18 Mar 03 - Corporate Governance Framework · “Corporate Governance is about formalising and making clear and consistent the decision-making processes in the organisation. An effective

AUDIT COMMITTEE ON 19 MARCH 2007

(Presiding Member: Ms L Scinto)

The meeting of the Audit Committee will be held in the Civic Centre, 128 Prospect Road, Prospect commencing at 7:00pm

A G E N D A

1. ON LEAVE – Nil 2. APOLOGIES – Kevin Benger 3. INAUGURAL MEETING 4. PRESIDING MEMBER’S REPORT 5. QUESTIONS WITHOUT NOTICE 6. QUESTIONS WITH NOTICE - Nil 7. DEPUTATIONS 8. NOTICES OF MOTION – Nil 9. REPORTS

Reports of the Chief Executive Officer Nil

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Reports of the General Manager Infrastructure & Corporate Services

9.1 Corporate Governance Framework and Risk Management Policy (Pages 1-68, Recommendation Page 3)

9.2 Efficiency and Economy Audit (Pages 69-89, Recommendation Pages 71-72)

9.3 Date of Audit Committee Meetings (Pages 90-92, Recommendation Pages 91-92)

10. GENERAL BUSINESS

Council has resolved that an Agenda Item “General Business” be included on Council and Committee Agendas for members to raise matters of a minor nature for action by the Administration, or to call for reports.

11. GENERAL BUSINESS – URGENT MATTERS

Council has resolved that an Agenda Item “General Business – Urgent Matters” be included on Council and Committee Agendas for members to raise matters of a genuinely urgent nature, is not a change to Council Policy and can not wait until the next Council or Committee meeting recognising that the leave of meeting will be required for each item on each occasion.

12. CONFIDENTIAL ITEMS

Nil

13. CLOSURE

Justin Commons General Manager Infrastructure & Corporate Services

15 March 2007

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ITEM NO.: 9.1 ON AGENDA TO: Audit Committee on 19 March 2007 FROM: General Manager Infrastructure & Corporate Services SUBJECT: Corporate Governance and Risk Management Policy FILE NO.: 1. PURPOSE OF REPORT

1.1 To recommend that Council adopt the revised Corporate Governance Framework and Risk Management Policy.

2. RELEVANCE TO STRATEGIC DIRECTIONS / POLICY

2.1 Councils Strategic Directions includes the goal of “Supporting a city where the elected representatives, Council staff and the community work in a collaborative and participatory environment”.

2.2 Corporate Governance

2.3 Risk Management Policy

3. COMMUNITY INVOLVEMENT

3.1 Nil.

4. DISCUSSION

4.1 Organisations are facing ever increasing challenges associated with minimising risks in the performance of their operations and the attainment of their objectives. Local Government Councils, given the nature of their operations, are particularly exposed to a myriad of risks, both internally and externally, and continue to strive to build trust and credibility with their community

4.2 There has been an increased focus placed on both Corporate Governance and Risk Management in recent years. Reasons for this include the tragedies associated with terrorist attacks, large corporate failures, increasing litigation, the collapse of large insurance companies and the associated increase in premiums.

4.3 The Local Government Sector has highlighted in its ‘Future Directions Program’ that it is committed to sound local government in South Australia. Councils recognise the importance of being responsive to their communities’ needs through operating in a democratic, accountable, just, fair participatory and transparent fashion.

4.4 In order to ensure that the Prospect community and ratepayers have assurance that the organisation (comprising both Council and the administration) is fulfilling its responsibilities with due diligence, openness and accountability, it is recommended that

H:\Reports\Audit Committee\2007\19 Mar 07 - Corporate Governance Framework.doc City of Prospect

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Council adopt and maintain a Corporate Governance Framework and Risk Management Policy.

4.5 The Draft Corporate Governance Framework provided as Attachments 1-48 was originally adopted by Council in March 2003 and has been updated to reflect changes that have occurred since that date.

4.6 One of the objectives of this Corporate Governance Framework is to assure stakeholders that the City is pursuing its objectives and fulfilling its responsibilities with due diligence and accountability. A fundamental component of this Framework is the effective management of the City’s risks in order to protect its employees, assets, liabilities and community against potential losses, to minimise uncertainty in achieving its goals and objectives and to maximise the opportunities to achieve its Vision.

4.7 Provided as Attachments 49–54 is the revised Draft Risk Management Policy. Risk management is the systematic approach to managing the City’s risks through the process of identification, analysis, evaluation, treatment, communication and monitoring of risks. This approach is based on the Australian Standard for Risk Management (4360:1999). To be effective, these processes must be integrated into the corporate culture and business operations at the strategic, project and operational levels.

4.8 Establishing an appropriate risk management program assists with both the provision of services in an effective and relevant manner, whilst at the same time ensuring compliance with a variety of statutory and legal requirements. It also assists Council to promote and demonstrate corporate fairness, transparency and accountability.

4.9 Whilst there has been an increased focus placed on Risk Management in recent years, Risk Management has been a fundamental component of prudential management practices for many years.

4.10 The Draft Risk Management Policy provides a framework within which the administration may develop and implement business processes to manage risks. The development of an Internal Audit Program that provides Council (via the Audit Committee) and the community with a level of assurance that the organisation is managing its risk is one such process.

4.11 To provide the newly created Audit Committee an opportunity to better understand the risks Council needs to manage and to facilitate the development of an Internal Audit Program, it is recommended that a Risk Workshop be attended by the Audit Committee and Executive Management Team. It is suggested that this workshop should be held in April or May 2007 (subject to members availability). This will enable the Audit Committee to make a recommendation to Council regarding the proposed scope of works and potential cost of the Internal Audit Program for 2007/08 prior to Council finalising its deliberations regarding the 2007/08 budget.

4.12 Provided for information only in Attachments 55-65 is the methodology used by the administration to systematically approach the management of the City’s risks through the process of identification, analysis, evaluation, treatment, communication and monitoring of risks. This approach is based on the Australian Standard for Risk Management (4360:1999).


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5. JUSTIFICATION OF PREFERRED OPTION

5.1 The Corporate Governance Framework (as amended) confirms Councils commitment to good governance. The framework provides a broad description of the elements of governance and the processes that will ensure the City of Prospect is governed and managed to achieve its Strategic Directions and annual operational plans. It is prudent for the Audit Committee to review this framework and recommend to Council its adoption.

5.2 It is also appropriate for the Audit Committee to review the Risk Management Policy and recommend to Council its adoption.

5.3 The instrument through which the Audit Committee will be able to gain and provide a level of assurance that the Council’s risks are being managed appropriately is its Internal Audit Program. It is suggested that the best way for the Audit Committee to obtain an understanding of the risks Council manages and to facilitate the development of an Internal Audit Program, is through participation at a Risk Workshop.

6. RECOMMENDATION

6.1 It is recommended:

(1) That Council adopts the revised Corporate Governance Framework provided as Attachments 1-48 to Agenda Item 9.1 of the Audit Committee on 19 March 2007.

(2) That Council adopts the Risk Management Policy provided as Attachments 49-54 to Agenda Item 9.1 of the Audit Committee on 19 March 2007.



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Corporate GovernanceDRAFT

Adopted by Council 25 March 2003_________ 2007

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Corporate Governance March 20073

Contents

1. CORPORATE GOVERNANCE IN LOCAL GOVERNMENT ............................................................1 1.1 Introduction ................................................................................................................................................. 1 1.2 The Local Government Sector ..................................................................................................................... 2 1.3 Control, Risk Management and Innovation ................................................................................................. 2 1.4 Governance and Local Government ............................................................................................................ 3

2. GOVERNANCE STATEMENT................................................................................................................4 2.1 Introduction ................................................................................................................................................. 4 2.2 Purpose ........................................................................................................................................................ 4 2.3 Corporate Governance Framework.............................................................................................................. 4 2.4 The Role, Function and Objectives of Council............................................................................................ 5 2.5 Council Composition ................................................................................................................................... 7 2.6 Committees and Reporting Structures ......................................................................................................... 9 2.7 Role and Function of Elected Members..................................................................................................... 12 2.8 Elected Member Protection from Personal Liability ................................................................................. 14 2.9 Roles and Functions of the Chief Executive Officer ................................................................................. 15 2.10 The Relationship between the Council and the Chief Executive Officer................................................... 16 2.11 Governance Principles ............................................................................................................................... 18

3. GOVERNANCE FRAMEWORK...........................................................................................................30

4. KEY GOVERNANCE DOCUMENTS, POLICIES & PROCESSES..................................................32 4.1 Leadership & Strategy ............................................................................................................................... 32 4.2 Support for Elected Members .................................................................................................................... 32 4.3 Ethics and Values ...................................................................................................................................... 32 4.4 Monitoring and Review ............................................................................................................................. 32 4.5 Stakeholder Relationship ........................................................................................................................... 33 4.6 Risk Management and Internal Control ..................................................................................................... 33 4.7 Legislative Administration and Compliance.............................................................................................. 33 4.8 Performance Assessment of Council, Management and Staff ................................................................... 33 4.9 Technology and Training........................................................................................................................... 34 4.10 Annual Review and Future Solvency ........................................................................................................ 34

