3. 2017 Work Plan be adopted

1. GOVERNANCE

Strategic Management Plan/Council Policy

Goal 4 A Recognised Leading PerformerKey Issue 4.1 LeadershipKey Action 4.1.4 Meet legislative, regulatory and good governance responsibilities and

obligations

Adelaide Hills Council – Audit Committee Meeting 31 October 2016Action Report, 2016 Work Plan Update and Adoption of 2017 Work Plan

Legal Implications

Section 126 of the Local Government Act 1999 sets out the functions of an audit committee.Management of Committee’s action items and work plan facilitates the achievement ofthese functions.

Risk Management Implications

The management of action items and the work plan will assist in mitigating the risk of:

Poor governance practices occur which lead to a loss of stakeholder (i.e. customerand regulator) confidence and/or legislative breaches.

Inherent Risk Residual Risk Target RiskExtreme (5C) Medium (3D) Medium (3D)

Financial and Resource Implications

There are no direct financial or resource implications from this item.

Customer Service and Community/Cultural Implications

Not applicable.

Environmental Implications

Not applicable.

Engagement/Consultation with Committee, Regional Subsidiary, Advisory Groupand Community

Consultation has occurred internally with Action and Work Plan responsible officers.

2. BACKGROUND

Action Report

The Action List tracks the implementation of resolutions of the Audit Committee.

Work Plan

The functions of the Audit Committee are set out in part 7 (Role) of the Committee Termsof Reference.

A Work Plan has been developed to assist the Committee members and staff in schedulingdiscussion and reports to ensure appropriate coverage of the functions over the 12 monthperiod.

The Audit Committee adopted a Work Plan for 2016 at its 16 November 2015 meeting.

Adelaide Hills Council – Audit Committee Meeting 31 October 2016Action Report, 2016 Work Plan Update and Adoption of 2017 Work Plan

3. ANALYSIS

Action Report

There is currently one outstanding (in progress) item on the Action Report (Appendix 1)which relates to the Procurement Policy. An update has been provided on the ActionReport and the Policy is included in this meeting’s agenda for recommendation to Council’sStrategic Planning & Development Policy Committee for adoption.

Work Plan

As per the 2016 Audit Committee Work Plan (Appendix 2), the following items arescheduled for the November (this) meeting:

Item CommentaryBudget Review 1 Will be provided at the February 2017

meeting (post-Council approval)Draft Annual Report See Agenda Item 6.2Internal Financial Controls Update See Agenda Item 6.10Risk Management Update See Agenda Item 6.9Internal Audit Quarterly Update See Agenda Item 6.7Balance date audit management letter(Completion Report)

See Agenda Item 6.6

Audit Committee Self-Assessment See Agenda Item 6.4Work Plan and Reporting Schedule See Agenda Item 6.1Audit Committee Meeting Dates See Agenda Item 6.11

A proposed 2017 Audit Committee Work Plan is attached (Appendix 3) for the AuditCommittees consideration and adoption.

4. OPTIONS

The Committee has the following options:

I. To note the status of the Action Report and Work Plan as presented and to adopt theschedule for 2017.

II. To alter or substitute elements of the Action Report and/or Work Plan/s.

5. APPENDICES

(1) Audit Committee Action Plan(2) 2016 Audit Committee Work Plan(3) Proposed 2017 Audit Committee Work Plan

Appendix 1Audit Committee Action Plan

MeetingDate

Item Topic Action ResponsibleOfficer

Progress Date ofUpdate

Due Date Comment

17-Aug-15 6.12 Procurement Policy In-principle support for the draft Procurement Policy - prepare report for Council Lachlan Miller In Progress 26/09/2016 Oct-16 Procurement policy review completed and scheduled forAudit Committee final endorsement on 31 October.Procedure finalisation contingent on organisational changeprocess.

4/10/2016 6.2 2015/16 Budget Review 4 4. Advises Council that it has reviewed Budget Review 4 and recommends itsadoption.

Paul Francis Completed 26/10/2016 Oct-16 BR4 considered and approved by Council at its 25 OctoberOrdinary meeting.

4/10/2016 6.3 2015/16 Draft Annual FinancialStatement

3. For the provision to the Audit Committee out of session of the draftManagement Representation Letter.

Paul Francis Completed 26/10/2016 Oct-16 Distributed to Audit Committee Members on 26 October


4. For the provision of advice to the Audit Committee out of session of anyadjustments to the Annual Financial Statements exceeding the External Auditor’smateriality threshold.

Paul Francis Completed 26/10/2016 Oct-16 No changes to report. Any changes will be reported inconjunction with the Benefits Realisation Report.


5. That the Presiding Member of the Audit Committee be authorised to sign theCertificate of Auditor Independence in accordance with the requirements ofRegulation 22(3) Local Government (Financial Management) Regulations 2011.

Paul Francis Completed 26/10/2016 Oct-16 Certificate of Auditor Independence signed on 4 October2016

ADELAIDE HILLS COUNCIL AUDIT COMMITTEE - ACTION REPORT

P:\AHC\Finance & Corporate Services\Governance\Audit Committee\Agenda PDFs\161031 31 October 2016\161031 Item 6.1 AHC Audit Committee Action Report - Attach 1.xlsx Page 1

Appendix 22016 Audit Committee Work Plan

ADELAIDE HILLS COUNCIL AUDIT COMMITTEE2016 Work Plan and Reporting Schedule

2016Feb May Aug Oct Nov

(Woodside)Long term financial plan forecast economic indicators AnnualDraft Annual Business Plan AnnualBudget Review 1 AnnualBudget Review 2 AnnualBudget Review 3 AnnualBudget Review 4 (s10) AnnualEnd of financial year reporting timetable AnnualEnd of financial year update AnnualFinal Annual Financial Statements (incl management representation letter) AnnualDraft Annual Report Annual

Placement of Council’s insurance portfolio (for noting) AnnualInternal Financial Controls update Bi-annualRisk Management Plan update QuarterlyResults of LGA Risk Management Review AnnualImplementation of LGA Risk Management Review Action Plan Bi-annual

Internal Audit quarterly update QuarterlyInternal audit reports As requiredImplementation of internal audit actions progress report Bi-annualInternal Audit Plan review Annual

External audit interim letter AnnuallyImplementation of external audit actions progress report Bi-annualExternal Audit Plan review Annual Provided in FebMeeting attendance by external auditors Annual in cameraReview of auditor independence and legislative compliance AnnualBalance date audit management letter (Completion Report) Annual

Whistleblowing Policy review Triennial next review 2019

Audit Committee self assessment review AnnualWhistleblowers protection procedure review Biennial N/AChairperson’s report AnnualWork Plan and Reporting Schedule AnnualAudit Committee Meeting Dates AnnualService Improvement Benefits Realisation Report Bi-annualTerms of Reference Annual

Terms of Reference

External Audit

Other Business

Financial Reporting

Internal Audit

Internal Control and RiskManagement

Appendix 3Proposed 2017 Audit Committee Work Plan

ADELAIDE HILLS COUNCIL AUDIT COMMITTEE2017 Work Plan and Reporting Schedule

2017Feb May Aug Oct Nov

(Woodside)Long term financial plan forecast economic indicators AnnualDraft Annual Business Plan AnnualBudget Review 1 (for information) AnnualBudget Review 2 AnnualBudget Review 3 AnnualBudget Review 4 (s10) AnnualEnd of financial year reporting timetable AnnualEnd of financial year update AnnualFinal Annual Financial Statements (incl management representation letter) AnnualDraft Annual Report Annual

Placement of Council’s insurance portfolio (for noting) AnnualInternal Financial Controls update Bi-annualRisk Management Plan update QuarterlyResults of LGA Risk Management Review AnnualImplementation of LGA Risk Management Review Action Plan Bi-annual

Internal Audit quarterly update QuarterlyInternal audit reports As requiredImplementation of internal audit actions progress report Bi-annualInternal Audit Plan review Annual

External audit interim letter Biannual verbal letterImplementation of external audit actions progress report Bi-annualExternal Audit Plan review AnnualMeeting attendance by external auditors Annual in cameraReview of auditor independence and legislative compliance AnnualBalance date audit management letter (Completion Report) Annual draft final

Whistleblowing Policy review Triennial next review 2019

Audit Committee self assessment review AnnualWhistleblowers protection procedure review Biennial N/AChairperson’s report AnnualWork Plan and Reporting Schedule AnnualAudit Committee Meeting Dates AnnualService Improvement Benefits Realisation Report Bi-annualTerms of Reference Annual

Terms of Reference

External Audit

Other Business

Financial Reporting

Internal Audit

Internal Control and RiskManagement


Monday 31 October 2016

Item: 6.2

Originating Officer: Director Community & Customer Service

Responsible Director: Director Community & Customer Service

Subject: 2015-16 Draft Annual Report

For: Decision

SUMMARY

The purpose of this report is to provide the draft 2015-16 Annual Report for the Audit Committee’sconsideration and advice.

RECOMMENDATION

The Audit Committee resolves that the:

1. Report be received and noted.2. Draft 2015-16 Annual Report, as contained in Appendix 1, be endorsed – recognising the

need for further editing and formatting of the final document.

1. GOVERNANCE


The Council’s Strategic Plan recognises the Council’s commitment to open, participative andtransparent decision making. The production of an Annual Report is fundamental todemonstrating the transparency of local government. The Strategic Plan also recognises theAnnual Report as the primary mechanism for reporting on achievements.

Legal Implications

Section 131 of the Local Government Act 1999 requires Councils to produce AnnualReports.

Various sections of the Act and associated Regulations set out the particulars of what mustbe contained in the Report.

Adelaide Hills Council – Audit Committee Meeting 31 October 20162015-16 Draft Annual Report


The review of the draft Annual Report will assist in mitigating the risk of non-compliancewith statutory requirements leading to a loss of confidence in the Council.

Inherent Risk Residual Risk Target RiskHigh (4C) Medium (3C) Medium (3C)


There are no financial implications arising from considering the draft Annual Report.Obviously though, any changes to the financial report elements of the Annual Reportchange the outcome reported for 2015-16.

Production of the annual report has involved mainly existing staff resources. A creativedesign consultant was engaged to produce the final document and a small number of hardcopies will be printed.


Not applicable.


Not applicable.


Engagement with the community is not applicable for the development of the AnnualReport. Naturally, the Annual Report itself, once finalised, is one way of communicating keyachievements and Council performance to the community.

2. BACKGROUND

The draft Annual Report has been prepared with an emphasis on reporting achievementsagainst the Council’s Strategic Plan, Corporate Plan and the 2015-16 Annual Budget andBusiness Plan. The financial statements are also incorporated in the Annual Report.

The role of the Audit Committee, pursuant to its Terms of Reference, is to:

3.1.1 (part) Review and provide advice to Council on the degree to which the annualfinancial statements present fairly the state of affairs of the Council

3.1.2 The committee shall monitor the integrity of the financial statements of theCouncil, including its annual report, reviewing significant financial reporting issuesand judgements which they contain.

Adelaide Hills Council – Audit Committee Meeting 31 October 20162015-16 Draft Annual Report

It should be noted that the Audit Committee considered the draft financial statements at itsmeeting held on 4 October 2016. Following consideration of the matter, the Committeeresolved as follows:

1. That the report be received and noted.2. That in accordance with Section 126(4)(a) of the Local Government (Financial

Management) Regulations 1999, the Audit Committee advises Council that it hasreviewed the annual financial statements of the Council for the financial year ended30 June 2016, and is satisfied that they present fairly the state of affairs of the Council

3. For the provision to the Audit Committee out of session of the draft ManagementRepresentation Letter.

4. For the provision of advice to the Audit Committee out of session of any adjustmentsto the Annual Financial Statements exceeding the External Auditor’s materialitythreshold.

