Finance Policy Committee
Agenda
3 March 2022
Notice is hereby given, in accordance with the provisions of the Local Government Act 1993 that a Finance Policy Committee meeting of ORANGE CITY COUNCIL will be held in the Council Chamber, Civic Centre, Byng Street, Orange on Thursday, 3 March 2022.
David Waddell
Chief Executive Officer
For apologies please contact Administration on 6393 8106.
Finance Policy Committee 3 March 2022
2.1 Independent Members of the Audit, Risk and Improvement Committee (ARIC)
1 Introduction
1.1 Declaration of pecuniary interests, significant non-pecuniary interests and less than significant non-pecuniary interests
The provisions of Chapter 14 of the Local Government Act, 1993 (the Act) regulate the way in which Councillors and designated staff of Council conduct themselves to ensure that there is no conflict between their private interests and their public role.
The Act prescribes that where a member of Council (or a Committee of Council) has a direct or indirect financial (pecuniary) interest in a matter to be considered at a meeting of the Council (or Committee), that interest must be disclosed as soon as practicable after the start of the meeting and the reasons given for declaring such interest.
As members are aware, the provisions of the Local Government Act restrict any member who has declared a pecuniary interest in any matter from participating in the discussion or voting on that matter, and requires that member to vacate the Chamber.
Council’s Code of Conduct provides that if members have a non-pecuniary conflict of interest, the nature of the conflict must be disclosed. The Code of Conduct also provides for a number of ways in which a member may manage non pecuniary conflicts of interest.
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Recommendation It is recommended that Committee Members now disclose any conflicts of interest in matters under consideration by the Finance Policy Committee at this meeting. |
RECORD NUMBER: 2022/158
AUTHOR: Charlotte O'Meara, Risk Management Lead
EXECUTIVE Summary
Council has completed a public Expression of Interest process to seek interested persons to be appointed as the two independent members of the Audit, Risk, and Improvement Committee (ARIC). This report provides a recommendation to Council for the appointment of the two independent voting members for the ARIC and the adoption of the Audit Risk and Improvement Committee Charter.
This report also provides a summary of the new Office of Local Government (OLG) draft Guidelines on Risk Management and Internal Audit which change the regulatory requirements for the ARIC, including the compulsory requirement for all Councils to have an ARIC in place by 4 June 2022.
Link To Delivery/OPerational Plan
The recommendation in this report relates to the Delivery/Operational Plan strategy “17.1 Collaborate - Provide representative, responsible and accountable community governance”.
Financial Implications
The two independent members are remunerated. Current fees and charges have been set by the Council at $1,050 (+GST) for the Chair per meeting and $888 (+GST) for the other member per meeting. Councillor members of the Committee are not paid. Independent members are also entitled to claim per kilometre rate reimbursement for travel to and from meetings based on the rates in the Local Government (State) Award. As this is a Statutory Committee these funds have been allocated and budgeted on an ongoing basis.
Policy and Governance Implications
ARIC is a Statutory Committee that must be in place by 4 June 2022 and all new requirements as denoted by the draft OLG Guidelines be implemented by June 2027.
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1. That Council appoint Bill Gillooly and Robert Lagaida as the two independent members of the Audit, Risk and Improvement Committee until September 2024 unless otherwise resolved by Council. 2. That Council adopt the Audit, Risk, and Improvement Committee (ARIC) Charter. 3. That a formal induction on the Committee’s purpose and responsibilities be arranged for Committee members. 4. That Council note the proposed requirements of the new draft OLG Guidelines. |
further considerations
Consideration has been given to the recommendation’s impact on Council’s service delivery; image and reputation; political; environmental; health and safety; employees; stakeholders and project management; and no further implications or risks have been identified.
SUPPORTING INFORMATION
Background
Council has had an ARIC since 2009. The duties and responsibilities of the Committee are outlined in the attached Charter.
The Charter identifies the composition of the ARIC as determined by the prior Council, with two independent members, a Councillor, and the Mayor of the day as core voting members. Non-voting members who attend include the Chief Executive Officer (CEO), Risk Management Lead, Director of Corporate and Commercial Services and other subject matter experts as required from time to time.
Appointments to the ARIC terminate at the conclusion of a term of Council, therefore this term of the ARIC will be until September 2024 unless otherwise resolved by Council. The prior Council approved an expression of interest process to seek nominations for independent members of the Committee. The Councillor voting membership was resolved at Council’s meeting of 15 February 2022. The Councillor membership consists of the Mayor and Councillor Duffy, with Councillor Kinghorn as an alternate.
The two independent members are remunerated. Current fees and charges have been set by the Council at $1,050 (+GST) for the Chair per meeting and $888 (+GST) for the other member per meeting. Councillor members of the Committee are not paid. Independent members are also entitled to claim per kilometre rate reimbursement for travel to and from meetings based on the rates in the Local Government (State) Award.
Appointment of Independent Members
The expression of interest process has been completed after advertisements were placed in local and metropolitan newspapers. Five responses were received by the closing date.