5. APPENDICES...........................................................................................................................................35 5.1 Definitions/Glossary/Interpretation ........................................................................................................... 36 5.2 Elected Member Allowances ......................................................................................... (see separate policy) 5.3 Elected Members Handbook.......................................................................................... (see separate policy) 5.4 Code of Conduct for Elected Members.......................................................................... (see separate policy) 5.5 Conflict of Interest Elected Members Guide ................................................................. (see separate policy) 5.6 Code of Conduct for Employees.................................................................................... (see separate policy) 5.7 Access and Equity Policy .................................................................................. (currently being developed) 5.8 Meeting of Council and Standing Committees – Guiding Principles ............................ (see separate policy) 5.9 Community Consultation Policy.................................................................................... (see separate policy) 5.10 Code of Practice for Public Access to Meetings and Documents .................................. (see separate policy) 5.11 Complaints Handling Policy (Review of Council Actions, Grievance Procedures) ..... (see separate policy) 5.12 Delegations Manual ....................................................................................................... (see separate policy) 5.13 Risk Management Policies and Procedures ................................................................... (see separate policy) 5.14 Legislative Compliance Self Audit.................................................................... (currently being developed) 5.15 Council Performance Self Assessment .............................................................. (currently being developed) At

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1. CORPORATE GOVERNANCE IN LOCAL GOVERNMENT

1.1 INTRODUCTION

1.1.1 Corporate Governance generally refers to the processes by which organisations are directed, controlled and held accountable. It encompasses authority, accountability, stewardship, leadership, direction and control exercised by the organisation.

1.1.2 Without such processes a governing body or Chief Executive Officer can have little confidence beyond mere ‘hope’ that the organisation is being run efficiently, remains a viable concern, and is carrying out the objectives and policies of the governing body.

1.1.3 The Australian National Audit Office describes Corporate Governance as:

“Corporate Governance is about formalising and making clear and consistent the decision-making processes in the organisation. An effective system of Corporate Governance will help facilitate decision-making and appropriate delegation of accountability and responsibility within and outside the organisation. This should ensure that the varying needs of the stakeholders are appropriately balanced; that decisions are made in a rational, informed and transparent fashion; and that those decisions contribute to the overall efficiency and effectiveness of the organisation.”

1.1.4 The legal and administrative framework within which a City operates determines the responsibilities of the Council, of an Elected Member, Chief Executive Officer and administration.

1.1.5 In essence, the Council is the steward of the City whilst the Chief Executive Officer is charged with managing the assets and resources of the City. It is essential that the respective roles of the Council and Chief Executive Officer are clearly understood to avoid misunderstandings that can all too often lead to disharmony. Elected Members should not perform or seek to perform either collectively or individually, the day-to-day management functions.

1.1.6 Elected Members carry out their role collectively or individually through the governance processes that are outlined in this document of Corporate Governance.

1.1.7 In this document, unless the contrary intention appears, words have the meaning as listed in Appendix 1: “Definitions/Glossary/Interpretation”.

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March 20073 Corporate Governance

1.2 THE LOCAL GOVERNMENT SECTOR

1.2.1 Local Government has become a dynamic industry as its powers, duties, functions and responsibilities have increased dramatically over the past decade. However, its funding sources have remained unchanged and as a result, the Council and administration now face an increasing challenge to maintain existing levels of service and make provision for new and improved services.

1.2.2 Local Government’s involvement in human services, as distinct from property services, has become an important and established part of our operations. Many communities now rely on youth, aged care, information and other similar services being provided by Local Government.

1.2.3 Library, aged care, community bus, community arts, information and other people supporting services have all been established in the City with great support from the community.

1.2.4 However, Local Government is still seen by many as only a regulatory agency which simply collects rates, manages traffic, inspects buildings, controls development and impounds dogs.

1.2.5 Considerable effort in good community relations is required to overcome this perceived limited role and poses a challenge for the Local Government industry.

1.3 CONTROL, RISK MANAGEMENT AND INNOVATION

1.3.1 Control includes the governance processes that need to be followed to ensure that all controllable risks are managed.

1.3.2 Control comprises those elements of an organisation, including its resources, systems, processes, culture, structure and activities that taken together support people in the achievement of the organisation’s objectives.

1.3.3 Control is as much a function of people’s ethical values and beliefs as it is of standards and compliance mechanisms.

1.3.4 Ensuring there is effective control is a way for the Council and the Chief Executive Officer to exercise due diligence in discharging their respective and various duties.

1.3.5 However, it is also important to emphasise that in focussing on the control environment the organisation is not seeking to eliminate risk or suppress innovation and creativity. Council wishes to foster innovation and creativity and seeks only to ensure risks are identified and managed appropriately. At

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1.4 GOVERNANCE AND LOCAL GOVERNMENT

1.4.1 The Local Government Act 1999 is the basis on which Local Government bodies are constituted. It contains detailed reporting and operational requirements with which a Council must comply.

1.4.2 The governance framework applicable to Local Government is generally more complex than in the private sector. Local Government tends to have broad objectives with wide reaching impacts on the community as distinct from private organisation where the overriding obligation is to maximise the return to shareholders. Local Government must recognise the wider public interest issues associated with the delivery of public services, while still ensuring the efficient and effective delivery of services.

1.4.3 Furthermore, unlike the private sector where boards are selected on the basis of identified skills or attributes necessary for running a particular business and there is a degree of personal liability attached to the role, the Council is a body elected by the community for which no particular qualifications are required and there is no personal liability involved.

1.4.4 In common with the private sector, Local Government has to respond to a complex set of stakeholder and legal requirements, particularly regarding financial reporting. In addition, Local Government has to satisfy public accountability requirements.

1.4.5 The Council is committed to a high standard of Corporate Governance and accountability and seeks continuous improvement in this regard. This document therefore provides a broad description of the elements of Corporate Governance and the process that will provide assurance that the organisation operates effectively and efficiently in fulfilling its Vision for the City and Mission for the Council.

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2. GOVERNANCE STATEMENT

2.1 INTRODUCTION

2.1.1 The Council has defined Corporate Governance as:

“Corporate Governance is the framework established by the Council to ensure that the Prospect community and ratepayers have assurance that the organisation is fulfilling its responsibilities with due diligence, openness and accountability.”

2.1.2 The Council has compiled this Corporate Governance document to provide a broad description of the elements of governance and the processes that will ensure the City of Prospect is governed and managed to achieve its Ten Year Horizon Statements, Five Year Action PlansStrategic Directions and annual operational actionsplans.

2.1.3 The Corporate Governance framework, which includes the development of more detailed governance policies and procedures, will provide a clear and transparent system for the management and operation of the City.

2.2 PURPOSE

2.2.1 The Council and the Chief Executive Officer have specific governance responsibilities. If addressed with due care and diligence, effective control over the management and operation of the City will be exercised.

2.2.2 This Corporate Governance document includes a description of the structures that the City has put in place to assist the Council and the Chief Executive Officer to act with the appropriate level of care and diligence to meet their governance responsibilities. It will enable the Council and the Chief Executive Officer to take timely corrective action whenever considered necessary.

2.3 CORPORATE GOVERNANCE FRAMEWORK

2.3.1 The Corporate Governance framework provide the Council and the Chief Executive Officer with the detailed policies and processes that will ensure:

(1)(1) That effective and accountable strategic leadership is provided.

(2)(2) That effective control over the operations of the City is exercised.

(3)(3) That value is added to the activities undertaken. Atta

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2.4 THE ROLE, FUNCTION AND OBJECTIVES OF COUNCIL

2.4.1 The Council is a body corporate established under the Local Government Act, 1999 and Section 6 defines the principal role of a Council to be:

“6. A Council is, under the system of Local Government established by this Act, established to provide for the government and management of its area at the local level and, in particular: -

(a) to act as a representative, informed and responsible decision-maker in the interests of its community; and

(b) to provide and coordinate various public services and facilities and to develop its community and resources in a socially just and ecologically sustainable manner; and

(c) to encourage and develop initiatives within its community for improving the quality of life of the community; and

(d) to represent the interests of its community to the wider community; and

(e) to exercise, perform and discharge the powers, functions and duties of Local Government under this and other Acts in relation to the area for which it is constituted.”

2.4.2 The functions of a Council include:

(1)(1) To plan at the local and regional level for the development and future requirements of its area;

(2)(2) To provide services and facilities that benefit its area, its ratepayers and residents, and visitors to its area (including general public services or facilities (including electricity, gas and water services, and waste collection, control or disposal services or facilities, health, welfare or community services or facilities, and cultural or recreational services or facilities);

(3)(3) To provide for the welfare, well-being and interests of individuals and groups within its community;

(4)(4) To take measures to protect its area from natural and other hazards and to mitigate the effects of such hazards;

(5)(5) To manage, develop, protect, restore, enhance and conserve the environment in an ecologically sustainable manner, and to improve amenity;

(6)(6) To provide infrastructure for its community and for development within its area;

(7)(7) To promote its area and to provide an attractive climate and locations for the development of business, commerce, industry and tourism; At

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(8)(8) To establish or support organisations or programs that benefit people in its area or local government generally;

(9)(9) To manage and, if appropriate, develop, public areas vested in, or occupied by, the council;

(10)(10) To manage, improve and develop resources available to the council;

(11)(11) To undertake other functions and activities conferred by or under an Act.