5. That the Presiding Member of the Audit Committee be authorised to sign theCertificate of Auditor Independence in accordance with the requirements of Regulation22(3) Local Government (Financial Management) Regulations 2011.

3. ANALYSIS

The draft Annual Report, contained in Appendix 1, is largely self-explanatory in terms of theCouncil’s achievements and activities during the reporting year.

The Report provides a summary of achievements against the commitments foreshadowedin the previous Annual Report, as well as highlights of other achievements againstcommitments in the 2015-16 Annual Business Plan and Budget.

Much of the additional content in the Annual Report addresses statutory requirements,particularly those set out in Section 131 and Schedule 4 of the Local Government Act 1999.

4. OPTIONS

The Audit Committee may resolve whether or not to endorse the draft Annual Reportand/or provide advice regarding its content.

Should the Committee endorse the Annual Report as presented, the next step will be toprogress it to the Council for consideration.

Should any advice be provided, it will be considered by staff and any appropriate changeswill be made prior to consideration by the Council.

5. APPENDICES

(1) Draft 2015-16 Annual Report

Appendix 12015-16 Draft Annual Report



Item: 6.3



Subject: Procurement Policy

For: Decision

SUMMARY

To seek the Audit Committee’s in-principle support of the draft Procurement Policy and torecommend to Council’s Strategic Planning & Development Policy Committee (SPDPC) to adopt therevised policy.

RECOMMENDATION

The Audit Committee resolves:

1. That the report be received and noted2. To recommend to the Council’s Strategic Planning & Development Policy Committee to

adopt the revised Procurement Policy as contained in Appendix 1

1. GOVERNANCE



obligations

Goal 4 A Recognised Leading PerformerKey Issue 4.1 Managing Risk and ResponsibilityKey Action 4.1.4 Procure goods and services that provide value for money

The current Procurement and Purchasing Policy was adopted by the SPDPC at its 28 May2013 meeting.

Adelaide Hills Council – Audit Committee Meeting 31 October 2016Procurement Policy

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Legal Implications

Section 49 of the Local Government Act 1999 sets out the legislative requirements inrelation to contracts and tender policies. The key elements are as follows:

(a1) A council must develop and maintain procurement policies, practices andprocedures directed towards—

(a) obtaining value in the expenditure of public money; and

(b) providing for ethical and fair treatment of participants; and

(c) ensuring probity, accountability and transparency in procurementoperations.

(1) Without limiting subsection (a1), a council must prepare and adopt policieson contracts and tenders, including policies on the following:

(a) the contracting out of services; and

(b) competitive tendering and the use of other measures to ensure thatservices are delivered cost-effectively; and

(c) the use of local goods and services; and

(d) the sale or disposal of land or other assets.

(2) The policies must—

(a) identify circumstances where the council will call for tenders for thesupply of goods, the provision of services or the carrying out of works,or the sale or disposal of land or other assets; and

(b) provide a fair and transparent process for calling tenders and enteringinto contracts in those circumstances; and

(c) provide for the recording of reasons for entering into contracts otherthan those resulting from a tender process; and

(d) be consistent with any requirement prescribed by the regulations.


The revision of the Procurement Policy will assist in mitigating the risk of:

Poor procurement practices leading to sub-optimal procurement outcomes, breach oflegislation/policy and stakeholder concern.

Inherent Risk Residual Risk Target RiskExtreme (5C) High (4C) Medium (2C)

Note: the mitigation of the above risk is contingent on the implementation of a broadprocurement framework consisting of the policy and procedural guidance, tools andsystems and procurement controls including templates, registers and auditing regimes.


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Expenditure on goods and services currently accounts for approximate 41% of Counciloperating expenditure, and as such it is imperative that procurement is undertaken in aprudent, efficient and accountable manner.

Procurement activities are generally undertaken by individual officers with procurementdelegations as part of their substantive duties.


There is a high expectation that Council has appropriate processes in place to undertakeprocurement in a prudent, efficient and accountable manner that complies with legislativerequirements.


The proposed Procurement Policy contains a Procurement Principle regardingEnvironmental Protection which seeks to:

• promote the purchase of environmentally friendly goods and services that satisfyvalue for money criteria;

• align the Council’s procurement activities with principles of ecological sustainability;

• purchase recycled and environmentally preferred products where possible;

• integrate relevant principles of waste minimisation and energy;

• foster the development of products and services which have a low environmentalimpact;

• provide leadership to business, industry and the community in promoting the use ofenvironmentally sensitive goods and services.


An earlier draft of the Procurement Policy was considered by the Audit Committee inAugust 2015.

The most significant change was the broadening of the “Encouragement of thedevelopment of competitive local business and industry” principle to “SustainableProcurement”.

2. BACKGROUND

At its 29 April 2013 meeting, the Audit Committee resolved to endorse the revisedProcurement and Purchasing Policy and to recommend it to Council for adoption.

The Committee also recommended that a further review of the Policy as part of the internalaudit engagement scheduled for the second half of 2013, and again in 2014 be undertaken,with a view to increasing thresholds if internal controls are demonstrated to be workingsatisfactorily with the new Open Office application.


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An internal audit of procurement was undertaken in May 2014 (finalised in July 2014) and,as previously reported to the Audit Committee, identified a number of control weaknessesregarding policy and procedure, use of preferred suppliers and tender processes.

A project was undertaken in June and July 2016 to review the current ProcurementFramework with a view to addressing the deficiencies identified in the internal auditthrough the creation of policy and procedural guidance, establishment of a series oftemplates, development of registers, investigation of procurement software (such asvendor and quoting management systems) and assessment of the resources required tooperate an effective and efficient procurement function.

3. ANALYSIS

The revised Procurement Policy (Appendix 1) is considered to be a key element of theoverall Procurement Framework as its sets both the tone and the overall approach toprocurement within the Council.

The revised Policy is fundamentally differentiated from its predecessor in the followingthree ways:

it removes the majority of the procedural content from the policy with the intentionfor the development of a suite of procurement procedures (i.e. direct purchasing,quotations, panels, procurement monitoring and review, etc);

it clearly articulates the procurement principles that an officer must have regard towhen undertaking a procurement activity;

it recognises the ability to use procurement activities to further the economic, socialand environmental outcomes that are contained in various Council policies andstrategies.

As part of the Procurement Framework project, the resourcing dedicated to theprocurement function is being reviewed and this will determine whether Council continuesto progresses with its largely decentralised model or whether a more centralised approachis adopted.

Following the outcome of the resourcing analysis, the intention is to finalise the suite ofprocedures and these, along with the Policy, will be released as one package with a trainingcomponent

4. OPTIONS

The Audit Committee has the following options:

I. To recommend to the SPDPC to adopt the draft Procurement Policy, with or withoutamendment (Recommended);

II. To determine recommend to the SPDPC to adopt the draft Procurement Policy at thistime.


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Should the Committee identify the need for substantial amendments to the revised Policy,it is recommended that they be referred to staff for review to allow for analysis of theimplications of the amendments, prior to the matter being brought back to the SPDPC forfurther consideration.

5. APPENDICES

(1) Draft Procurement Policy – October 2016

Appendix 1Draft Procurement Policy – October 2016

COUNCIL POLICY

POLICY NAME

Policy Number: GOV-08

Responsible Department(s): Governance & Risk

Relevant Delegations: (To be updated administratively)

Other Relevant Policies: (To be updated administratively)

Relevant Procedure(s): (To be updated administratively)

Relevant Legislation: (To be updated administratively)

Policies and Procedures Supersededby this policy on its Adoption: (To be updated administratively)

Adoption Authority: (To be updated administratively)

Date of Adoption: (To be updated administratively)

Effective From: (To be updated administratively)

Minute Reference for Adoption: (To be updated administratively)

Next Review: (To be updated administratively)

Procurement Page 2

PROCUREMENT

1. INTRODUCTION

1.1 In compliance with Section 49 of the Local Government Act 1999 (Act), the AdelaideHills Council (Council) should refer to this policy (Policy) when acquiring goods andservices.

1.2 Section 49 of the Act requires Council to prepare and adopt policies on contractsand tenders on:

1.2.1 the contracting out of services; and

1.2.2 competitive tendering and the use of other measures to ensure thatservices are delivered cost-effectively; and

1.2.3 the use of local goods and services.

1.3 Furthermore, Section 49 (a1) of the Act requires Council to develop and maintainpolicies, practices and procedures directed towards:

1.3.1 obtaining value in the expenditure of public money; and

1.3.2 providing for ethical and fair treatment of participants; and

1.3.3 ensuring probity, accountability and transparency in all operations.

1.4 This Policy seeks to:

1.4.1 define the methods by which Council can acquire goods and services;

1.4.2 demonstrate accountability and responsibility of Council to ratepayers;

1.4.3 be fair and equitable to all parties involved;

1.4.4 enable all processes to be monitored and recorded; and

1.4.5 ensure that the best possible outcome is achieved for the Council.

2. POLICY OBJECTIVE

Council aims to achieve advantageous procurement outcomes by:

2.1 enhancing value for money through fair, competitive, non-discriminatoryprocurement;

2.2 promoting the use of resources in an efficient, effective and ethical manner;

2.3 making decisions with probity, accountability and transparency;

2.4 advancing and/or working within Council’s economic, social and environmentalpolicies;

Procurement Page 3

2.5 providing reasonable opportunity for competitive local businesses to supply toCouncil;

2.6 appropriately managing risk; and

2.7 ensuring compliance with all relevant legislation.

3. SCOPE

3.1 This Policy covers the required conduct for all procurement activities associatedwith the acquisition of Goods, Works or Services of any value by the Council. Thisincludes tendering arrangements and the contracting of services and applies to allCouncil staff.

3.2 However, this Policy does not cover:

3.2.1 non-procurement expenditure such as sponsorships, grants, fundingarrangements, donations and employment contracts; or

3.2.2 the disposal of land and other assets owned by the Council; or

3.2.3 the purchase of land by the Council.

4. PROCUREMENT PRINCIPLES

Council must have regard to the following principles in its acquisition of goods and services:

4.1 Encouragement of open and effective competition

4.1.1 Open and effective competition is the central operating principle inpursuit of the best outcome.

4.1.2 Openness requires procurement actions that are visible to the Council,ratepayers and suppliers/contractors. The probability of obtaining thebest outcome is generally increased in a competitive environment.

4.1.3 Council will create effective competition by maximising the opportunitiesfor firms to do business with Council through the selection ofprocurement methods suited to market conditions, the nature of theprocurement, and the objectives of the procurement overall.

4.1.4 Council will offer and provide feedback, where sought, to unsuccessfulbidders.

4.2 Obtaining Value for Money

4.2.1 Value for money involves obtaining goods, works or services for theCouncil that best meet the end user’s needs at the lowest total cost withthe minimum level of acceptable contractual risk.

4.2.2 This is not restricted to price alone.

4.2.3 An assessment of value for money must include, where possible,consideration of fitness for purpose, fair market prices and whole of lifecosts. 'Whole of life' includes, price, cost of spares, running costs, post-

Procurement Page 4

delivery support, effective warranties, cost of replacement, installationcosts, etc.

4.3 Probity, Ethical Behaviour and Fair Dealing

4.3.1 Council will not use or disclose information that confers unfair advantage,financial benefit or detriment on a supplier.

4.3.2 Officers engaged in purchasing should at all times undertake their dutiesin a professional, ethical, honest and impartial manner, act responsiblyand exercise sound judgment by observing the highest standards ofintegrity and professional conduct in line with the Code of Conductrequirements.