Council is provided with the attached applications which were assessed against the below assessment criteria to be appointed as independent members of the Committee. Pursuant to the current ARIC Charter one of the independent members will be elected as the Chair by the Committee:
· candidates were assessed against the criteria in the Charter and the Expression of Interest. Some of the requirements of the new draft OLG Guidelines were included in the selection criteria in the expression of interest.
· breadth of experience of candidates in similar sectors and as Directors of Board or in similar roles as a voting member and/or chair of Audit and Risk Committees.
· relevant professional knowledge and expertise in planning, accounting, financial, legal, industrial relations, enterprise risk management and/or audit.
· independence of members. The assessment of the applicants’ independence has been considered against the Charter for the Committee and the OLG Guidelines (particularly part 4) both of which are attached. In particular, the need for existing/former employees of any council to have a hiatus of two years prior to appointment to Audit and Risk Management Committees.
· reference checking of the two recommended candidates was undertaken to confirm and expand on the skills and attributes outlined in their applications.
Bill Gillooly and Robert Lagaida are recommended as the independent members of the ARIC. Both candidates presented strong applications that satisfy the selection criteria.
Draft Office of Local Government Guidelines Risk Management and Internal Audit for local councils in NSW
In 2016 the Local Government Act 1993 (NSW) was amended to require Councils to appoint an ARIC. The OLG has been working with Councils and other key stakeholders to develop a framework that will support the operation of ARICs and the establishment of a risk management and internal audit function in each council.
The new framework will be governed by the regulations and Guidelines for risk management and internal audit for local councils in NSW. These will prescribe the minimum standards for each Council’s audit, risk and improvement committee, risk management framework and internal audit function. The draft Guidelines are attached.
The guidelines are still in draft and may be subject to change based on feedback from Local Councils. The compliance deadlines and requirements are outlined below.
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Deadline |
Requirement |
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June 2022 |
Councils must appoint an ARIC |
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June 2024 |
Risk Management Framework must comply with guidelines |
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June 2024 |
Internal audit function must comply with the guidelines |
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June 2024 |
Annual attestation requirements for risk management and internal audit |
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June 2027 |
Membership of ARIC must meet guidelines |
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June 2027 |
Annual attestation requirements for ARIC |
Appointment of ARIC
By June 2022 each Council must have appointed an ARIC to comply with section 428A of the Local Government Act. Council is compliant with this requirement.
The ARIC must develop a strategic plan every four years to ensure that all the matters listed in section 428A of the Local Government Act are reviewed by the committee and internal audit function over each council term. The plan will be developed at the first ARIC meeting.
Membership of ARIC
The draft guidelines set out membership requirements for ARICs. Councils are not required to comply with these requirements until June 2027. The guidelines also remain in draft and are yet to be finalised by the OLG.
Orange Council is categorised as a Tier 2 Council under the Guidelines. All Tier 2 Councils must at a minimum have three members comprising:
· 1 independent chair prequalified under the NSW Government’s prequalification scheme
· 1 independent member prequalified under the NSW Government’s prequalification scheme
· 1 independent person that meets the eligibility criteria
The key change to the guidelines is that the Councillor members will be non-voting members of the ARIC, with the independent members the only voting members of the Committee.
This is a controversial proposed amendment and several Councils have provided submissions on this change, so the next version of the draft Guidelines may revise this requirement.
Annual attestation requirements
The draft guidelines also require the CEO to attest each year in the Council’s annual report whether the Council has complied with the following requirements:
· that Council has adopted a risk management framework that is consistent with current Australian risk management standards.
· That the ARIC reviews the implementation of Council’s risk management framework and issues an assessment of the effectiveness of the council’s risk management framework to the governing body each council term.
This requirement will take effect in June 2027, allowing a five-year transition period.
1 Audit, Risk and Improvement Committee (ARIC) Charter - Draft, D22/9176⇩
2 Expression of Interest - Audit and Risk Committee - Orange City Council - 2022 PDF, D22/8127⇩
3 Draft-Guidelines-for-Risk-Management-and-Internal-Audit-Framework-for-Local-Councils-in-NSW August 2021, D22/8132⇩
4 Letter Bill Gillooly Response to ARIC EOI 2022, D22/8143⇩
5 Curriculum Vitae Bill Gillooly - ARIC application - 2022, D22/8145⇩
6 Letter David Kortum Orange City Council - EOI ARIC - 2022, D22/7621⇩
7 Robert Lagaida response to ARIC EOI 2022, D22/8639⇩
8 Robert Lagaida - Resume, D22/8640⇩
9 Ron Gillard response to OCC EOI ARIC Independent member February 2022, D22/9293⇩
10 Les Hullick - response to OCC EOI ARIC Independent Member February 2022, D22/9292⇩
Attachment 1 Audit, Risk and Improvement Committee (ARIC) Charter - Draft
Attachment 2 Expression of Interest - Audit and Risk Committee - Orange City Council - 2022 PDF
Attachment 3 Draft-Guidelines-for-Risk-Management-and-Internal-Audit-Framework-for-Local-Councils-in-NSW August 2021
Attachment 5 Curriculum Vitae Bill Gillooly - ARIC application - 2022
Attachment 6 Letter David Kortum Orange City Council - EOI ARIC - 2022
Attachment 9 Ron Gillard response to OCC EOI ARIC Independent member February 2022