(Section 7 Local Government Act 1999)

2.4.3 Objectives of a Council

A Council must, in performance of its roles and functions:

(1)(1) Provide open, responsive and accountable government;

(2)(2) Be responsive to the needs, interests and aspirations of individuals and groups within its community;

(3)(3) Participate with other councils, and with State and national governments, in setting public policy and achieving regional, State and national objectives;

(4)(4) Give due weight, in all its plans, policies and activities, to regional, State and national objectives and strategies concerning the economic, social, physical and environmental development and management of the community;

(5)(5) Seek to coordinate with State and national government in the planning and delivery of services in which those governments have an interest;

(6)(6) Seek to facilitate sustainable development and the protection of the environment and to ensure a proper balance within its community between economic, social, environmental and cultural considerations;

(7)(7) Manage its operations and affairs in a manner that emphasises the importance of service to the community;

(8)(8) Seek to ensure that council resources are used fairly, effectively and efficiently;

(9)(9) Seek to provide services, facilities and programs that are adequate and appropriate and seek to ensure equitable access to its services, facilities and programs.

(Section 8 Local Government Act 1999) Atta

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2.5 COUNCIL COMPOSITION

2.5.1 The Council comprises the Mayor, three Area Councillors and ten Ward Councillors.

2.5.2 The community elects two members from each of the five wards of the City (10). There are three Area Councillors (until May 2003 when these positions will cease to exist).

2.5.3 The Mayor and Area Councillors are elected at large.

2.5.4 General elections for the whole of Council are held every three four years on a date set by legislation with the next general election due to occur in May 2003November 2010.

2.5.5 There are no qualifications or other limitations on who may be elected as a member of Council provided that they are:

(1)(1) an elector for the City, or a nominee of a body corporate or a group which is on the voters roll;

(2)(2) an Australian citizen or have been an elected member of a council between May 1997 and January 2000.

2.5.6 Candidates for election cannot be:

(1)(1) an employee of the Council;

(2)(2) a member of an Australian Parliament;

(3)(3) an undischarged bankrupt or subject to other relief for insolvent debtors;

(4)(4) sentenced to or liable to serve a term of imprisonment;

(5)(5) a candidate for election to another council; or

(6)(6) disqualified from election by a court order made under the Act.

2.5.7 Voter Representation

The table below shows the average Elector/Elected Member ratio of a number of Councils as at February 2006.

Elected Members (excluding

Mayor

Electors Representation quota

City of Burnside 12 35,712 2,747

City of Campbelltown 10 39,195 2,613 Atta

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Elected Members (excluding

Mayor

Electors Representation quota

City of Holdfast Bay 13 30,054 2,311

City of Norwood Payneham & St Peters

15 29,976 1,873

City of Prospect 11 16,010 1,601

City of Walkerville 10 6,103 610

Electoral Roll - Voters Roll Summary (as of 11 August 2006):

House of Assembly Roll

Council Supplementary Roll

Total Electors

Number of Votes received in November 2006 Election*

Nailsworth 2,904 576 3,480 1,154

Kingston 2,698 643 3,341 1,016

Fitzroy 2,640 485 3,115 996

St Johnswood 2,643 509 3,052 958

Highbury 2,465 566 3,022 876

Total 13,341 2,779 16,010 5,000

2.5.8 Periodic Review of Ward Boundaries

Council undertook its last review of Ward boundaries in October 2000. A periodic review of the composition, size and ward structure of the Council must be held at least every eight years, or when the number of electors in each Ward varies by more than or less than 10%.

For the purposes of public initiated submissions, a group of at least 20 eligible electors may submit to Council a submission that the Council consider a proposal: At

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• to alter the boundaries of the Council;

• to alter the composition of the Council or the representative structure of the Council (including by the creation, alteration or abolition of wards);

• to incorporate within the area of the Council a part of the State that is not within the area of the Council.

The process for lodgement and assessment of a public initiated submission is governed by section 28 of the Local Government Act 1999.

2.6 COMMITTEES AND REPORTING STRUCTURES

2.6.1 The Council has the following structures for managing its business: -

Council Meets on the 4th Tuesday of the month

Standing Committees of the whole Comprises all Elected Members of Council

Environment & Planning Meet on the 2nd Tuesday of the month Functions: • City Planning • Development Assessment • Heritage • General Inspection • Environmental Health • Waste Management • Natural Assets

Finance & AdministrationCorporat

e Servcies Meet on the 3rd Tuesday of the month

Functions: • Governance • Rates Administration • Employee Relations • Administration Services • Financial Management • Information Management

Community DevelopmentServices Meet on the 2nd Tuesday of the month

Functions: • Community Development • Recreation & Sport • Community Arts • Library

Infrastructure Meet on the 3rd Tuesday of the month

Functions: • Traffic Management • Streets & Footpaths • Stormwater Drainage �Open Spaces �Street Trees & Nature Strips • Waste Asset Management • Sanitation • Fleet Management • Depot Operations

General Purposes Committee Meet on the 1st Tuesday of the month

Functions: major issues as and when required and formulates the Annual Budget

Working Parties & Advisory Groups Created by the Standing Committees as and when required Atta

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Non-Other Standing Committees Structural Reform Advisory Committee

Comprises the Mayor, and the Presiding Members of the four standing Committees

meet periodically as required Functions:

�Organisation �Policy �External Relations �Corporate/Strategic Planning �Special Projects

Audit Committee Comprises:- • Mayor, one Elected Member and three

Independent Members • Meets periodically as required. Functions include:- • Risk Management • Audit • Financial Governance

CEO Performance Development Review Committee

Comprises:- • Mayor , two Elected Members for

four years (to November 2010) • Mayor, two Elected Members for two

years (to October 2008) • Meets periodically as required Functions:- • To review the performance and

remuneration of the CEO

2.6.2 All Council and Standing Committee meetings are open to the public. Non-standing Committees are not open to the public.

2.6.3 It has been the practice at The City of Prospect for many years that virtually all business is to be debated in Committees in the first instance. The resultant Committee recommendations are then referred to Council for consideration.

2.6.4 Although still bound by the formality of meeting procedures, in practice, Committee meetings are conducted more informally and hence encourage more discussion.

2.6.5 Committee recommendations have no legal status until they have been adopted at a Council meeting. It has been the custom at The City of Prospect for committee recommendations to be considered by a meeting of the Council held a week or two after the committee meeting, so that Elected Members have time to consider the recommendations and, if necessary, to discuss them with other members of the Council, staff or residents.

2.6.6 Matters are brought before Committees in the form of reports from the Chief Executive Officer or Directors General Managers which, within the constraints imposed by resources, give the Elected Members sufficient information on which to make a decision in the form of a recommendation to Council.

2.6.7 Reports include an administrative recommendation which is framed taking into account Council’s strategic plans, budgets, objectives and policies. At

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2.6.8 The recommendation is a guide to the Committee. It is entirely the prerogative of the Committee whether or not to adopt, reject or amend the recommendation.

2.6.9 Once the Council adopts the recommendation of the Committee, the Chief Executive Officer is responsible for ensuring these decisions are acted upon.

2.6.10 Working Parties and Advisory Groups are also established from time to time. Like the Structural Reform Advisory Committee, these These working parties and advisory groups have not been delegated decision making authority by the Council and meetings are not (generally) open to the public.

Development Assessment Panel

2.6.11 Under the Development Act, 1993, the Council has established a Development Assessment Panel (DAP) whose role is to assess development applications. The Panel is responsible for determining its own meeting arrangement. Membership comprises four Independent Members and 3 Elected Members for a two year term.

2.6.12 The DAP is a separate legal ‘authority’ and is not to be confused with the Council itself, even though the 3 members of the panel are primarily persons who are also Elected Members.

2.6.13 The DAP evaluates development proposals against the provisions of the Development Plan which is set by the Council at a strategic level.

2.6.14 The DAP make autonomous decisions which are not subsequently subject to review or alteration by Council.

Regional Subsidiaries

2.6.15 The City of Prospect has one Regional Subsidiary established under Section 43 of the Local Government Act.

2.6.16 During 2003/04, Waste Care SA, a regional subsidiary (the subsidiary) was established pursuant to Section 43 of the Local Government Act, by a number of constituent councils comprising Adelaide, Campbelltown, Charles Sturt, Norwood Payneham & St Peters, Prospect City Councils and the Town of Walkerville.

2.6.17 The subsidiary was formed at the end of February 2004 and has signed a project agreement with Waste Management Pacific (SA) Pty Ltd to operate a Resource Recovery Waste Transfer Station (RRWTS) on leased land at Wingfield.

2.6.18 As a constituent council, City of Prospect has a five (5) percent equity share in the subsidiary.

2.6.19 In the event of a winding up of the subsidiary, City of Prospect would either receive its equity share of any net assets after payment of all expenses of the subsidiary, or be liable to pay an equity share towards all expenses associated

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with winding up the subsidiary’s operations. A contingent liability has been identified in the accounts to reflect this potential liability in a future year.

2.6.20 To offset this potential liability, an agreement between the subsidiary and Waste Management Pacific (SA) Pty Ltd for the ‘compulsory purchase’ by the latter in 2014 has been established. This agreement enables the subsidiary to notify Waste Management Pacific (SA) Pty Ltd that it is required to accept assignment of the lease for the land and the purchase of the RRWTS.