4.4 Accountability, Transparency and Reporting

4.4.1 Accountability in procurement means being able to explain and evidencewhat has happened. An independent third party must be able to seeclearly that a process has been followed and that the process is fair andreasonable.

4.4.2 Delegations define the limitations within which Council employees arepermitted to work. They ensure accountability and provide confidence toCouncil and the public that purchasing activities are dealt with at theappropriate level. As such, Council has delegated responsibilities toemployees relating to the expenditure of funds for the purchase of goodsand services and the acceptance of tenders.

4.4.3 Employees must be able to account for all decisions and provide feedbackon them. Additionally, all procurement activities will leave an audit trailfor monitoring and reporting purposes.

4.5 Ensuring compliance with all relevant legislation

4.5.1 To ensure purchasing activities are conducted in accordance withlegislative and common law responsibilities. These include but are notlimited the Local Government Act 1999, Competition and Consumer Act2010, the Independent Commissioner Against Corruption Act 2012, theFreedom of Information Act 1991, National Competition Policy and otherrelevant legislation, industrial awards and agreements and internationaltrade agreements.

4.6 Sustainable Procurement

4.6.1 Sustainable procurement is defined as a process whereby Council meettheir procurement needs in a way that achieves value for money on awhole life basis in terms of generating benefits not only to theorganisation, but also to our community, the economy and theenvironment.

4.6.2 Council encourages the consideration, where deemed appropriate, ofsustainable and social inclusion elements such as:

Procurement Page 5

4.6.2.1 Creating employment and training opportunities (particularlyamong disadvantaged groups such as people with disability ormental illness, migrants, Indigenous) thus providing socialinclusion and an opportunity for those to participate in thelocal community;

4.6.2.2 Diversity and equality in the supplier market – encouraging adiverse base of suppliers (e.g. minority or under-representedsuppliers); and

4.6.2.3 Local sustainability – building and maintaining healthy, strongcommunities, support social inclusion and enhancing wellbeingof local residents by striving to generate local employment.

4.6.3 Council will take into account accessibility of local providers whenplanning and designing infrastructure or services that will require externalprocurement.

4.6.4 Council will endeavour to provide support to local enterprises by holdingbriefings to encourage development of capacity to meet the needs ofCouncil.

4.7 Environmental Preference

Council will seek to:

4.7.1 promote the purchase of environmentally friendly goods and services thatsatisfy value for money criteria;

4.7.2 align the Council’s procurement activities with principles of ecologicalsustainability;

4.7.3 purchase recycled and environmentally preferred products wherepossible;

4.7.4 integrate relevant principles of waste minimisation and energy;

4.7.5 foster the development of products and services which have a lowenvironmental impact;

4.7.6 provide leadership to business, industry and the community in promotingthe use of environmentally sensitive goods and services.

4.8 Work Health & Safety

4.8.1 Council will only engage suppliers and/or contractors who are able tomaintain a level of WHS that is acceptable in accordance with Council’sWHS Policies and Procedures and any additional requirements specified interms and conditions of contractual arrangements.

5. PROCUREMENT METHODS

Generally, open and fair competition is best achieved by undertaking a tender process sothat all interested parties have an opportunity to bid. However, there may beprocurements in which a tender process will not necessarily deliver the most advantageous

Procurement Page 6

outcome for the Council – in such instances, other market approaches may be moreappropriate.

The Council may, having regard to its Procurement Principles and any other factorsconsidered relevant by the Council, in its absolute discretion determine to utilise one ormore of the following procurement methods:

5.1 Direct Purchasing

5.1.1 This is where Council purchases from a single source, without firstobtaining competing bids.

5.1.2 This method may be suitable for low value, low risk goods and services,and where the supplier already has a successful service history with theCouncil.

5.2 Request for Quotations (RFQ)

5.2.1 This is where Council obtains written quotations from prospectivesuppliers.

5.2.2 This method may be suitable for simple, largely price-based purchases.

5.2.3 A “Short Form Request for Quotation” can be used for purchases withminimal specifications.

5.2.4 A “Long Form Request for Quotation” can be used for purchases withdetailed specifications.

5.3 Requests for Expressions of Interest (REOI)

5.3.1 This is where Council issues an open invitation for a proposed goodsand/or service.

5.3.2 This method may be used where there is potentially a large market for theproposed goods and/or service, and the Council would like to be able toprepare a short list of suppliers to then invite to participate in a tenderprocess.

5.4 Request for Tenders (RFT)

5.4.1 This is where the Council issues a tender for a proposed goods and/orservice.

5.4.2 Council may issue a “Select” Request for Tender where it has alreadyissued a REOI, or where it has reasonable grounds for only dealing with aselect group of potential suppliers.

5.4.3 Otherwise, Council may issue an “Open” Request for Tender.

5.5 Panel contracts

5.5.1 This is where the Council establishes panel arrangements with a selectgroup of suppliers – generally, this occurs once the Council has completed

Procurement Page 7

its appointment of such suppliers in accordance with this Policy, and caninclude either:

5.5.1.1 a standing offer from a pool of suppliers for the provision ofgoods and services on agreed terms; or

5.5.1.2 the prequalification of certain suppliers who may or may notbe engaged on terms to be agreed.

5.5.2 Once a panel has been established, the Council may purchase theparticular goods and/or service through such panel arrangements.

5.6 Strategic alliances

5.6.1 This is where the Council undertakes procurement through contractarrangements already established and administered by otherorganisations.

6. PROCUREMENT CONSIDERATIONS

The appropriate method of procurement will be determined by reference to a number offactors, including:

6.1 Value of the Purchase

Value ofPurchase ($)

MinimumProcurementRequirement

Applicable Procurement Method

< $10,000 One quotation Direct PurchasingRequest for Quotations (RFQ)Request for Expressions of Interest (REOI)Request for Tender (RFT)Panel ContractsStrategic Alliances

$10,000 to$100,000

Threequotations

Request for Quotations (RFQ)Request for Expressions of Interest (REOI)Request for Tender (RFT)Panel ContractsStrategic Alliances

< $100,000 RFX Request for Expressions of Interest (REOI)Request for Tender (RFT)

The value of the purchase will be calculated as follows:

1.1.1 single one-off purchase – the total amount, or estimated amount, of thepurchase (excluding GST);

1.1.2 multiple purchases – the gross value, or the estimated gross value, of thepurchases (excluding GST); or

Procurement Page 8

1.1.3 ongoing purchases over a period of time – the annual gross value, or theestimated annual gross value, of the purchases (excluding GST).

1.1.4 Splitting of amounts to bring expenditure within lower limits is notpermitted.

6.2 cost of an open market approach versus the value of the acquisition and thepotential benefits;

6.3 the particular circumstances of the procurement activity;

6.4 the objectives of the procurement;

6.5 the size of the market and the number of competent suppliers;

6.6 the Council’s leverage in the marketplace;

6.7 time constraints;

6.8 a global assessment of the risks associated with the relevant activity and /orproject, including the risk profile of the procurement and any risks associated withthe preferred procurement method.

7. RECORDS

7.1 Council will document the reasons for entering into specific procurement methodsor contracts other than those resulting from a competitive quoting, tender processor purchases less than $1000. Records to be stored in Council’s RecordsManagement System

8. EXEMPTIONS FROM THIS POLICY

8.1 This Policy contains general guidelines to be followed by the Council in itsprocurement activities. There may be emergencies, or procurements in which atender process will not necessarily deliver best outcome for the Council, and othermarket approaches may be more appropriate.

8.2 In certain circumstances, the Chief Executive Officer (or where this power isdelegated to a Procurement Committee) may waive application of this Policy andpursue a method which will bring the best outcome for the Council. The Councilmust record its reasons in writing for waiving application of this Policy.

9. DELEGATIONS

9.1 Council makes the following delegations:

9.1.1 The Chief Executive Officer has the delegation to approve, amend andreview any procedures that shall be consistent with this Policy.

9.1.2 The Chief Executive Officer has the delegation to enter into contracts andapprove expenditure to a value of $500,000 (GST exclusive).

9.1.3 The Chief Executive Officer may sub –delegate the authority to CouncilOfficers to enter into contracts and approve expenditure to a value of$300,000 (GST exclusive).

Procurement Page 9

9.1.4 The Chief Executive Officer and one other Council Officer at Director levelmay jointly approve payment of operational expenditure to a value of$1,000,000. Examples of this type of expenditure are:

Budgeted loan repayments

Budgeted non-elective services (e.g. insurance, waste costs)

Fortnightly payroll

Creditor Payments

10. PRUDENTIAL REQUIREMENTS

10.1 In some circumstances a procurement process may require additional duediligence in accordance with the Local Government Act 1999 prudentialrequirements. If this occurs the process will be subject to the Council’s PrudentialManagement Policy

11. AVAILABILITY OF THE POLICY

11.1 This Policy will be available for inspection at the Council's Offices during ordinarybusiness hours and via the Council's website www.ahc.sa.gov.au. Copies will alsobe provided to the public upon request, and upon payment of a fee in accordancewith the Council's Schedule of Fees and Charges.



Item: 6.4



Subject: Audit Committee Self-Assessment

For: Information

SUMMARY

To provide the Audit Committee with the results of the 2016 self- assessment review.

RECOMMENDATION

The Audit Committee resolves that the report be received and noted.

1. GOVERNANCE



obligations

Legal Implications

Nil.


The evaluation of the Audit Committee’s performance will assist in mitigating the risk of:



Adelaide Hills Council – Audit Committee Meeting 31 October 2016Audit Committee Self-Assessment


There are no direct financial or resource implications from this item.


There is a high expectation that Council has appropriate corporate governance processes inplace including the review of the effectiveness of Council’s decision making bodies.


Nil


Consultation has occurred with the members of the Audit Committee via a questionnairewith five responses received and consolidated for consideration.

2. BACKGROUND

In adopting its Work Plan for 2016 the Audit Committee identified the prudence ofperiodically conducting an assessment of the Committee’s performance with a view toidentifying improvements in governance practices and performance. The responsesreceived have been averaged and the comments provided assigned to each question inAppendix 1.

3. ANALYSIS

All five members of the Audit Committee provided responses to the self-assessment as wasthe case in 2015. A consolidation of responses received has been provided as Appendix 1for review by the Committee.

As can be seen within the appendix the scoring was generally very positive across all area,with a slight overall improvement in the result over that of the previous year.

4. OPTIONS


I. To note the outcomes of the Self-Assessment.II. To determine areas of improvement by way of resolution.

5. APPENDICES

(1) 2016 Self-Assessment Report

Appendix 12016 Self-Assessment Report

Q1 Please provide your name:Answered: 5 Skipped: 0

100.00% 5

0.00% 0

Q2 Do you understand and agree with thefunctions of the Committee as detailed in its

Terms of Reference?Answered: 5 Skipped: 0

Total 5

Yes

No

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Answer Choices Responses

Yes

No

Q3 Does the Committee collectively havesufficient skills, experience, time and

resources to undertake its duties?Answered: 5 Skipped: 0

Yes

No

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1 / 10

AHC Audit Committee Self Assessment (2016)

100.00% 5

0.00% 0

Total 5


Yes

No

Q4 Does the Committee work constructivelyas a team and work well with others

attending the meetings?Answered: 5 Skipped: 0

0.00%0

0.00%0

0.00%0

60.00%3

40.00%2

5

4.40

(no label)

0 1 2 3 4 5 6 7 8 9 10

Very Inefffective Ineffective Neither Effective or Ineffective Effective Very Effective Total Weighted Average

(no label)

Q5 Does the relationship betweenCommittee members strike the right

balance between challenge and mutuality?Answered: 5 Skipped: 0

(no label)

0 1 2 3 4 5 6 7 8 9 10


2 / 10


0.00%0

0.00%0

20.00%1

60.00%3

20.00%1

5

4.00

(no label)

Q6 Do the meeting arrangements enhancethe Committee’s effectiveness (e.g.

frequency, timing, duration, venue andformat) to allow sufficient time for the

discussion of agenda items?Answered: 5 Skipped: 0

0.00%0

0.00%0

0.00%0

80.00%4

20.00%1

5

4.20

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q7 Are the reports for each meetingsufficiently comprehensive and yet

understandable enough for you to makeinformed decisions?

