Agenda of Audit and Risk Committee - Wednesday, 10 August 2022

CITY OF BUSSELTON

MEETING NOTICE AND AGENDA – 10 August 2022

TO: THE MAYOR AND COUNCILLORS

NOTICE is given that a meeting of the Audit and Risk Committee will be held in the Committee Room, Administration Building, Southern Drive, Busselton on Wednesday, 10 August 2022, commencing at 9.00am.

The attendance of Committee Members is respectfully requested.

DISCLAIMER

Statements or decisions made at Council meetings or briefings should not be relied on (or acted upon) by an applicant or any other person or entity until subsequent written notification has been given by or received from the City of Busselton. Without derogating from the generality of the above, approval of planning applications and building permits and acceptance of tenders and quotations will only become effective once written notice to that effect has been given to relevant parties. The City of Busselton expressly disclaims any liability for any loss arising from any person or body relying on any statement or decision made during a Council meeting or briefing.

Mike Archer

CHIEF EXECUTIVE OFFICER

3 August 2022

Audit and Risk Committee 6 10 August 2022

6. Reports

6.1 2021/22 INTERIM AUDIT REPORT

STRATEGIC THEME	LEADERSHIP - A Council that connects with the community and is accountable in its decision making.
STRATEGIC PRIORITY	4.2 Deliver governance systems that facilitate open, ethical and transparent decision making.
SUBJECT INDEX	Financial Operations
BUSINESS UNIT	Financial Services
REPORTING OFFICER	Manager Financial Services - Paul Sheridan
AUTHORISING OFFICER	Director Finance and Corporate Services - Tony Nottle
NATURE OF DECISION	Executive: Substantial direction setting, including adopting budgets, strategies, plans and policies (excluding local planning policies); funding, donations and sponsorships; reviewing committee recommendations
VOTING REQUIREMENT	Simple Majority
ATTACHMENTS	Attachment a Interim Management Letter to Mayor - City of Busselton - 30 June 2022 ⇩ Attachment b Interim Management Letter Attachment - City of Busselton - 30 June 2022 ⇩

OFFICER RECOMMENDATION

That the Council accepts the 2021/22 Auditors’ Interim Audit Report for the year ended 30 June 2022 as provided in Attachment B.

EXECUTIVE SUMMARY

The signed Independent Auditor’s Interim Management Letter with attachment, in relation to the 2021/22 Financial Year Interim Audit, was received from the Office of the Auditor General (OAG) on 13^th June 2022, and is provided to Committee Members as attachments to this report.

Two (2) minor findings from the Interim Audit were noted in the letter and recommendations provided. The City has provided management responses against each finding.

The action items have now been completed and therefore these findings are now closed out.

BACKGROUND

Pursuant to Section 7.9 of the Local Government Act 1995 (the Act), an Auditor is required to examine the accounts and annual financial report submitted by a local government for audit. The Auditor is also required, by 31 December following the financial year to which the accounts and report relate, to prepare a report thereon and forward a copy of that report to:

(a) The Mayor or President

(b) The Chief Executive Officer; and

Furthermore, in accordance with Regulation 10 (4) of the Local Government (Audit) Regulations 1996, (the Regulations) where it is considered appropriate to do so, the Auditor may prepare a Management Letter to accompany the Independent Auditor’s Report, which is also to be forwarded to the persons specified in Section 7.9 of the Act.

The Interim Management Letter provides an overview of the audit process and outcomes, and also identifies any matters that, while generally not material in relation to the overall audit of the financial report, are nonetheless considered relevant to the day to day operations of the City.

As part of the annual audit process, the auditor conducts an Interim Audit prior to the end of the financial year. The focus of the Interim Audit is to assess the overall control environment, but not for the purpose of expressing an opinion on the effectiveness of internal control, and to obtain an understanding of the key business processes, risks and internal controls relevant to our audit of the annual financial report. Specifically, the Interim Audit includes:

· updating OAG understanding of City’s current business practices ;

· updating OAG understanding of the control environment and evaluating the design and implementation of key controls ;

· sample testing of transactions to confirm the accuracy and completeness of processing accounting transactions; and

· clarifying significant accounting issues before the annual financial report is prepared for audit.

The Chairperson of the Audit and Risk Committee (ARC) and City officers met with the OAG at an entrance meeting held on the 9^th May 2022. At this meeting, the OAG outlined the process for the annual audit (including interim and final).

The interim audit took place from the 23^rd May to the 3^rd June 2022. An exit meeting was held with City officers on the 7^th June 2022. The OAG has since provided their signed Interim Management Letter, attached to this report.

OFFICER COMMENT

As part of the 2021/22 Interim Management Letter, the Auditor made two findings, deemed as minor, that were previously noted in the findings for the final audit for the 2020/21 financial year. These were:

1. Asset Management Policy/Procedure

2. Asset Stocktake Policy/Procedure

Full details and City of Busselton Management comments can be seen in the 2021/2022 Management Letter attachment.

City staff have since prepared the Operational Practice – Assets which covers both minor findings and has been approved by the CEO on the 19^th July 2022. These matters are now complete.

Statutory Environment

Matters pertaining to the financial audit of a local government authority are detailed within:

· Local Government Act 1995 - Section 7.9 and Section 7.12A.

· Local Government (Financial Management) Regulations 1996.

· Local Government (Audit) Regulations 1996 – Regulation 16.

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

There are no financial implications associated with the officer recommendation.

Stakeholder Consultation

No external stakeholder consultation was required or undertaken in relation to this matter.

Risk Assessment

An assessment of the potential implications of implementing the officer recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. No risks of a medium or greater level have been identified.

Options

The Audit and Risk Committee may determine to make specific recommendations in relation to the audit findings and the actions identified by management in addressing these. Given the operational nature of the one issue that arose and that this has now been addressed, officers do not think specific resolutions are necessary.

CONCLUSION

The City received two minor findings as a result of the Interim Audit 2021/22, which have now been addressed and closed out.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.

Audit and Risk Committee		8		10 August 2022
6.1	Attachment a		Interim Management Letter to Mayor - City of Busselton - 30 June 2022

Audit and Risk Committee		10		10 August 2022
6.1	Attachment b		Interim Management Letter Attachment - City of Busselton - 30 June 2022