2.6.21 In future years, as a constituent council, the City of Prospect will be entitled to a share of any profit made and distributed by the subsidiary in accordance with the subsidiary’s Charter. Profit distribution is not solely dependent on equity shares of the constituent council.

Executive Management Team

2.6.152.6.22 The Chief Executive Officer has an established Council has an Executive Management Team (EMT) which comprises the four Departmental Directors and the the Chief Executive Officer and two General Managers. The EMT meets every weekly.

2.7 ROLE AND FUNCTION OF ELECTED MEMBERS

2.7.1 The role of the Mayor is defined in S.58 of the Local Government Act as follows:

“a) to preside at meetings of the council;

b) if requested, to provide advice to the chief executive officer between council meetings on the implementation of a decision of the council;

c) to act as the principal spokesperson of the council;

d) to exercise other functions of the council as the council determines;

e) to carry out the civic and ceremonial duties of the office of principal member.”

2.7.2 The role of a Elected Member of a Council is defined in S59 of the Local Government Act as follows:

“a) as a member of the governing body of the council –

(i) to participate in the deliberations and civic activities of the council;

(ii) to keep the council’s objectives and policies under review to ensure that they are appropriate and effective;

(iii) to keep the council’s resource allocation, expenditure and activities, and the efficiency and effectiveness of its service delivery, under review; Atta

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b) as a person elected to the council – to represent the interests of residents and ratepayers, to provide community leadership and guidance, and to facilitate communication between the community and the council.

2.7.3 The role of Elected Member’s must primarily be seen in the context of the purpose of the Local Government Act and what it individually and collectively, expressly and inferentially requires of elected members. These requirements may collectively and generally be seen as ‘governance’ and ‘service delivery’ as follows:-

Governance • Policy formulation • Strategic/corporate Planning • Custodianship of public assets • Participate in the deliberations and civic activities of the Council • Community Development • Budgeting and Taxation • Leadership and Advocacy • Delegation of authority • Appoint Chief Executive Officer and review performance • Governance framework

Service Delivery • Communication between the community and council • Resources allocation • Performance monitoring • Access and equity • Compliance with legal frame works

2.7.4 There is of course some interrelationship between these two categories of an elected

member’s role.

2.7.5 All of these considerations must be viewed in the context that elected members hold their positions under statute. Their positions are created by, and therefore their powers and duties are largely regulated by the Local Government Act. However, equity and common law also have roles to play in understanding the responsibilities of elected members.

2.7.6 The Local Government Act suggests two key but distinct aspects to the role of elected members – a dual representative role; to represent the community on the Council and the Council in the community. The fact that each elected member must endeavour to reconcile their responsibilities in respect of each role suggests that they are more than a mere collection of consumer representatives.

2.7.7 In addition to the representative role, elected members have a relationship with the Council as a body corporate. Like directors of a company they stand in a fiduciary relationship with the Council and must act in the best interests of the body corporate and, presumably, in so doing, generally in the best interests of the residents and ratepayers of the Council area. At

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2.7.8 Elected members, in addition to their representative role, are also accountable to the community. There are many provisions in the legislation, which apply to the accountability of the Council as a body corporate rather than to elected members individually. This is understandable from the perspective that elected members cannot individually bind or commit the Council to any action. However, there are also certain provisions, which apply to elected members individually, and which generally seek to ensure that their public duties/private interests do not become blurred.

2.7.9 For each proposal that the Council considers, elected members must strike a balance between the needs and demands of the ratepayers and the interests of applicants and third parties who may be affected by their decisions. In this context elected members may be characterised as ‘community representatives’. But, elected members must also balance the interests of the Council itself in protecting the institution which is the Council, its assets, its public persona and reputation, its financial well-being and its role as the provider of services to the community both now and in the future.

2.7.10 In carrying out their functions members should exercise all reasonable care and ensure that they are as fully informed as they may reasonably be expected to be. In this regard, elected members have a right at any reasonable time, to have access to any documentation which is relevant to the performance of their functions. In general terms this means matters of current council business and does not entitle members to otherwise have a right of general access to any council documents.

2.7.11 An elected member exercises power in the performance of their functions through a resolution of the Council at a formally constituted meeting.”

2.8 ELECTED MEMBER PROTECTION FROM PERSONAL LIABILITY

2.8.1 Section 39 of Local Government Act provides that:

“(1) No civil liability attaches to a member of a Council for an honest act or omission in the exercise, performance or discharge, or purported exercise, performance or discharge, of the member’s or council’s powers, functions or duties under this or other Acts.

(2) A liability that would, but for this section, attach to a member of a Council attaches instead to the Council.”

2.8.2 It should be noted that this does not provide any protection for an Elected Member charged with any criminal acts and is only of benefit to a member for civil matters where they have acted honestly.

2.8.3 In a Council or Committee meeting where an Elected Member is fulfilling a public duty the law grants to the member certain limited protection from legal actions in defamation. This limited protection is known as qualified privilege and may be a defence where statements are made in good faith (i.e. believing them to be true) and are related to the subject matter of the debate. At

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2.8.4 Statements which are made during a meeting with malice, recklessly, or by an Elected Member not caring if they are true or false, do not enjoy this protection. Statements made by an Elected Member outside of Council meetings do not attract the protection of qualified privilege. If defamation laws are broken an Elected Member can be sued.

2.9 ROLES AND FUNCTIONS OF THE CHIEF EXECUTIVE OFFICER

2.9.1 Section 99 of the Local Government Act specifies that:

“(1) The functions of the chief executive officer include: –

a) to ensure the policies and lawful decisions of the council are implemented in a timely and efficient manner;

b) to undertake responsibility for the day to day operations of the council;

c) to provide advice and reports to the council on the exercise and performance of its powers and functions under this or any other Act;

d) to co-ordinate proposals for consideration by the council for developing objectives, policies and programs for the area;

e) to provide information to the council to assist the council to assess performance against its strategic management plans;

f) to ensure that timely and accurate information about council policies and programs is regularly provided to the council’s community, and to ensure that appropriate and prompt responses are given to specific requests for information made to the council;

g) to ensure that the assets and resources of the council are properly managed and maintained;

h) to ensure that records required under this or another Act are properly kept and maintained;

i) to give effect to the principles of human resource management prescribed by this Act and to apply proper management practices;

j) to exercise, perform or discharge other powers, functions or duties conferred on the chief executive officer by or under this Act, and to perform other functions legally directed by the council.

(2) The chief executive officer must consult with the council (to a reasonable degree) when determining or changing to a significant degree : –

a) the organisational structure for the staff of the council; or Atta

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b) the processes, terms or conditions that are to apply to the appointment of senior executive officers; or

c) the appraisal scheme that is to apply to senior executive officers.”

2.9.2 Further, Section 103 specifies:

“(1) the chief executive officer is responsible for appointing, managing, suspending and dismissing the other employees of the council (on behalf of the council).

(2) the chief executive officer must ensure that an appointment under subsection (1) is consistent with strategic policies and budgets approved by the council.

(3) the chief executive officer must, in acting under subsection (1), comply with any relevant Act, award or industrial agreement.

(4) suspension of any employee by the chief executive officer does not affect a right to remuneration in respect of the period of suspension.”

2.10 THE RELATIONSHIP BETWEEN THE COUNCIL AND THE CHIEF EXECUTIVE OFFICER

2.10.1 The formal distinctions between the role of Elected Members and the Chief Executive Officer can be summarised as:

(1)(1) Elected Members (collectively) –

• Set Strategy, Policies, and Delegations

• Allocate resources via Strategic and Annual budget processes • Monitor Performance of the Council • Represent the interests of the community • Appoint the Chief Executive Officer and periodically review his/her

performance.

(2)(2) The Chief Executive Officer –

• Provides Policy and Strategic advice to Council

• Implements Council’s strategy and plans

• Manages the activities and operations of the administration

• Is accountable to Council for the administration’s performance

• Is responsible for the appointment and management of all staff.

2.10.2 It is a critical feature of good governance that Elected Members and the Chief Executive Officer recognise and respect each other’s roles and responsibilities. It is

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important for an Elected Member not to involve themselves in administrative matters (including staff related issues) or for management not to set strategy and policy which has not been authorised by Council.

2.10.3 Nevertheless, the Elected Members and the Chief Executive Officer recognise the key importance of maintaining good relationships in order to achieve the best outcome for the community. This depends on trust, respect for each other’s roles, and for open communication.

2.10.4 Apart from the formal processes of Council, open communication is facilitated by: -

(1)(1) Regular meetings between the Mayor and Chief Executive Officer.

(2)(2) Elected Members having access to the Chief Executive Officer and Directors General Managers

(3)(3) Periodic Strategic workshops for Elected Members

2.10.5 If an individual Elected Member proposes some new initiative and wants information to support it, then the usual practice is to call for a report in Committee (or Council). If the Council adopts the recommendation to call for a report it is clear to the administration that the Council as a whole wants the work to be done so that all Elected Members will be equally informed.

2.10.6 In terms of providing information to an individual Elected Member, it depends on whether the information required is readily available or whether a substantial amount of work is required. In the latter case the administration would suggest the calling for a report to see whether the Council as a whole supports the work being done.