Answered: 5 Skipped: 0

(no label)

0 1 2 3 4 5 6 7 8 9 10


3 / 10


0.00%0

0.00%0

0.00%0

60.00%3

40.00%2

5

4.40

(no label)

Q8 Are the presentations an interesting andhelpful way of informing members about

various issues?Answered: 5 Skipped: 0

0.00%0

0.00%0

0.00%0

80.00%4

20.00%1

5

4.20

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q9 Are effective minutes prepared,distributed and followed up?


0.00%0

0.00%0

20.00%1

60.00%3

20.00%1

5

4.00

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q10 How do you rate the overall efficiencyand effectiveness of the Committee?

4 / 10



0.00%0

0.00%0

0.00%0

60.00%3

40.00%2

5

4.40

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q11 Do staff and members conductthemselves in accordance with highstandards of behaviour (eg. Code of

Conduct)?Answered: 5 Skipped: 0

0.00%0

0.00%0

0.00%0

20.00%1

80.00%4

5

4.80

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q12 How do you rate the performance of thePresiding Member in preparing for and

conducting the meetings?Answered: 5 Skipped: 0

5 / 10


0.00%0

0.00%0

0.00%0

60.00%3

40.00%2

5

4.40

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q13 How do you rate the performance of thePresiding Member in preparing for and

conducting the meetings?Answered: 4 Skipped: 1

0.00%0

0.00%0

0.00%0

50.00%2

50.00%2

4

4.50

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q14 How do you rate your performance as amember of the Committee?


6 / 10


0.00%0

0.00%0

0.00%0

100.00%5

0.00%0

5

4.00

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q15 Does the Committee assure itself thatthe Executive take responsibility for risk

identification and control, and give formalassurance through reporting that key risks

are being adequately managed?Answered: 5 Skipped: 0

0.00%0

0.00%0

0.00%0

100.00%5

0.00%0

5

4.00

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q16 Is the Committee satisfied that there isan effective program in place to ensure thatrisk management becomes an integral part

of the way in which Council conductsbusiness?


7 / 10


0.00%0

0.00%0

0.00%0

100.00%5

0.00%0

5

4.00

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q17 Are internal audit findings andrecommendations responded to in a timely

and appropriate manner?Answered: 5 Skipped: 0

0.00%0

0.00%0

0.00%0

80.00%4

20.00%1

5

4.20

(no label)

0 1 2 3 4 5 6 7 8 9 10


(no label)

Q18 Does the Committee review the work ofthe external auditor?


8 / 10


100.00% 5

0.00% 0

Total 5

Yes

No

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Yes

No

100.00% 5

0.00% 0

Q19 Does the Committee review anddiscuss the external auditor’s management

letter?Answered: 5 Skipped: 0

Total 5

Yes

No

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Yes

No

Q20 Is the Committee effective in managingand monitoring the relationship with the

external auditor?Answered: 5 Skipped: 0

9 / 10


100.00% 5

0.00% 0

Total 5

Yes

No

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Yes

No

0.00% 0

100.00% 5

Q21 Do you have any other suggestions forimproving any aspect of the Committee’s

performance, role or functions?Answered: 5 Skipped: 0

Total 5

Yes

No

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


Yes

No

10 / 10




Item: 6.5

Originating Officer: Paul Francis, Manager Finance


Subject: Debtor Reporting

For: Information

SUMMARY

This item reports outstanding Debtor balances to Audit Committee.

RECOMMENDATION


1. GOVERNANCE


Goal 4 A Recognised Leading Performer

Key Issue 4.2 Managing Risk and ResponsibilityKey Action 4.2.6 Manage and maintain the sustainable financial position of Council.

Legal Implications

Council may obtain funds by recovering fees, charges, penalties or other money payable toit under S133 Local Government Act 1999.

Council also has obligations specified within the current Community WastewaterManagement Scheme (CWMS) licence that require an endorsed hardship policy forcustomers. Failure to establish this policy will result in Council breaching current licenceconditions.

Adelaide Hills Council - Audit Committee Meeting 31 October 2016Debtors Reporting

Page 2


Monitoring the balances of Debtors through regular reporting will assist in mitigating therisk of:

Poor debt recovery practices which lead to increased levels of overdue debtors willnegatively impact on Council’s current cashflow as well as reduce the likelihood offuture debt recovery.

Inherent Risk Residual Risk Target RiskExtreme (4B) Medium (3D) Medium (3D)


Close monitoring of debt supported by an agreed Policy will ensure that any cashflowimpact on Council is minimised.


Nil


Nil


Nil

2. BACKGROUND

Council generates income from a variety of sources including rates, grants, fines(infringements), development applications and fees and charges for the provision of goodsand services to individuals, businesses and other organisations in the community. Thisincome is managed using financial management systems which also enables recording ofamounts owing to Council and information relating to amounts paid. Appropriate actioncan be taken to collect amounts owing where they are not paid in a timely manner.

Management monitors Council’s debtors in terms of amount and age.

At the meeting of Council held on 15 December 2015 a Debt Recovery Policy was adoptedthat supports the sale of land for unpaid rates where arrears are in excess of the 3 yearrequirement outlined within s184 of the Local Government Act 1999.

The Debtors report was last presented to Audit Committee on 15 August 2016. Since then,debtors balances have been reported in the 2015/16 Financial Statements. In addition,another selection of properties has been identified to commence a Section 184 LocalGovernment Act 1999 Selling of Property for non Payament of Rates process.


Page 3

The table below compares Council’s debtor balances, over the most recent three year ends,summarised by category. It shows the size of the debtors, but not the age.

Three Year Debtors Comparision, $0,000Debtors June 2014 June 2015 June 2016Rates General 1,629 1,908 1,539Rates Postponed 22 20 25Debtors General 357 490 262Other Government 155 152 107GST Recoupment 197 202 200

2,360 2,772 2,133

Rates Debtors

Earlier this year a process to sell 11 properties was endorsed, in line with S184 LocalGovernment Act 1999. One property, a parcel of land, was auctioned. In all other cases, thefull amount of the rates sought was paid to Council without selling.

Another S184 Sale of Property for Non Payment of Rates process for 11 properties wasendorsed by Council on 25 October 2016.

Council's rates debtor is dominated by rates that are struck in full in July, then quarterlyfluctuations of receipts, which makes comparison of rates debtors within the year difficultto understand. Additionally, over 3,000 ratepayers have paid the full annual rates assessedduring the first quarter. There are 17,500 ratepayers in total.

0

500

1,000

1,500

2,000

2,500 2014-2016 Debtor Balances

June 2014

June 2015

June 2016


Page 4

In order to provide rates debtor information capable of being straight forward to monitor,the overdue rates can be used. As at 24 October 2016 the total overdue rates debtor was$1,428k. This includes $107k of arrears that have been endorsed for s184 Sale of Propertyfor Non Payment of Rates.

Sundry Debtors

An Aged Debtors Report as at 30 September 2016 in the table below shows the age ofcurrent debtors, excluding rates.

Description TOTAL<30

Days<60

Days<90

Days<120Days

<150Days

>150Days

Additional Bins 31,060 9,165 0 3,559 0 2,330 16,006Burial Fees 19,858 11,560 220 0 2,500 0 5,578Fire Hazard Reduction 8,006 0 0 0 3,790 4,216Food Premises Inspection 9,581 42 171 82 0 40 9,246Grants Receivable 60,500 60,500 0Misc (includes AHBTC) 160,217 40,288 8,662 65,694 0 11,201 34,372Private Works 260 0 0 0 0 0 260Road Rents 5,667 0 0 0 0 100 5,567

TOTAL: 30/9/2016 295,149 121,555 9,053 69,335 6,290 13,671 75,245

TOTAL: 30/6/2016 369,569 160,809 63,538 36,181 7,055 20,976 81,011

TOTAL: 30/11/2015 481,456 131,857 181,985 27,707 (3,288) 1,434 141,761

The total Sundry debtors outstanding has decreased from $482k in November 2015 to$295k in September 2016. Additionally, the >150 days debt has decreased from $142k inNovember 2015 to $75k in September 2016.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

<30 Days <60 Days <90 Days <120 Days <150 Days >150 Days

Miscellaneous Debtors as at 30 September2016 - Aged Balances

Misc Debtors


Page 5

3. OPTIONS

Audit Committee is limited to receiving this report.



Item: 6.6



Subject: Final Audit Completion Report 2016

For: Information

SUMMARY

Council’s external auditors (BDO) attended the Audit Committee meeting on 4 October 2016 toprovide an update on the Annual Financial Statements. At that time a draft Audit Completion Reportwas provided in support of those Statements.

This report provides the final version of the Audit Completion Report for the consideration of theAudit Committee.

RECOMMENDATION

The Audit Committee resolves that the final Audit Completion Report for the 2015/16 financialyear received from BDO be noted.

1. GOVERNANCE


Goal 4 A Recognised Leading PerformerKey Issue 4.2 Managing Risk and ResponsibilityKey Action 4.2.6 Manage and maintain the sustainable financial position of Council.

Legal Implications

Accounts, Financial Statement and Audit, Local Government Act 1999


Continual testing of Council’s transactions and internal controls by an external auditorcoincides with Council’s own Risk Management Framework. Auditor’s annual inspectionand certification of Council’s financial position and performance provides the communitywith an assurance of Council’s internal financial control environment.

Adelaide Hills Council – Audit Committee Meeting 31 October 2016Audit Completion Report 2016


Funding for the External Audit of Council is provided for within the Annual Budget.


Not applicable.


Not applicable.


Not applicable.

2. BACKGROUND

At the time of the last Audit Committee meeting the final Audit Completion Report had notbeen received from BDO, however an Interim Report was included in the agenda anddiscussed at the meeting.

The final report has subsequently been provided and is included as Appendix 1.

3. ANALYSIS

The Final Completion Report states in part that:

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Opinion

In our opinion, the financial report presents fairly, in all material respects, theCouncil’s financial position as at 30 June 2016, and its financial performance and cashflows for the year then ended in accordance with Australian Accounting Standards,the Local Government Act 1999, and the Local Government (Financial Management)Regulations 2011.

4. OPTIONS


1. To note BDO’s Final Report2. To make additional comments or suggestions for Council and staff to consider.

Adelaide Hills Council – Audit Committee Meeting 31 October 2016Audit Completion Report 2016

5. APPENDICES

(1) Final 2015/16 Audit Completion Report - BDO

Appendix 1Final 2015/16 Audit Completion Report – BDO

ADELAIDE HILL COUNCIL

Audit Completion ReportYear ended 30 June 2016

Internal control

Summary of misstatements

Key accounting and audit matters

Audit status

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Presentation of your financial report

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Other communications 4

New developments 5

Appendic

es

Independence declaration 3

Proposed audit report 1

KEY CONTACTS

Geoff EdwardsEngagement PartnerTel: +61 8 7324 [email protected]

Linh DaoEngagement ManagerTel: +61 8 7324 6147 [email protected]

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AUDIT STATUS

We have set out in this document the significant matters arising from our audit for the year ended 30 June 2016.