2.10.7 Clearly with limited resources and a number of Elected Members, it would be impossible to acquiesce to every request for information.

2.10.8 Staff below Director General Manager level are not in an equal situation when dealing with an Elected Member because of the perception that an Elected Member has ‘power’. For this reason, the Act provides that a member has no direct authority over an employee of the Council with respect to the way in which the employee performs his or her duties. This includes requests for information and documents and even questions of that employee.

2.10.9 If a situation arises where (say) one (or a few) Elected Members are seeking a significant amount of information and taking up a considerable amount of employee(s) time, then the Chief Executive Officer needs to exercise a judgment in terms of what access to the employee(s) will be provided, in order to balance the interests of the Council as a whole.

2.10.10 The Structural Reform Advisory CommitteeChief Executive Officer Performance Development Review Committee reviews the performance and remuneration of the Chief Executive Officer on an annual basis. Where considered necessary, the Structural Reform Advisorythis Committee may seek external expert assistance to help in its evaluation. At

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2.11 GOVERNANCE PRINCIPLES

2.11.1 The following characteristics as necessary for good governance specific to Local Government:-

(1) Councils being elected by, representative of, and accountable to their community;

(2) Policies and programs reflecting the mandate Councils have received from electors;

(3) Policy enactment arising from the Council plan with appropriate performance management to assess the Council’s progress;

(4) Community participation in governance;

(5) Mayor and councillors providing leadership to the community and reflecting the community’s collective aspirations;

(6) A management structure with implements the Council’s goals in accordance with Council’s priorities and approved budget;

(7) Provision of services which meet the community’s needs (sometimes in partnership with other levels of government, business or community organisations);

(8) Local government being well placed to facilitate coordination and integration at a local level;

(9) Cooperation between local governments. 5 Code of Good Governance, Municipal Association of Victoria and Victorian Local Governance Association, December 1997.

2.11.12.11.2 The Corporate Governance framework Framework provides for ‘governance principles’ made up of policies and procedures.

2.11.22.11.3 The policies and procedures developed for each governance principle provide the Council, an Elected Member, the Chief Executive Officer and employees with guidance and, where appropriate, prescribed processes that ensure the City effectively and efficiently achieves its Vision and Mission.

2.11.32.11.4 The Governance Principles are listed and then summarised below:-

(1)(1) Leadership and Strategy

(2)(2) Support for Elected Members

(3)(3) Ethics and Values

(4)(4) Performance Monitoring and Review

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(5)(5) Communication (Stakeholder Relationships)

(6)(6) Risk Management and Internal Control

(7)(7) Legislative Administration and Compliance

(8)(8) Delegations

(9) Performance Assessment of Council, Management and Staff

(9)(10) Technology and Training

(10)(11) Annual Review and InsolvencyFinancial Governance

2.11.42.11.5 Leadership and Strategy

(1)(1) Elected Members as representatives of residents and ratepayers provide community leadership and guidance, and facilitate communication between the community and the Council.

(2)(2) The Mayor, at the request of the Chief Executive Officer, provides advice to the Chief Executive Officer on the implementation of Council decisions1.

(3)(3) For the organisation to achieve its objectives it is important that a clear and documented corporate strategy be developed.

(4)(4) The Strategic Plan and Budget Annual Business Plan and Budget collectively guide the organisation. This document includes the following:

�Vision, Mission and Core Values Statement

The Vision, Mission and Core Values Statement confirms the aspirations for our community, the development of our City and the values of the organisation.

• Strategic Plan

This plan has a Ten-year Horizon Statement and Five-year Action Plan covering all the major activities of the organisationthe Vision for the City and the six Strategic Priorities for 2004-2007. For each Strategic Direction, the objectives and proposed approaches to achieving Council’s goals over the 3-4 planning period is provided. The Strategic Plan is influenced by the general operating environment, elected member and staff views in setting medium term objectives.

The Strategic Plan is reviewed annually by the Council.

1 Local Government Act 1999, Section 58(1)(b)

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• Annual Budget and Action PlanBusiness Plan and Budget

These componentsThe Annual Business Plan and Budget expresses the resources and performance measures associated with the first next year of the Strategic Plan. The Annual Business Plan and Budget is adopted in July June each year by Council.

2.11.52.11.6 Risk management concepts are currently beinghave been introduceding into

the organisation. The identification and management of risk is considered an important part of the governance process and will, over time, feed into the strategic planning process.

2.11.62.11.7 Support for Elected Members

(1)(1) The Chief Executive Officer, through an effective support process, ensures that Elected Members understand their roles and responsibilities and are able to add value and bring independent, informed and objective judgement to bear on the governance and decision making process of Council.

(2)(2) The Chief Executive Officer provides Elected Members with an induction program on appointment and makes available to Elected Members continuing education and development programs as necessary.

(3)(3) Individual support and advice is available from the administration, normally via the relevant Departmental DirectorGeneral Manager.

(4)(4) Council’s policy is based on the principle that no Elected Member will be out of pocket as a result of their commitment to Council activities. Support is provided by way of quarterly allowance paid in advance and reimbursements for travel sanctioned by Council in accordance with the Council Members Allowances and Benefits Policy.

(5)(5) The Mayor receives an annual allowance, paid monthly in advance and an expenditure budget to be expended at the discretion ofby the Mayor.

2.11.72.11.8 Ethics and Values

(1)(1) To ensure that the Council meets its obligations under the Act and to support its commitment to ethical behaviour, the Council has developed a Code of Conduct for Elected Members and Conflict of Interest Guidelines.

(2)(2) The Chief Executive Officer and staff abide by a documented Code of Conduct for Employees and detailed policies and guidelines contained in the Administrative Policy and Guidelines Manual.

(3)(3) The Council has adoptedis developing a set of Core Values which guide the expected behaviour of the organisation and the people in it. These values are will be encouraged throughout the administration, built into the Strategic Plan, and linked to staff performance appraisals and plans. Atta

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2.11.82.11.9 The Vision, Mission and Core Values are for the City and Strategic Priorities 2004-2007 are:

VISION “The Creative Community” The City of Prospect is a progressive community which respects its unique heritage and diversity. Where possible, the City of Prospect will build a sustainable future that improves the quality of life of our community. We will be creative and innovative, and focused on people as the City’s most important asset.

This vision for Prospect is based upon the view that our City will be: • a learning community where people and groups gain knowledge, skills and

confidence through community activity; • a fair and just community which upholds civic rights and equality of opportunity,

and which recognises and celebrates the diversity of its cultures and respect for its heritage;

• an active and empowered community where people are fully involved and which has strong and varied local organisations and a clear identity and self-confidence;

• an influential community which is consulted and has a strong voice in decisions which affect its interests;

• an economically strong community which creates opportunities for work and which retains a high proportion of its wealth;

• a caring community aware of the needs of its members and in which services are of good quality and meet these needs;

• a green community with a healthy and pleasant environment, conserving resources and encouraging awareness of environmental responsibility;

• a healthy community where citizens are encouraged to participate actively in sporting and recreational activities;

• a safe community, where people do not fear crime, violence or other hazards; and • a welcoming community in which people generally feel a sense of belonging.

Our strategic directions are: • Building our economic strength and diversity • Engaging our community in participatory processes • Creating a sustainable urban environment • Ensuring that the heritage character of the city is preserved and improved. • Working towards an innovative and technologically advanced community • Strengthening creativity in our community through arts and culture.

Adopted by the Council on 27 April 2004 Atta

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2.11.92.11.10 The comprehensive and coordinated integration of these Core Values is will be supported by the development and implementation of key strategies and policies throughout the organisation.

2.11.102.11.11 Performance Monitoring and Review

(1)(1) The City has a number of instruments in place to ensure that performance is continually monitored and reviewed, and that corrective action is taken where required.

(2)(2) Financial Reporting

Cash based fFinancial reports are readily available on a daily basis for the following levels of management and staff of Council to satisfy their financial accountability requirements. �Team Leader

�Departmental Director

�Chief Executive Officer

Cash based fFinancial reports and budget reviews are provided to Council on a monthly and quarterly basis respectively. A 510-year Long Term Financial Plan is currently beinghas been developed by the organisationand is reviewed on an annual basis by Council.

(3)(3) Corporate PlanPerformance Reporting

The performance against the Strategic Annual Business Plan Action Items is reported on an annual six monthly basis to Council. The achievement of Strategic Plan Objectives is reported on an annual basis.

(4)Performance Reporting

Council is developing performance reporting processes based on the ‘balanced scorecard’ methodology. The methodology seeks to report on a range of performance indicators (mainly non-financial) critical to achieving the strategic objectives of the City. Reporting will be at all levels from the team through to the corporate level.

(5)City Indicators

As part of its role of representing the interests of its community, Council is developing a set of ‘City Indicators’ designed to monitor the health and well being of the Prospect Community. This helps Council understand the broad trends in the society, which Council may be able to influence over the long term, perhaps in association with other levels of government. Atta

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(6)(4) Annual Report

An Annual Report including the full set of audited financial statements are produced for Council and distributed as required by legislation. Interested parties can also obtain a copy of the Annual Report.

(7)(5) Customer Satisfaction Survey

The Council conducts a professionally managed customer survey biannually biennially to monitor Council’s performance as perceived by the community across a range of key services. Both Elected Members and staff contribute to the survey and receive the results of the survey.