This summary covers those matters we believe to be material in the context of our work.

Our audit was conducted in accordance with Australian Auditing Standards , the Local Government Act 1999 and the

Local Government (Financial Management) Regulations 2011, and is in the process of being completed.

Our audit will be concluded once we have completed the following outstanding audit procedures:

• Finalisation of audit procedures in relation to Council’s internal controls;

• Review of updated final draft of Council’s financial statements;

• Review of events subsequent to 30 June 2016;

• Receipt of written management representations on various matters;

• Receipt of formally adopted financial statements and agreement of these to the drafts provided to us to date.

At the date of this completion report we anticipate issuing unqualified opinions on both the financial statements,

and internal controls.

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KEY ACCOUNTING AND

AUDIT MATTERSWe have set out below the key accounting and audit matters that have arisen during the audit.

Significant risks of material misstatement

Our audit procedures were focused on areas that are considered to represent significant risk of material

misstatement. We identified the risk areas as part of our risk assessment procedures undertaken during the planning

phase and continued to be alert for risks during the course of the audit. We set out below the significant risks

identified along with our findings and conclusions.

Cut-off of grant funding and accuracy of any amounts deferred at 30 June 2016

Description of risk Findings and conclusion

There is a risk of error in the calculation of grant income recognised and deferred at year end by reference to grant agreements and Australian Accounting Standards.

Unlike 2015, the first payment of the untied financial assistance grant for

next year was not received prior to this year end.

The financial statements are presented fairly in all material respects in

relation to grant income.

Equity accounted investments


There is a risk that the equity interest in

the 3 Management Authority joint ventures

have been incorrectly valued as at the

reporting date.

We have obtained the financial statements of Management Authority

investees and were satisfied that the movement in the equity accounted

investments has been accounted for appropriately.

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KEY ACCOUNTING AND

AUDIT MATTERS

Revaluation of Infrastructure and Buildings


There is a risk that the revaluation of

Council’s infrastructure (including

buildings) is not appropriately undertaken.

The financial statements of the Council incorporate a simple internal

revaluation of all infrastructure assets (except for land) based on

appropriate ABS statistics which resulted in an revaluation increment of

$2,683,000. The revaluation does not include any element of asset

verification or condition assessment.

Completeness of Infrastructure Assets


There is a risk that infrastructure assets

the Council records are either not

complete, or include assets not actually

owned by the Council.

Council completed their review of stormwater assets and identified a

significant balance that are not the responsibility of Council. These have

been removed from the asset records with the adjustment of $3.7m being

treated as the correction of a prior period error.

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KEY ACCOUNTING AND

AUDIT MATTERS

Management override of controls

Description Findings and conclusion

Per Australian Auditing Standards there is

a presumed risk that management has the

ability to manipulate a fraudulent

financial report by overriding controls that

otherwise appear to be operating

effectively.

Our completion testing will include a final review of general journal

entries, on a sample basis.

Accounting treatment of items captured within Capital WIP

Description Findings and conclusion

There is a risk that the accounting

treatment of items captured within

Capital WIP may not be in accordance with

Australian Accounting Standards.

We have obtained the WIP schedule and reviewed in detail a sample of

projects outstanding as at 30 June 2016 to ensure they are likely to

generate assets. We performed a sample testing of asset transfers out of

Capital WIP to ensure that categorisation and value allocated of assets are

appropriate and we have not noted any instance of exception.

We note that this year Council has adopted a policy of recording the

transfer of completed assets from WIP to Infrastructure, Property Plant &

Equipment only at the end of the year, even where the assets were

actually brought into use during the year. This has the effect of

understating the annual depreciation charge. We do not believe this to

have a material impact.

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SUMMARY OF MISSTATEMENTS

Uncorrected misstatements

As at the date of this report, we have not identified any uncorrected misstatements during the audit. Misstatements have

not been included if they are considered to be clearly trivial which we have set at $45,000 . Matters which are clearly

trivial are regarded as clearly inconsequential when taken individually or in aggregate.

Corrected misstatements

As at the date of this report, we did not identify any misstatements during the course of our audit which requires

adjustments.

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INTERNAL CONTROL

Current year

We have a responsibility to provide an audit report in which we express a conclusion on the Council’s compliance with

Section 125 of the Local Government Act 1999 in relation to the Internal Controls established by the Council to

ensure that financial transactions relating to the receipt, expenditure and investment of money, acquisition and

disposal of property and incurring of liabilities have been conducted properly and in accordance with law in all

material respects.

In addition, in accordance with ASA 265 Communicating Deficiencies in Internal Control to Those Charged with

Governance and Management, we are required to communicate in writing, any other significant deficiencies in

internal control identified during the audit.

The standard defines a deficiency in internal control as follows:

1. A control is designed, implemented or operated in such a way that it is unable to prevent, or detect and correct,

misstatements in the interim financial report on a timely basis; or

2. A control necessary to prevent, or detect and correct, misstatements in the interim financial report on a timely

basis is missing.

Significant deficiency in internal control means a deficiency or combination of deficiencies in internal control that, in

the auditor’s professional judgement, is of sufficient importance to merit the attention of those charged with

governance.

We intend providing an unqualified audit report In relation to compliance with Section 125 of the Local Government

Act 1999. Details of matters identified in our testing of internal controls o date that were determined not to require

qualification in our audit report are set out below..

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INTERNAL CONTROL

Other deficiencies in internal

controlPotential effects Recommendation

Management

comments

1 Council does not have a clear policy

on Grant funding detailing assessment

process, recognition, treatment,

claim collection, community

expectation and funding period and,

disclosure of any conflicts of interest.

The absence of formal

policies and

procedures may lead

to inconsistent or

inappropriate

practices resulting in

errors. Formal and

effective controls are

particularly important

where high volumes of

transactions or where

the total dollar value

is significant.

We recommend that

the management

review and ensure the

implementation of the

Grant funding policy.

Council does not have

a Grant Funding policy

but recognises the

need to implement

one.

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Management

comments

2 Whilst the Better Practice Model

requires Council to establish

employee termination policies and

procedures, including statutory

regulation and union requirements,

this policy is still being drafted by

Payroll Officer at the time of our

year end visit.

The absence of formal

policies and

procedures may lead

to inconsistent or

inappropriate

practices resulting in

errors.

We recommend that

the management

review and ensure

that the

implementation of the

employee termination

policy.

At this time all terminations are executed in line with the Enterprise Development Agreement ( EDA), and the relevant award structure where the EDA is silent. To support this approach a checklist has been established. Management will consider the establishment of an Employee Termination Policy and / or Procedure.

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INTERNAL CONTROL



Management

comments

3 The Council does not maintain a

contract register as required by the

Better Practice Model.

A contract register

would allow Council

to effectively and

efficiently manage

and keep track of

their external service

engagement

commitments.

We recommend

management

introduce and

maintain a contract

register.

Whilst Council does

not maintain a

contract register, it

does keep a list of

contracts. A formal

register of contracts is

considered to be

appropriate and will

be developed.

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APPENDICES



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APPENDIX 1

Proposed audit reportsFinancial Report:

We have audited the accompanying financial report of Name of Council, which comprises the statement of financial

position as at 30 June 2016, the statement of comprehensive income, the statement of changes in equity and the

statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other

explanatory information, and the certification of the financial statements by the Chief Executive Officer and the Principal

Member of the Council.

Council’s Responsibility for the Financial Report

The Council’s officers are responsible for the preparation and fair presentation of the financial report in accordance with

Australian Accounting Standards, the Local Government Act 1999 and the Local Government (Financial Management)

Regulations 2011, and for such internal control as the Council's officers determine is necessary to enable the preparation

and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in

accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical

requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether

the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material

misstatement of the financial report, whether due to fraud or error.



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In making those risk assessments, the auditor considers internal control relevant to the council’s preparation and fair

presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the council’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the

Council's officers, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial report presents fairly, in all material respects, the Council’s financial position as at 30 June

2016, and its financial performance and cash flows for the year then ended in accordance with Australian Accounting

Standards, the Local Government Act 1999, and the Local Government (Financial Management) Regulations 2011.

BDO Audit Partnership (SA)

Geoff Edwards

Partner

Adelaide, XX October 2016

APPENDIX 1

Proposed audit report (continued)



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Internal Controls:

We have audited the compliance of Name of Council (the Council) with the requirements of Section 125 of the Local

Government Act 1999 in relation only to the Internal Controls established by the Council to ensure that financial

transactions relating to the receipt, expenditure and investment of money, acquisition and disposal of property and

incurring of liabilities for the period 1 July 2015 to 30 June 2016 have been conducted properly and in accordance with

law.

The Council’s Responsibility for the Internal Controls

The Council is responsible for implementing and maintaining an adequate system of internal controls, in accordance with

Section 125 of the Local Government Act 1999 in relation to Internal Controls to ensure that the receipt, expenditure and

investment of money, the acquisition and disposal of property, and incurring of liabilities have been conducted properly

and in accordance with law.

Our Responsibility

Our responsibility is to express a conclusion on the Council’s compliance with Section 125 of the Local Government Act

1999 in relation only to the Internal Controls established by the Council to ensure that financial transactions relating to

the receipt, expenditure and investment of money, acquisition and disposal of property and incurring of liabilities have

been conducted properly and in accordance with law in all material respects,. Our engagement has been conducted in

accordance with applicable Australian Standards on Assurance Engagements ASAE 3100 Compliance Engagements, issued

by the Australian Auditing and Assurance Standards Board, in order to provide reasonable assurance that, the Council has

complied with Section 125 of the Local Government Act 1999 in relation only to the Internal Controls specified above for

the period 1 July 2015 to 30 June 2016. ASAE 3100 also requires us to comply with the relevant ethical requirements of

the Australian professional accounting bodies. Our procedures included assessing the controls of the Council based on the

criteria in the Better Practice Model—Internal Financial Controls, specifically:

APPENDIX 1




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Obtaining an understanding of controls in relation to the receipt, expenditure and investment of money, the acquisition

and disposal of property and the incurring of liabilities

1. Evaluating management's assessment of these controls

2. Assessing the risk that a material weakness exists

3. Testing and evaluating the design and implementation of controls on a sample basis based on the assessed risks

These procedures have been undertaken to form a conclusion as to whether the Council has complied in all material

respects, with the Section 125 of the Local Government Act 1999 in relation only to the Internal Controls established by

the Council to ensure that financial transactions relating to the receipt, expenditure and investment of money,

acquisition and disposal of property and incurring of liabilities have been conducted properly and in accordance with law,

for the period 1 July 2015 to 30 June 2016.

Inherent Limitations

Because of the inherent limitations of any compliance procedure, it is possible that fraud, error or non-compliance may

occur and not be detected. A reasonable assurance engagement is not designed to detect all instances of non-compliance

with Section 125 of the Local Government Act 1999 in relation to the Internal Controls specified above, as the

engagement is not performed continuously throughout the period and the procedures performed in respect of compliance

with Section 125 of the Local Government Act 1999 in relation to the Internal Controls specified above are undertaken on

a test basis.

The conclusion expressed in this report has been formed on the above basis.

Independence

In conducting our engagement, we have complied with the independence requirements of the Australian professional

accounting bodies.

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Conclusion

In our opinion, the Council has complied, in all material respects, with Section 125 of the Local Government Act 1999 in

relation to Internal Controls established by the Council in relation to the receipt, expenditure and investment of money,

acquisition and disposal of property and incurring of liabilities have been conducted properly and in accordance with law

for the period 1 July 2015 to 30 June 2016.