(8)(6) Benchmarking, Continuous Improvement, and Program Review

A program of benchmarking City of Prospect’s services with other major metropolitan councils and potentially other organisations, as well as support for the continuous improvements process within the organisation serve to regularly expose new and better ways of doing things.

2.11.112.11.12 Communication (Stakeholder Relationships)

(1)(1) The City has developed and continues to develop, processes to build effective relationships with a range of stakeholders including:

• The Minister for State/Local Government Relations

• The Local Minister for the Adelaide Electorate

• Community and Sporting Groups

• Ratepayers

• Residents

• Business Partners

• Management and Staff

• Other State and Federal Government Departments

• Other Councils, particularly within the Metropolitan Eastern Region

(2)(2) The Council has also established the following processes:

• Community Engagement Policy;

• Publication of an Annual Report (including audited financial statements) and various other publications informing stakeholders of the organisation’s performance and activities;

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• Development Maintenance of a website;

�Public Consultation Policy;

• Consultation with community groups;

• Liaison with Federal, State, Regional and private bodies responsible for planning and delivery of services;

• Collaboration with local industry to integrate environmental, employment and economic development;

• Customer Service and Information Service programs;

• All Council, and Standing Committee meetings are open to the public;

• Council complies with Freedom of Information Legislation and privacy principles (voluntarily).

• A Privacy policy and Access to Information policy which are designed to ensure the integrity and quality of communication with stakeholders;

• Publication of city wide community magazine ‘The Creative Community’;

• Summary Rating Policy distributed to all Ratepayers;

• Corporate Core values that emphasise the need to ‘listen’ to the community; and

• Complaints Handling Policy.

2.11.122.11.13 Risk Management and Internal Control

(1)(1) Council meetings are once a month and Elected Members are given adequate notice of meetings, which complies with the prescribed statutory requirements. Agenda items and relevant material are provided prior to the meetings to enable informed discussion by the Elected Members. Minutes of meetings accurately reflect the decisions made by the Council.

(2)(2) The Chief Executive Officer regularly reviews operational processes and procedures and implements necessary corrective action, to ensure the effectiveness of the City’s internal systems of control; thereby ensuring its:

• Assets are safeguarded, and

• Decision-making capability and the accuracy of its reporting and financial results are maintained at a high level at all times. Atta

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(3)(3) The Chief Executive Officer engages the assistance of external advisers as considered necessary to monitor and evaluate the City’s activities and internal controls.

(4)(4) Other strategies the Council has implemented and/or is developing to achieve effective risk management and internal controls include the following: -

• Establishment of an Audit Committee

• Development of an Internal Audit Program

• Limits of authority are delegated in accordance with the Act and appropriate approval processes implemented.

• Position descriptions are established for all positions.

• Annual performance appraisals.

• Policies and procedures are documented in a Policy and Procedure Manual and will, in due course, be accessible on the Intranet for all staff. These are regularly reviewed and updated in line with regulatory, policy and service changes.

• All governance policies and procedures are contained in the City’s Policy and Procedures Manual. The City continues to work towards the development of policies and procedures to support all governance principles.

• A Risk Management Framework and annual Risk Assessment Workshops to identify key risk areas and implement strategies to mitigate them.

• A Disaster Recovery and a Business Continuity Plan is to behas been developed.

�Control Self-Assessment (CSA) Workshops are being developed to review process effectiveness and efficiency.

• A Self-“Internal Audit program Program” is being developed whereby compliance with major regulatory, strategic and operational requirements are regularly reviewed. These include requirements specified in the Act together with environmental, heritage, cultural, OH&SOHS&W, Industrial Relations and Equal Opportunity legislation.

2.11.132.11.14 Legislative Administration and Compliance

(1)(1) The City must comply with all of its statutory obligations, not only of the Local Government Act but also many other legislative requirements, which impact on its activities. Atta

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(2)(2) Processes must be in place to ensure that Council and Management understand the range of legislation which impacts on our activities, the responsibilities that these various Acts convey and are informed of changes to legislative requirements.

(3)(3) Examples of such legislation includes Elections, Occupational Health & Safety and Welfare, Whistle Blowing, Goods & Services Tax, Fringe Benefits Tax, Trade Practices Act, Competitive Neutrality, Dog Control, Native Title, State Records, Development, Freedom of Information, employment and environmental legislation to name just a few.

(4)(4) Industry bodies such as the Local Government Association, together with the Office of State/Local Government Relations and the Councils legal advisors, play a significant role in communicating legislative requirements.

(5)(5) Local Government has such a broad range of legislative requirements, more complex than the most private sector or and more narrowly focussed organisations, so it is important Council can be assured compliance is taking place.

(6)(6) A review is to be conducted to identify all legislation relevant to the City of Prospect, and significant compliance components requirements and to establish mechanisms to provide assurance that compliance are is occurring. This is to be included in the “Internal Audit Program”.

2.11.142.11.15 Delegations

(1)(1) Council has delegated a broad range of powers, duties, and functions under the Local Government Act and other relevant Acts to the Chief Executive Officer in order to provide effective decision-making and provide a high level of customer service. Where appropriate the Chief Executive Officer has further sub-delegated powers to appropriate professional staff. These delegations are reviewed following every periodic electionannually and are contained in the Delegation Manual.

(2)(2) However, certain matters are unable to be delegated by the Council under Section 44(3) of the Act. These are:

“(a) power to make a by-law;

(b) power to declare rates or a charge with the character of a rate;

(c) power to borrow money or to obtain other forms of financial accommodation;

(d) power to adopt or revise a strategic management plan or budget of the council;

(e) power to approve expenditure of money on works, services or operations of the council not contained in a budget approved by the council;

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(f) power to determine annual allowances under Chapter 5;

(g) power to approve payment of reimbursement of expenses that may be paid at the discretion of the council and for which the council has not adopted a formal policy or made specific financial provision;

(h) power to establish a subsidiary, or to participate in the establishment of a regional subsidiary;

(i) power to make an application or recommendation, or to report to give a notice, to the Governor or the Minister, being an application, recommendation, report or notice for which provision is made by or under this or another Act;

(j) power to fix, vary or revoke a fee under Section 188(1)(d) to (h); and

(k) power or function excluded from delegation by the regulations”

2.11.152.11.16 Performance Assessment of Council, Management and Staff

(1)(1) It is proposed that Council conduct a self-assessment of its own performance but a forum and format needs to be developed. It can be said the community judges each Elected Member through the three four yearly general elections, however the Council proposes to demonstrate best practice in terms of periodic reviews and continuing service improvement via a self assessment process.

(2)(2) The Structural Reform Advisory Committee CEO Performance Development Review Committee (sitting as a Performance Review Panel) annually reviews the performance of the Chief Executive Officer and develops a Performance Plan for the Chief Executive Officer that includes strategic priorities, personal competencies, development opportunities and the criteria to be used for performance assessment.

(3)(3) The Chief Executive Officer annually assesses the performance and effectiveness of the four DirectorsGeneral Managers.

(4)(4) Directors General Managers assess the performance and effectiveness of the Team Leaders within their Departments annuallyManagers within their portfolios.

(5)(5) The Team LeadersManagers annually assess the performance of their respective staff.

(6)(6) The results of the performance assessments are reviewed with the relevant personnel and training and development plans are established to ensure all employees are equipped to carry out their duties and possible future duties. Atta

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2.11.162.11.17 Technology & Training

(1)The development of electronic information and technology continues to be significant.. The service potential and relevance as a City may well be dependent on Council’s strategy regarding the use of information technology, and technology generally be it electronic or otherwise, in the efficient utilisation of its assets and processes.

(2)(1) Consequently, tThe Council recognises its responsibility to ensure its management information systems, internal controls and technology are kept up to date and support the Council’s objectives.

(3)(2) Council also recognises that if the organisation is to keep up with the rapid pace of change in all areas and maintain expert advice and high levels of service and innovation it must be committed to continual staff training and development.

2.11.172.11.18 Annual Review and Future SolvencyFinancial Governance

(1)(1) The City is committed to responsible financial management to ensure it will remain solvent and able to meet its current and future obligations.

(2) The Manual “Excellence in Governance for Local Government”7 identifies sound financial management as a key component of good governance. It describes the principle behind sound financial management as being:

“There should be robust and transparent financial management established and maintained to meet local government’s accountability to its stakeholders, particularly in terms of stewardship of community assets, now and into the future”.

(3) This can be expanded into a series of aims and principles:

• Council is financially sustainable

• Infrastructure is effectively and efficiently managed

• Budgets and other financial information are reported upon in a consistent and accurate fashion

• Council has a considered position on service delivery, and its roles and responsibilities in relation to each of its services

• Council has a considered position on the funding of services and has suitable resources to enable it to evaluate the strategic benefit of all of its services

• An equitable, transparent and accountable rating system is in place

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• Achievement of council’s strategic objectives is facilitated through the effective management of borrowings and financial assets

• There are systems and procedures in place that improve the efficiency and effectiveness of council services

• There are systems and procedures in place to improve the efficiency and effectiveness of services

• The integrity of financial systems and reports are safeguarded

(4) Each of these aims/principles can be achieved using a number of mechanisms. The Long-Term Financial Plan, Infrastructure and Asset Management Plan and the Council’s Strategic Plan are the key guiding documents to achieve these aims.

(5) Each document is the subject of regular review and reporting to Council.

(6) The Council receives monthly finance reports, quarterly reviews of the Budget, and the Annual Financial Statements for adoption. The audited Annual Financial Statements are reviewed by Council’s Audit Committee before being considered by Council.

7 Excellence in Governance for Local Government, CPA Australia and Local Government Managers Australia, 2005

(2)(7) Strategies to achieve this include the following:

• A comprehensive performance management and reporting system covering both financial and operational matters has been implemented.

• The annual financial statements are independently audited in accordance with the Local Government Act.

• A 510-year Long Term Financial Plan has been developed and is reviewed annually.

• An Infrastructure and Asset Management Plans are beinghas been developed for major asset categories.

• Debt and investment management policies have been developed.

�A Property Review to rationalise property not producing sufficient community benefit is undertaken periodically.

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3. GOVERNANCE FRAMEWORK

A graphical representation of the

Corporate Governance framework is shown on the next page.

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CORPORATE GOVERNANCE FRAMEWORK

STAKEHOLDERS

GOVERNANCE & CONTROL

STRUCTURES

ORGANISATIONAL FRAMEWORK

CORPORATE OBJECTIVES

FUNCTIONS

- Council & Committees- Establishment of Committees- Terms of Reference (Council & Committees)- New Member Inductions (Council & Committees)- Effective Meetings & Quality Records (Council & Committees)- Self Evaluation (Council & Committees

ACCOUNTABILITY FRAMEWORK

MANAGEMENT STRUCTURE

MANAGEMENT STANDARDS

- Governance Principles- Core Values- Policies- Delegations- Code of Conduct- Communication of Standards- Risk Management- Management Support- Risk Management - Policy

CONTROL MONITORING & REVIEW

EXTERNAL ACCOUNTABILITY

MANAGE MONITOR & REVIEW RISKS

INTERNAL REPORTING

MONITORING & REVIEW EXTERNAL REPORTING

- Establish the Context- Identification- Analysis- Assessment- Treatment- Monitoring & Review of Risks

- Council- Risk- Management- OH&S Committee

- External Audit- Financial Stewardship- Perforamnce Reporting- Corporate Governance - Disclosure

Minister for Local GovernmentCommunity GroupsRatepayersResidentsVisitorsBusinessManagement and Staff

Laws & RegulationsLocal Government Act & RegulationsDevelopment Act & RegulationsOHS&W ActLocal Government (Elections) Act

COUNCIL

(Elected Members

CHIEF EXECUTIVE OFFICER

Attachment

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4. KEY GOVERNANCE DOCUMENTS, POLICIES & PROCESSES

* Included in full in Section 5 – Appendices

4.1 LEADERSHIP & STRATEGY

4.1.1 Strategic Plan (10 Year Horizon, 5 Year Action Plan and 12 Month Action Items) 4.1.2 Annual BudgetAnnual Business Plan and Budget 4.1.3 Long Term Financial Plan 4.1.4 Asset and Infrastructure Management Plan

4.2 SUPPORT FOR ELECTED MEMBERS

4.2.1 Council Members Allowances and Benefits Policy 4.2.1Annual Survey- Elected Member perceptions of Executive Support 4.2.2Elected Member Allowances and Support Policy * 4.2.34.2.2 Induction Program 4.2.44.2.3 Training and Development 4.2.54.2.4 Access to Executive Management 4.2.64.2.5 Elected Members Handbook*

4.3 ETHICS AND VALUES

4.3.1 Code of Conduct for Elected Members* 4.3.2 Conflict of Interest Elected Members Guide* 4.3.3 Code of Conduct for Employees* 4.3.4 Access and Equity Policy* 4.3.5 Meeting of Council and Standing Committees – Guiding Principles* 4.3.6 Code of Conduct for Development Assessment Panel 4.3.7 Sale and Disposal of Land and Other Assets 4.3.8 Purchasing, Quotations & Tenders Policy

4.4 PERFORMANCE MONITORING AND REVIEW

4.4.1 Annual Report 4.4.2 Financial Reporting and Quarterly Review 4.4.3 Corporate Strategic Plan Reporting 4.4.4 Performance Reporting 4.4.5 City Indicators 4.4.6 Customer Satisfaction Survey 4.4.7 Benchmarking Continuous Improvement, and Program Review 4.4.8 Audit Committee At

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4.5 COMMUNICATION (STAKEHOLDER RELATIONSHIP)

4.5.1 Strategic Directions 4.5.2 Community Engagement Policy* 4.5.3 Website 4.5.14.5.4 Annual Report 4.5.24.5.5 Rating Policy 4.5.3Community Consultation Policy* 4.5.4Website 4.5.54.5.6 Code of Practice for Public Access to Meetings and

DevelopmentsDocuments* 4.5.64.5.7 Council Publications 4.5.74.5.8 Corporate Culture 4.5.84.5.9 Complaints Handling Policy (Review of Council Actions, Grievance

Procedures)* 4.5.10 Advisory Committees

4.6 RISK MANAGEMENT AND INTERNAL CONTROL

4.6.1 Audit Committee 4.6.2 Internal Audit Program (to be developed) 4.6.14.6.3 Delegations Manual* 4.6.24.6.4 Policy and Procedures Manual 4.6.34.6.5 Position Descriptions 4.6.44.6.6 Risk Management Framework* 4.6.5Control Self Assessment Process 4.6.64.6.7 Legislative Compliance Self Audit 4.6.8 Audited Financial Statements

4.7 LEGISLATIVE ADMINISTRATION AND COMPLIANCE

4.7.1 Legislative Compliance Self Audit* 4.7.2 Delegations Manual*

4.8 PERFORMANCE ASSESSMENT OF COUNCIL, MANAGEMENT AND STAFF

4.8.1 Council Performance Self Assessment* 4.8.2 Structural Reform AdvisoryCEO Performance Development Review Committee

monitors the performance of the Chief Executive Officer 4.8.3 Directors General Managers’ performance reviewed by Chief Executive Officer 4.8.4 Team LeadersManagers performance reviewed by DirectorsGeneral Managers 4.8.5 Staff reviewed by Team LeadersManagers At

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4.9 TECHNOLOGY AND TRAINING

4.9.1 Council Commitment to investment in new technology 4.9.2 Council commitment to investment in staff training and development 4.9.3 IT Strategic Plan 2001-2003

4.10 ANNUAL REVIEW AND FUTURE SOLVENCYFINANCIAL GOVERNANCE

4.10.1 Performance Reporting System 4.10.2 Audited Financial Statements 4.10.3 Long Term Financial Plan 4.10.4 Asset and Infrastructure Management Plans 4.10.5 Debt and Investment Management Policy 4.10.6Property Review

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5. APPENDICES

5.1 Definitions/Glossary/Interpretation .........................................................(Pages 36-37)

5.2Elected Member Allowances ................................................................. (see separate policy)

5.2 Terms of Reference for Council Committees ......................................(pages 38-46)

5.3 Elected Members Handbook......................................................... (see separate policy)

5.4 Code of Conduct for Elected Members......................................... (see separate policy)

5.5 Conflict of Interest Elected Members Guide ................................ (see separate policy)

5.6 Code of Conduct for Employees ................................................... (see separate policy)

5.7 Access and Equity Policy...........................................(currently beingto be developed)

5.8 Meeting of Council and Standing Committees – Guiding Principles...................................................................... (see separate policy)

5.9 Community Consultation Policy................................................... (see separate policy)

5.10 Code of Practice for Public Access to Meetings and Documents .................................................................................... (see separate policy)

5.11 Complaints Handling Policy (Review of Council Actions, Grievance Procedures) ................................................................. (see separate policy)

5.12 Delegations Manual ...................................................................... (see separate policy)

5.13 Risk Management Policies and Procedures .................................. (see separate policy)

5.14 Legislative Compliance Self Audit ............................(currently beingto be developed)

5.15 Council Performance Self Assessment ......................(currently beingto be developed)

5.16 Council Members’ Allowances and Benefits Policy................ (see separate policy)

5.17 Sale & Disposal of Land and Other Assets .............................. (see separate policy)

5.18 Purchasing, Quotations & Tenders Policy............................... (see separate policy)

5.19 Code of Conduct for Development Assessment Panel ................ (to be developed)

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Appendix 1

5.1 DEFINITIONS/GLOSSARY/INTERPRETATION

In this document, unless the contrary intention appears:-

"absolute majority" of the members of a council means a majority of the whole number of

the members; "accounting records" means all records and documents relevant to any receipt or payment of

money and includes the working papers and other documents necessary to explain the methods and calculations by which statements and accounts are made up;

"administration" means the Chief Executive Officer and all staff employed by the CEO; "agenda" means a list of items of business to be considered at a meeting; "area" means the area for which a council is constituted; "area councillor" means a councillor elected by the electors for the area, as a representative

of the area as a whole (whether or not the area is divided into wards); "authorised person" means a person appointed by a council as an authorised person under

Chapter 12 Part 3; "business day" means a day that is not a Saturday, Sunday or public holiday; "chief executive officer" means the chief executive officer of a council and includes a deputy

or other person acting in the office of chief executive officer; “city” means the City of Prospect, comprising the Highbury, St Johns Wood, Nailsworth,