Geoff Edwards

Partner


APPENDIX 1




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APPENDIX 2

New format audit reportThe recently revised Australian Auditing Standards herald the dawn of a new era of auditor reporting. This new approach

has been designed to focus on the key output from the audit process – your audit report. The changes improve the

communicative value of your audit report, with headline changes including:

• Placing the opinion section at the top of your audit report

• Enhancing our reporting on going concern matters – including a separate section when there is a material uncertainty

relating to going concern

• Emphasising the importance of the annual report and our work performed on other information

• Providing enhanced descriptions about your responsibilities as management or those charged with governance

For periods ending on or after 30 June 2017, your audit report will be in this new format.



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APPENDIX 3

Auditor independence declaration

We set out below our draft Auditor independence declaration.

CERTIFICATION OF AUDITOR INDEPENDENCE

I confirm that, for the audit of the financial statements of Name of Council for the year ended 30 June 2016, I have

maintained my independence in accordance with the requirements of APES 110 – Code of Ethics for Professional

Accountants, Section 290, published by the Accounting Professional and Ethical Standards Board, in accordance with the

Local Government Act 1999 and the Local Government (Financial Management) Regulations 2011 made under that Act.

This statement is prepared in accordance with the requirements of Regulation 22 (5) Local Government (Financial

Management) Regulations 2011.

Geoff Edwards

Partner





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APPENDIX 4

Other communicationsEthics and independence matters

In conducting our audit, we have complied with the independence requirements of s290 of APES 110

Code of Ethics for Professional Accountants.

We have obtained independence declarations from all staff engaged in the audit. We also have policies

and procedures in place to identify any threats to our independence, and to appropriately deal with and

if relevant mitigate those risks.

We have not become aware of any issue that would cause any member of the engagement team, BDO or

any BDO network firm to contravene any ethical requirement or any regulatory requirement that applies

to the audit engagement.

BDO has not provided any other services during the audit to Council Name.



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Non-compliance with laws and regulations

We have made enquiries in relation to any non-compliance with laws and regulations during the course

of our audit. We have not identified any instances of non-compliance with laws and regulations as a

result of our enquiries.

Fraud

Management have confirmed that there were no matters of fraud identified for the period under audit,

or subsequently. It should be noted that our audit is not designed to detect fraud however should

instances of fraud come to our attention we will report them to you.

We have not identified any instances of fraud during the course of our audit.

APPENDIX 4

Other communications



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APPENDIX 5

New developmentsSupplementing this report is a summary of the new and emerging developments that may impact you in future

years. We have provided a brief overview of the major changes relevant to you in the table below. Our Issues and

Trends page on our website also includes resources regarding new and emerging areas.

Title of standard Brief overview and impact

AASB 15 Revenue from Contracts with Customers

The new revenue recognition standard, AASB 15 Revenue from Contracts with Customers is effective for annual periods beginning on or after 1 January 2018. Details were provided in our 2015 Audit Completion Report.

AASB 16 Leases AASB 16 is a new accounting standard in relation to leases, that applies to annual reporting periods beginning on or after 1 January 2019.

Subject to certain minor exceptions, under this new standard there will be no more operating leases and all leases will be capitalised on the balance sheet by recognising a ‘right-of-use’ asset and a lease liability for the present value of the obligation. No more rental expense! All leases will incur a front-end loaded expense, comprising depreciation on the right-of-use asset, and interest on the lease liability.

AASB 9 Financial Instruments

The financial instrument standard, AASB 9 Financial Instruments was issued as a complete standard in Australia in December 2014. It is effective for annual periods beginning on or after 1 January 2018 and early adoption is permitted. Details were provided in our 2015 Audit Completion Report.



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APPENDIX 5

New developments (continued).

Title of standard Brief overview and impact

Disclosure Initiative The disclosure Initiative project that comprises amendments to AASB 101 (which is effective for 30 June 2017 year ends) will result in changes to the format and presentation of the 2017 Model Financial Statements that are mandated for use by Councils under the Local Government Act.

AASB 2015-6 Amendments to Australian Standards –Extending Related Party Disclosures to Not-for-profit Public Sector Entities

In a significant change from current requirements, from 1 July 2016 Australian government and local government entities will have to disclose related party information in the same was that private sector entities have to now. Details were provided in our 2015 Audit Completion Report.

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We have prepared this report solely for the use of Adelaide Hills Council. As you know, this report forms part of a continuing dialogue between the company and us and, therefore, it is not intended to include every matter, whether large or small, that has come to our attention. For this reason we believe that it would be inappropriate for this report to be made available to third parties and, if such a third party were to obtain a copy of this report without prior consent, we would not accept any responsibility for any reliance they may place on it.

BDO Audit Partnership (SA) 21 903 784 597 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Partnership (SA) and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees.

www.bdo.com.au



Item: 6.7



Subject: Internal Audit Quarterly Update

For: Information

SUMMARY

This report provides the Audit Committee with an update on progress of internal audits nominated inthe Strategic Internal Audit Plan.

The draft report on the Legislative Compliance Audit examining compliance with the LocalGovernment Act 1999 has just been received from the auditors and there is limited time to providethe auditors with additional documentation and then finalise the assessment. The current version ofthe report is attached for Committee consideration.

RECOMMENDATION


1. GOVERNANCE



Key Issue 4.1: LeadershipAction 4.1.4: Meet legislative, regulatory and good governance responsibilities and

obligations.

Key Issue 4.2 Managing Risk and ResponsibilityKey Action 4.2.5 Ensure legislative compliance occurs through the application of core

policies and procedures.

Adelaide Hills Council – Audit Committee Meeting 31 October 2016Internal Audit Quarterly Update

Legal Implications

Section 125 of the Local Government Act 1999 requires councils to ensure that appropriatepolicies, practices and procedures of internal controls are implemented and maintained inorder to assist the council to carry out its activities in an efficient and orderly manner toachieve its objectives, to ensure adherence to management policies, to safeguard Council’sassets, and to secure (as far as possible) the accuracy and reliability of Council records.

The Internal Audit program is an important tool to provide an objective appraisal of theadequacy on internal controls in managing our risk and supporting the achievement ofcouncil objectives.


The implementation of the internal audit program will assist in mitigating the risk of:

Internal control failures occur which lead to greater uncertainty in the achievement ofobjectives and/or negative outcomes.

Inherent Risk Residual Risk Target RiskHigh (4C) Medium (3C) Medium (3C)


The Internal Audit budget for this financial year includes funding to resource the proposedaudits and enable them to be outsourced under the oversight of the Manager Governanceand Risk. Given the range of demands on this role, and the specialised nature of a numberof the audits, it is not possible to undertake audits internally.


There is a high expectation that Council has appropriate corporate governance processes inplace including an effective internal control environment.


Not applicable


Internal consultation occurs in the preparation of an internal audit scopes, in finalising auditreports and in the development and implementation of actions to address the auditfindings. External consultation was not applicable.


2. BACKGROUND

2.1 Strategic Internal Audit Plan Activities

The Audit Committee received an internal audit update as its August 2016 meeting andreceived the draft report of the Good Governance – Legislative Compliance Audit. At theJune 2016 Audit Committee meeting the scope of the Planning Assessment Audit wasconsidered.

3. ANALYSIS

3.1 Strategic Internal Audit Plan Progress

Good Governance – Legislative Compliance

The Legislative Compliance Audit Report has now been finalised and actions will be trackedvia the Internal Audit Actions Register.

The implementation status of the Register is scheduled to be reported at the FebruaryAudit Committee.

Planning Assessment Audit

This audit has not commenced at as yet due to competing priorities. An update on progresswill be provided at the next Audit Committee meeting.

Next Audit

Work is planned on the next internal audit scope(s) in regard the Customer ServiceStandards/Compliant Management and or Business Continuity Plan Current StateAssessment. The draft scope(s) will be presented to the February 2017 Audit Committeemeeting.

3.2 Structure Review

A structure and resourcing review is currently underway regarding the governance, riskmanagement, internal audit, procurement, emergency management and performancereporting (GRIAPEMPR) functions. The review considers legislative requirements, structuraland reporting arrangements, resource requirements and benchmarking of functions withcomparable councils. A proposed structure has been released for internal consultationregarding the creation of a dedicated resource for the risk management internal audit andemergency management functions.

The Audit Committee will be advised of the outcome of this review and any resultantstructural arrangements at the February 2017 meeting.


4. OPTIONS


I. To note the status of the Strategic Internal Audit Update as presented; and / or

II. To identify additional actions to be undertaken.



Item: 6.8



Subject: Election of Audit Committee Presiding Member

For: Decision

SUMMARY

The Adelaide Hills Council Audit Committee (Committee) consists of five members of whom three areIndependent Members and two are Council Members.

The Committee Terms of Reference (TOR) provide that the Committee appoints its PresidingMember. While it is not specified in either the Terms of Reference or the applicable LocalGovernment legislation, the Presiding Members in recent years have been drawn from theIndependent Members.

The purpose of this report is to provide information relevant to the appointment of a PresidingMember(s) for the forthcoming period.

RECOMMENDATION


1. That the report be received and noted2. To appoint …………………… as the Adelaide Hills Council Audit Committee Presiding Member

for the period 23 November 2016 to 31 July 2017

1. GOVERNANCE



obligations

Adelaide Hills Council Audit Committee Meeting 31 October 2016Election of Audit Committee Presiding Member

The Committee TOR was most recently revised at the 22 February 2016 meeting andrecommended to the Council for adoption which occurred at the 26 April 2016 meeting.

Relevant to this report, the TOR prescribes (at clause 6.9) that the Committee ‘shall appointthe Presiding Member of the committee who may be one of the Independent Members.’

Legal Implications

While the Local Government Act 1999 and the Local Government (Financial Management)Regulations 2011 prescribe both the composition and functions of Audit Committees, theyare silent with regards to the appointment of Presiding Members.


The appointment of competent Presiding Members will assist in mitigating the risk of:



New Presiding Members are provided with both formal and informal training, as required,to ensure that they understand meeting procedures and the role and function of an auditcommittee in the local government and Adelaide Hills Council context.


Where the Presiding Member is an Independent Member of the Committee he or shereceives a sitting fee of $525 while an Ordinary Independent Members receives $365. If thePresiding Member was a Council Member, he would receive the statutory loading of theCouncil Member allowance. The policy states that a Council Member who is the presidingmember of one or more prescribed committees receives an overall allowance equal to oneand a quarter (1.25) times the annual allowances for Council Members of that Council. Theamounts are built into the Governance & Risk Department budget.


There is a high expectation that Council has appropriate corporate governance processes inplace including effective audit and oversight arrangements.


Not applicable.


Not applicable.


2. BACKGROUND

The three Independent Members (Peter Robertson, Peter Brass and Paula Davies) wereappointed for a three year term at the Ordinary Council meeting on 22 July 2014 with theterms to conclude on 31 July 2017.

The two Council Members (Cr Malcolm Herrmann and Cr John Kemp) were appointed for atwo year term at the Ordinary Council meeting on 25 November 2014 with the terms toconclude on 24 November 2016.

At its 1 December 2014 meeting, in relation to the matter of Presiding Members, theCommittee resolved:

Moved Cr Malcolm HerrmannS/- Peter Robertson

Carried47

1. That Peter Robertson be the Presiding Member of the Audit Committee until 31July 2015

2. That Peter Brass be the Presiding Member of the Audit Committee from 1 August2015 until 31 July 2016

3. That Paula Davies be the Presiding Member of the Audit Committee from 1August 2016 until 31 July 2017

At the 1 June 2016 meeting, the Committee discussed the merits of extending the PresidingMember terms to coincide with the finalisation of the financial statements.

On 4 August 2016, Independent Member, Paula Davies, advised the Administration ofchanges to her employment circumstances which had the potential to preclude her abilityto adequately discharge the responsibilities of the Presiding Member role.

At the 15 August 2016 Audit Committee meeting the Committee resolved:

Moved Paula DaviesS/- Cr John Kemp 26

The Audit Committee resolves:1. That the report be received and noted2. That the resolution of 1 December 2014 regarding Item 6.1 – Audit Committee

Election of Presiding Member be rescinded.3. To appoint Peter Brass as the Adelaide Hills Council Audit Committee Presiding

Member for the period 15 August 2016 to 22 November 2016 to cover the periodup to the finalisation of the financial accounts and the report to Council by thePresiding Member.

Carried

3. ANALYSIS

Restructuring the term of the Presiding Member to align with the financial statements (andAnnual Report) has merit and this was resolved at the Audit Committee’s 15 August 2016meeting to extend the current Presiding Member to 22 November 2016.


The recent practice of the Committee has been to rotate the Presiding Member roleannually between the Independent Members however the legislation and TOR do notprevent a Council Member being appointed to the role.

The circumstances of the Independent Member, Paula Davies have changed and she hasnotified the Administration that she is now available to be nominated for the PresidingMember of the Audit Committee. If the Committee so determined, selecting Paula Daviesas the next Presiding Member of the Audit Committee would align with the intent of theCommittee’s (now rescinded) resolution on 1 December 2014.

At its 22 November 2016 Ordinary meeting, the Council will be considering a reportrecommending the:

1. review of Section 41 and Advisory Groups structures to promote the achievement ofthe Strategic Plan (which was adopted by Council on 25 October 2016); and

2. appointment of Council Members to the Audit Committee for the balance of theCouncil term (i.e. November 2018).

Notwithstanding the consideration of the Council at its 22 November meeting, on the basisof the current Committee Members terms, only the Independent Members are eligible forappointment to the Presiding Member role for the period post 25 November 2016.

Election Process

The Audit Committee TOR does not prescribe a process for the election to the PresidingMember role however, for information, Council’s Code of Practice for Meeting Procedures,which applies to Council and SPDPC meetings provides the following ‘Election Process’which has been slightly amended to remove reference to Council/SPDPC:

Nominations will be called for the position/s to be filled. Members absent from the meeting may nominate for a position in writing/email in

advance to the CEO to have their nomination recognised. If there are more nominees that positions to be filled, an election will be necessary. The CEO (or another Council staff member) will be appointed as the Returning Officer

and may enlist other Council staff to assist with the conduct of the vote and thecount.

The method of voting will be by secret ballot. Each Member shall have one vote. The voting method to be used for both single and multiple member elections is the

preferential system. Ballot papers will be provided and the nominee’s names drawn to determine the

order on the ballot paper. In the event of a tie, the result will be decided by drawing lots, the candidate first

drawn being the candidate excluded. After all votes have been cast, the Returning Officer shall publically announce the

final votes cast for each candidate and formally declare the result of the election. The ballot papers from each secret ballot will be shredded. Each appointment is by way of a resolution of the Committee and is for the

remainder of the Committee’s term unless otherwise resolved for that position.


4. OPTIONS


I. To appoint an Independent Member as the Presiding Member for the term 23November 2016 up to 31 July 2017 (Recommended) or any shorter period; or

II. To determine not to elect a Presiding member at the time and reconsider the matteronce the appointment of Council Members to the Audit Committee has occurred(i.e.at the February 2017 meeting or a Special Meeting in the interim). This is notrecommended as it will leave the Committee without a Presiding Member post 22November 2016.



Item: 6.9



Subject: Risk Management Plan Update

For: Information

SUMMARY

This report provides the Audit Committee with an update on Risk Management activities includingthe current status of the Strategic Risk Profile and Management Plan.

In relation to the Strategic Risk assessments, there has been no change to the risk ratings from thelast (August 2016) assessment.

In relation to the implementation of Mitigation Actins to manage the Strategic Risks, the followingresults have been achieved which are an improvements on the August 2016 results – Completed35%, In Progress 46% and Overdue 19%.

RECOMMENDATION


1. GOVERNANCE



Key Issue 4.1 Managing Risk and ResponsibilityKey Action 4.1.4 Update the risk management framework, which addresses workplace

health and safety, emergency management, business continuity, publicliability and legislative accountability

Adelaide Hills Council – Audit Committee Meeting 31 October 2016Risk Management Update

Legal Implications

A number of sections of the Local Government Act 1999 require councils to identify andmanage the risks associated with its functions and activities. Further, s125 requires councilto have appropriate internal controls.

Similarly the Work Health & Safety Act 2012 is structured around the protection of workersand others against harm to their health, safety and welfare through the elimination orminimisation of risk arising from work or specified substances or plant.


Improvements in the implementation of the risk management framework s will assist inmitigating the risk of:

A lack of effective risk management occurs which leads to greater uncertainty in theachievement of objectives and/or negative outcomes.



While there are no direct financial or resource implications from this report, a number ofStrategic Risk Profile and Management Plan treatments are impacted by fundinglimitations.


There is a high expectation that Council has appropriate corporate governance processes inplace including an effective corporate risk management system.


Environmental matters have been considered within the development of the Strategic RiskProfile and Management Plan.


Consultation has occurred internally with the directors who are the owners of strategicrisks and with managers and other relevant officers in the development of the risk profileand mitigating actions.

2. BACKGROUND

Council adopted the revised Risk Management Policy at its 25 February 2014 Councilmeeting. The Audit Committee considered the key elements of the Corporate RiskManagement Framework at its May 2014 meeting and suggested a number ofenhancements. The revised Framework was adopted by Council at its 24 June 2014meeting.


A Strategic Risk Profile and Management Plan was developed documenting eleven strategicrisks (SR), with SR 9 broken into three sub risks. The strategic risks are described as:

1. Failure to plan at the local and regional level for the future development and futurerequirements of the area. (F1)

2. Failure to deliver projects, programs and services in accordance with plans (time,budget, quality)

3. Failure to provide for the welfare, well-being and interests of the community (F)4. Failure to take measures to protect the community from natural and other hazards

(F)5. Failure to manage, develop, protect, restore, enhance and conserve the environment

in an ecologically sustainable manner and to improve amenity. (F)6. Failure to provide appropriate infrastructure for the community (F)7. Failure to promote the Council area and provide an attractive climate and locations

for the development of business, commerce, industry and tourism (F)8. Failure to manage and develop public areas vested in, or occupied by the Council (F)9. Failure to manage, improve and develop the resources available to the Council. (F)

a. Failure to manage, improve and develop the human resources available to theCouncil. (F)

b. Failure to manage, improve and develop the information resources available tothe Council. (F)

c. Failure to manage, improve and develop the financial resources available tothe Council. (F)

10. Failure to act as a representative, informed and responsible decision-maker in theinterests of the community. (PR2)

11. Failure to exercise, perform and discharge the powers, functions and duties underlegislation, contracts, leases and policies (PR)

The Strategic Risk Profile and Management Plan, including controls and treatment plansagainst each strategic risk, was received by the Audit Committee at its meeting on 22February 2016 and an update provided on 15 August 2016 and by Council at its ordinarymeeting on 23 February 2016.

Given the importance of regular monitoring and reporting on the proper management ofour risks and the benefits of using a specially designed risk management system, council isparticipating in the pilot and refinement of a risk management module which is beingdesigned by an Australian business, Control Track.

3. ANALYSIS

Strategic Risk Profile

The Strategic Risks are regularly reviewed by the risk owners responding to triggers in therisk environment, changes in causation or impact, changes in the control environment andon the completion of mitigation actions (which then form part of the control environment)which collectively can impact the likelihood and/or consequence of the risk.

1 F refers to function under the Local Government Act 19992 PR refers to principal role under the Local Government Act 1999


The Strategic Risks were recently reassessed and the following graphs depict the Inherent,Residual and Target ratings. There were no changes to the ratings from the previousassessment in August 2016.


Notwithstanding the absence of change in the risk ratings, the implementation ofMitigation Actions has been progressing steadily. The following graph sets out the currentstatus.

The above figures compare favourably with the August 2016 assessments of 15%completed and 85% in progress.

Revised timeframes for the overdue actions are being obtained from the MitigationOwners.

Structure Review

A structure and resourcing review is currently underway regarding the governance, riskmanagement, internal audit, procurement, emergency management and performancereporting (GRIAPEMPR) functions. The review considers legislative requirements, structuraland reporting arrangements, resource requirements and benchmarking of functions withcomparable councils. A proposed structure has been released for internal consultationregarding the creation of a dedicated resource for the risk management internal audit andemergency management functions.

The Audit Committee will be advised of the outcome of this review and any resultantstructural arrangements at the February 2017 meeting.

4. OPTIONS


I. To note the update on the Strategic Risk Profile as presented (Recommended);

II. To determine not to note either or both updates and/or identify additional actions tobe undertaken.



Item: 6.10



Subject: Internal Financial Control Update 2015/16

For: Information

SUMMARY

As at 30 June 2016, Council’s external auditors, BDO, were required to provide an opinion on internalcontrols in accordance with S125 of the Local Government Act 1999.

This report presents an update to the Committee on progress made by Council towards thedevelopment of the Internal Control Framework.

RECOMMENDATION


1. That the report be received and noted.

2. To note the further developments undertaken in improving the internal financial controls.

1. GOVERNANCE


Goal 4: A Recognised Leading PerformerSMP Key Issue: 4.2: Managing Risk & Responsibility

4.2.6 Manage and maintain the sustainable financialposition of Council

Legal Implications

Work on the Internal Controls Framework is being undertaken in conjunction with Part 3 –Accounts, Financial Statements and Audit, Local Government Act 1999 and Part 6 – Audit,Local Government (Financial management) Regulations 2011.

Adelaide Hills Council – Audit Committee Meeting 31 October 2015Internal Financial Control Update 2015/16


The implementation of the Internal Financial Control Model will assist in mitigating the riskof:

Internal control failures occur which leads to greater uncertainty in the achievementof objectives and/or negative outcomes.

Inherent Risk Residual Risk Target RiskHigh (4C) Medium (3C) Low (2E)


Satisfactory internal financial controls provide the foundation for all of Council’s financialmanagement and reporting.


Not applicable.


Not applicable.

Community Engagement/Consultation

Not applicable.

2. BACKGROUND

Councils are required to have "appropriate policies, practices and procedures of internalcontrol". In addition, Council audit committees are required to monitor the adequacy of alla Council's "accounting, internal control, reporting and other financial managementsystems and practices".

Like the audit opinion of annual financial statements, the internal controls opinion isprovided to a Council and becomes a public document, to be published with a Council’sfinancial statements along with the financial statements audit opinion.

When forming an internal controls opinion, auditors must refer, as a benchmark, to theBetter Practice Model - Internal Financial Controls which was developed in April 2012 andpublished by the LGA on advice from the SA Local Government Financial ManagementGroup.

Adelaide Hills Council – Audit Committee Meeting 31 October 2015Internal Financial Control Update 2015/16

3. ANALYSIS

From the start of the 2015/16 financial year, Adelaide Hills Council, along with all non-metropolitan councils, now has the same obligation (re internal financial controls) as theauditors of metropolitan Councils have had for the previous two years. Council’s externalauditors, BDO, were required to provide an opinion on internal controls in accordance withs129(3)(b) of the Act.

On 29 August 2016 BDO attended Council’s Stirling office to undertake transactional samplefieldwork and final testing of Council’s internal controls assessments and reviews.

BDO's Audit Completion Report, presented to audit Committee in draft format on 4October 2016 states:

We intend providing an unqualified audit report In relation to compliance withSection 125 of the Local Government Act 1999.

Whilst BDO found three matters that Council does not have any formal policy or currentdocumentation on, an unqualified audit opinion has been received. These are:

Grant Policy Employee Termination Policy and a Current Contract Register.

Over the course of 2016/17 Council will continue to enhance the internal controlenvironment in order to ensure ongoing compliance with our legislative requirements.Reporting to the Audit Committee during 2017 will include updates from the Control Tracksystem which is used to monitor our controls and agreed actions.

4. OPTIONS

Audit Committee is limited to receiving and noting this report.



Item: 6.11



Subject: 2017 Audit Committee Meeting Dates

For: Decision

SUMMARY

One of the fundamental principles of local government is that council and council committee,wherever possible, should be open to the public and document documents made available.

The setting and publication of the meeting times and locations of Audit Committee meetings isrequired to enable public notices to be given under the Local Government Act 1999. The reportcontains the proposed Audit Committee 2017 meeting schedule for approval.

RECOMMENDATION


1. That the report be received and noted.

2. To approve the Audit Committee meeting schedule, timings and locations for 2017 asfollows:

Commencement 6.00pm

Meeting Dates andLocations

6 February 2017, 63 Mt Barker Road, Stirling

1 May 2017, 63 Mt Barker Road, Stirling

14 August 2017, 63 Mt Barker Road, Stirling

2 October 2017, 63 Mt Barker Road, Stirling

6 November 2017, 26 Onkaparinga Valley Road, Woodside

Adelaide Hills Council – Audit Committee Meeting 31 October 20152017 Audit Committee Meeting Dates

1. GOVERNANCE


Goal 4: A Recognised Leading PerformerKey Issue 4.1: LeadershipKey Action 4.1.4 Meet legislative, regulatory and good governance responsibilities and

obligations.

Legal Implications

Section 87(8) of the Local Government Act 1999 requires that the notice an ordinarymeeting of the committee must be given to members at least three (3) clear days beforethe date of the meeting.

Section 88(2) states that notice must be given a soon as practicable after the time thatnotice is given to the members of the committee


The setting of a schedule of ordinary meetings for the Audit Committee will assist inmitigating the risk of:


Inherent Risk Residual RiskExtreme (5C) Medium (4D)


Council’s current budget contains provision for the costs associated with the notificationand conduct of audit Committee meetings


The timing and location of Audit Committee meetings should be considerate of the desirefor community members to attend.


Not applicable.


The community was not consulted on the timing and location of the proposed AuditCommittee meetings however, once determined, this information is advertised on theCouncil website.

Adelaide Hills Council – Audit Committee Meeting 31 October 20152017 Audit Committee Meeting Dates

2. BACKGROUND

The Council set the 2016 meeting schedule for Council and SPDPC meetings and it isanticipated that a similar schedule will be carried forward into 2017 as follows:

SPDPC 2nd TuesdayCouncil 4th Tuesday

3. ANALYSIS

On this basis, the following schedule is proposed for the Audit Committee in 2017 whichwill allow recommendations from the Audit Committee to be considered by the Council inthat same month.

6 February 2017

1 May 2017

14 August 2017

2 October 2017

6 November 2017

4. OPTIONS


I. To resolve to adopt the recommendations regarding the schedule, timing andlocations of Audit Committee meetings; or

II. To amend an/all aspect(s) of the recommendations regarding the schedule, timingand locations of Audit Committee meetings.

REPORT TO THE ADELAIDE HILLS COUNCILON THE OPERATIONS OF THE AUDIT COMMITTEE DURING 2016

INTRODUCTION

As outlined in Clause 4.2 of the Terms of Reference for the Audit Committee, the Presiding Memberwill attend a meeting of the Council at least once per annum to present a report on the activities ofthe Committee. This report provides an overview of the Adelaide Hills Council’s Audit Committeeoperations for the 2016 year.

This report includes:

A summary of the work the Committee performed during the year aligned to theCommittee’s Terms of Reference;

Details of meetings, including the number of meetings held during the period, and thenumber of meetings attended by each member; and

• Advising the future work scheduled for 2017.

The report is intended to invite comment from the Council on all of the above.

SUMMARY OF WORK PERFORMED AGAINST THE TERMS OF REFERENCEFor 2016 the Audit Committee had established a robust framework for the provision of informationto meet the objectives established within the Terms of Reference. As a consequence some 43reports were considered by the Committee for consideration, and where appropriate,recommendations subsequently provided to Council.

The following sections of this report provide a brief summary of the work undertaken by keyobjective.

Financial Reporting and Prudential RequirementsA review of the Long Term Financial Plan (LTFP) was undertaken during February prior toconsideration of the draft Annual Business Plan and Budget. Emphasis of the Committee was on theassumptions that had been used in the development of the Plan and alignment against previousversions that had been reviewed. The Committee recognised the significant work that had gone intodeveloping a new model for the LTFP and the additional flexibility this would provide in monitoringthe organisation’s financial sustainability moving forward.

Consideration of the draft Annual Business Plan and Budget noted that the targets that had beenestablished within the LTFP were met for operating income and expenditure as well as the capitalprogram. The achievement of these targets provided a level of assurance around the ongoingfinancial sustainability of the Council.

Throughout the year the Committee assessed each quarterly budget review and sought clarificationwhere required. There were no areas of concern for the Committee in relation to these reviews.

At the 4 October 2016 meeting the Committee had a robust discussion around the draft AnnualFinancial Statements that had been presented. The review provided assurance that not only had therequirement of the Local Government Act 1999 had been met, but that the result achieved alignedclosely to the forecast projected by Council for the year. The Committee proposed a number ofminor amendments to the Statements that were subsequently incorporated by the administration.The Committee reiterated its concerns with the impact in the timing of receipt of Financial

Assistance Grant funding that occurred in 2014/15 for the 2015/16 financial year. Notes to theaccounts were included to provide clarity on this issue.

At the time of writing this report it was expected that Council would receive an unqualified AuditOpinion.

Internal Controls and Risk Management SystemsThere was a large degree of emphasis of the Committee this year on internal controls and riskmanagement.

Internal ControlsFrom the start of the 2015-16 financial year, Adelaide Hills Council now has the same obligationregarding the development and maintenance of a system of internal financial controls, consistentwith the requirements of the Local Government (Financial Management) Regulations 2011, as themetropolitan Councils have had for the past two years. This required Council’s external auditors,BDO, to provide an opinion on internal controls in accordance with s129(3)(b) of the Act. Theseobligations are extensive and as such the Committee had sought regular updates on the status ofworks leading up to and throughout the 2015/16 financial year.

As reported last year monitoring against the key risks and controls has been generated from asystem called ‘Control Track’. This system tracks agreed treatment plans by responsible officer.

Whilst a final Audit Opinion was yet to be received at the time of writing this report, BDO haveadvised within their draft Completion Report that “At the date of this completion report weanticipate issuing unqualified opinions on both the financial statements and internal controls”.

Risk ManagementThroughout the year the Audit Committee has reviewed updates on the organisation’s strategic risksand agreed actions. Whilst the Committee is comfortable with the progress being made in oversightof risk, there is a need for improved reporting of the risk profile of Council to ensure bothoperational and strategic risks have appropriate controls and mitigation strategies in place.

The Committee was provided with a demonstration of a new risk management system that council isparticipating in piloting. It is expected that the full implementation of this system will providedsignificant benefits to Council during 2017.

The Committee also reviewed responses to the LGA MLS self-assessment questionnaire which isdesigned to monitor council’s business risk profile and measure ongoing business improvement aswell as provide a comparison with other Councils within the Region and sector.

Whistleblowing

A review of the Whistleblower’s Policy is required to be undertaken annually. This review wascompleted in February 2016 with only minor edits made to the Policy.

Internal AuditThe Committee has established a program of internal audits that has been developed to recognisekey areas of risk. Individual audits undertaken are reported to the Committee, at which time theCommittee has been providing an opinion on the responses to recommendations that have beenprepared by staff. The program is also monitored quarterly to ensure that appropriate actions arebeing undertaken.

During the current year progression of new audits has been limited given the changes that occurredwithin the leadership of the Risk and Governance area. The Committee has however established anextended program of audits for 2017 supported by an increase in the Internal Audit budget.

External AuditThe Audit Committee met with Council’s External Auditors, BDO, in the absence of management atthe 4 October 2016 meeting. The auditors advised that the financial management and reporting ofcouncil activities was of a very good standard. This allowed for the external audit to be completedwithin the scheduled timetable and supporting documentation was readily available. The auditcompletion report highlighted some key accounting and audit matters including some internalcontrol deficiencies that were adequately addressed my management. These will be reviewed byexternal audit during the following years audit to ensure all items have been appropriately actioned.

The Committee also assessed the External Auditor’s independence and objectivity taking intoaccount relevant professional and regulatory requirements and the extent of Council’s relationshipwith the auditor, including the provision of any non-audit services. The Committee is satisfied thatfor the 2015/16 financial year, there were no relationships between the External Auditor and theCouncil that compromise audit independence, and this was also confirmed in writing by the externalauditor.

Economy and Efficiency AuditsThe Committee has reviewed biannual reports from the Service Improvement Benefits Realisationwork that is being undertaken by Council. Recognising that Council’s LTFP has included efficiencygains in order to offset rising costs, the Committee sees progression of this Plan as important inensuring ongoing value in service provision is achieved.

In considering the reports the Committee made recommended changes to ensure that the benefitsbeing identified were both quantifiable and auditable. These recommendations have now beencaptured in the process moving forward.

DETAILS OF MEETINGSDuring 2016, a total of five (5) Audit Committee meetings were held being:

• 22 February 2016• 1 June 2016• 15 August 2016• 4 October 2016• 31 October 2016

The above meeting cycle is consistent with the requirements of the Committee’s Terms ofReference which requires at least four meetings per year to be held.

The Audit Committee member attendance at meetings during the year was as follows:

Name Attendance CommentsPeter Brass 5/5 Presiding MemberPeter Robertson 5/5Paula Davies 5/5Cr Malcolm Herrmann 5/5Cr John Kemp 5/5

FUTURE WORK PROGRAM PROPOSALAt the 31 October 2016 meeting of the Committee a work plan for 2017 was established. This workplan will ensure that the Committee continues to undertake its principal functions as set out inSection 126(4) of the Local Government Act 1999 which include:

• reviewing annual financial statements to ensure that they present fairly the state of affairsof the Council;

• proposing, and providing information relevant to, a review of the Council’s strategicmanagement plans or annual business plan; and

• Liaising with the Council's auditor.

CONCLUSIONThe body of work undertaken by the Committee is continuing to develop over time and theCommittee is striving to ensure that its work is useful in the context of contributing to Adelaide HillsCouncil strategic objectives. The Committee has also completed a self-assessment of its ownperformance for continuous improvement and invites Council’s feedback on the opportunities forcontinuing development of the Committee’s operations.

Finally, we would like to thank the other members of the Committee for their ongoing efforts inensuring that the work undertaken is done so at both a highly professional and robust level. Wewould also like to thank those staff involved in preparing the reports and responding to questions atmeetings, as their involvement has significantly aided in the review and decisions of the Committee.

Peter BrassPresiding MemberAdelaide Hills Council Audit Committee

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