Kingston and Fitzroy Wards. "council" means a council constituted under the Act, which comprises mayor and councillors

(also known as elected members); "council committee" means a committee of a council established under this Act and includes

a subcommittee; "councillor" means a person appointed or elected as a councillor of a council under this Act; "elected members" means mayor and councillor of the council; "elector" see Local Government (Elections) Act 1999; "Electoral Commissioner" means the person for the time being holding, or acting in, the

office of the Electoral Commissioner under the Electoral Act 1985;

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"general election", in relation to a council, means a general election of members of the council (whether held under section 5 of the Local Government (Elections) Act 1999 or pursuant to a proclamation or notice under this Act);

"LGA" means the Local Government Association of South Australia; "mayor" of a council means the principal member of the council; "member" of a council means the principal member or a councillor of the council; "organisation" means the Council and the Administration; "officer" of a body corporate means a director, manager, secretary or public officer of the

body corporate and includes any other person who takes part in the management of the affairs of the body corporate;

"periodic election" means an election to fill offices of a council held pursuant to section 5 of

the Local Government (Elections) Act 1999; "presiding member" means the member elected by the Council to chair a Council or

Committee meeting; "public notice" means notice published in the Gazette and in a newspaper circulating

generally throughout the State; "public place" means a place (including a place on private land) to which the public has

access, but does not include any part of a community parcel divided by a plan of community division under the Community Titles Act 1996;

"ratepayer" means a person who appears in the assessment record as the owner or occupier

of rateable property; "relative" of a person means (a) the spouse; or (b) a parent or remoter lineal ancestor; or (c) a son, daughter or remoter descendant; or (d) a brother or sister; "remuneration" means salary, allowances and other monetary benefits paid or payable to an

employee of a council; "valuation" means a determination or assessment of value; "ward councillor" means a councillor elected by the electors of a particular ward, as a

representative of the ward.

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TERMS OF REFERENCE – GENERAL PURPOSES COMMITTEE

Comprises: All Elected Members of Council

Presiding Member: Mayor

Coordinator: Chief Executive Officer

Meeting Times: First Tuesday of each month at 7.30pm (as required).

The General Purposes Committee is responsible for issues associated with:

1) Major issues as and when required

2) Governance Issues

3) Strategic Planning

4) Annual budget Review

5) Management

6) Recommending new or amended policies to Council.

7) Giving consideration to significant changes in existing programs and services to new programs and services included in its terms of reference, prior to the annual Budget being considered by Council.

8) Considering any matter not covered by policy or where a request has been made for the policy of Council not to be applied.

9) Receiving and considering reports from CEO and/or General Managers regarding matters included in its terms of reference, which may be initiated from correspondence, requested by Elected Members, reference from the Council or by the administration.

10) Giving consideration to significant changes in existing programs and services or new programs and services included in its terms of reference, prior to the annual Budget being considered by Council.

All recommendations of the Committee must be considered and adopted by a meeting of the Council before they have any legal effect and can be acted upon.

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TERMS OF REFERENCE –ENVIRONMENT & PLANNING COMMITTEE


Presiding Member: Appointed by the Council annually (in May)

Coordinator: General Manager Environment & Community Services

Meeting Times: Second Tuesday of each month, commencing at 7.30 pm or at the conclusion of the DAP meeting or the Community Services Committee Meeting.

The Environment & Planning Committee is responsible for the following functional areas of Council services:-

1) City Planning at a policy and strategic level.

2) Heritage

3) The preparation of draft Supplementary Development Plans as may be necessary from time to time.

4) Determining policy and guidelines for development in order to achieve the desired future character of the City.

5) Environmental Health.

6) Open spaces

7) Street trees and nature strips

8) Waste management

9) Recommend new or amend policies to Council.



12) Receiving personal representations from ratepayers or other persons interested in matter before the Committee, but in accordance with approved procedures.

13) Receiving and considering reports from the CEO or General Manager Environment & Community Services regarding matters included in its terms of reference, which may be initiated from correspondence, requested by Elected Members, reference from the Council or by the administration.

14) Economic Development



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TERMS OF REFERENCE – COMMUNITY SERVICES COMMITTEE



Coordinator: General Manager Environment & Community Services

Meeting Times: Second Tuesday of each month, commencing at 7.30 pm or following the Development Assessment Panel or the Environment & Planning Committee.

The Community Services Committee is responsible for the following functional areas of Council services:

1) Community Services.

2) Recreation and sport

3) Community arts

4) Library





9) Receiving and considering reports from the CEO or General Manager Environment & Community Services regarding matters included in its terms of reference, which may be initiated from correspondence, requested by Elected Members, reference from the Council or by the administration.


All recommendations of the Committee must be considered and adopted by a meeting of the Council before they have any legal effect and can be acted upon. At

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TERMS OF REFERENCE – INFRASTRUCTURE COMMITTEE



Coordinator: General Manager Infrastructure & Corporate Services

Meeting Times: Third Tuesday of each month, commencing at 7.30 pm or following the Corporate Services Committee.

The Infrastructure Committee is responsible for the following functional areas or Council services:

1) Traffic management

2) Streets and footpaths

3) Stormwater drainage

4) Sanitation

5) Fleet management

6) Depot operations.




10) Receiving and considering reports from the CEO or General Manager Infrastructure & Corporate Services regarding matters included in its terms of reference, which may be initiated from correspondence, requested by Elected Members, reference from the Council or by the administration.



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TERMS OF REFERENCE – CORPORATE SERVICES COMMITTEE



Coordinator: General Manager Infrastructure & Corporate Services

Meeting Times: Third Tuesday of each month, commencing at 7.30 pm or following the Infrastructure Committee.

The Corporate Services Committee is responsible for the following functional areas of Council services:

1) Governance - Elected Members and Local Government

2) Rates Administration

3) Employee relations and training

4) Administrative services

5) Financial management

6) Information Technology/Management

7) Audit

8) Community Safety (including General Inspection).


10) Giving consideration to significant changes in existing programs and services to new programs and services included in its terms of reference, prior to the annual Budget being considered by Council.



13) Receiving and considering reports from CEO and General Manager Infrastructure & Corporate Services regarding matters included in its terms of reference, which may be initiated from correspondence, requested by Elected Members, reference from the Council or by the administration.



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PROSPECT AUDIT COMMITTEE TERMS OF REFERENCE

1. Objective The objective of the Audit Committee is to oversee the City’s risk management, and audit initiatives and to act as a source of advice to the Council and CEO in relation to these matters. These Terms of Reference are to be read in conjunction with the Chapter 8 of the Local Government Act 1999 and the City’s Risk Management Policy and Procedures. 2. Authority The Committee is appointed by the Council as a Committee and has the authority to require any information it sees as relevant to its activities from any Councillor, executive, staff member, contractor or consultant, each of whom are required to respond to such enquiries. The Committee is authorised to obtain independent professional advice where considered necessary following consultation with the CEO. 3. Responsibilities of the Committee The responsibilities of the Committee are to: General • Examine any matters referred to the Committee and undertake any other

investigations considered appropriate. • To develop a program of audits to ensure the active management of risk and to

demonstrate transparency and financial prudence • Receive Internal and Annual External Audit reports and monitor the

implementation of corrective actions. • Support the development and promulgation of policies related to relevant legislation

in particular the Whistleblowers Protection Act.

External Audit • Support and provide advice to the Council in the appointment, evaluation and

removal of the External Auditor. • Consider the coordination of the internal and external audit programs. • Review audit results and managements’ response to external audit reports. • Ensure that the External Audit concerns itself with the matters contained within

part 3 and part 4 of Chapter 8 of the Local Government Act. • Be satisfied with the independence, scope and effectiveness of the external audit. • Ensure that the Auditor is provided with open and transparent access to officers,

Councillors and information so as to enable the auditor to effectively conduct the task consistent with Chapter 8 of the Local Government Act.

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Internal Audit (Efficiency and Effectiveness Audits) • Support and provide advice to the Council in the appointment, evaluation and

removal of the Internal Auditor or independent, suitably qualified person to undertake Efficiency and Effectiveness Audits.

• Ensure that Internal Audits shall concern themselves with the extent to which policy objectives have been satisfied, that is how effective the policy has been and how efficiently it has been implemented.

• Discuss and approve the Internal Audit Plan and consider resourcing regarding the staffing and budget requirements.

• Consider the coordination of the internal and external audit programs. The purpose of coordinating these efforts is to assure efficiency, reduce redundancy and use audit resources effectively.

• Receive internal audit reports, consider recommendations and monitor the implementation of agreed corrective actions.

• Be satisfied that the City has appropriate fraud and corruption prevention strategies and adequate processes are in place to identify and address any fraudulent or corrupt activities.

• Be satisfied with the independence, scope and effectiveness of internal audit. • Authorise special investigations (eg. fraud, misconduct and maladministration). Risk Management • Be satisfied that the City’s Risk Management Policy and Procedures are being

followed, monitoring the City’s risk profile, tolerance levels and mitigation strategies.

• Assess management systems and policies that deal with the adequacy and effectiveness of risk management and internal control practices.

• Be aware of actual/proposed changes in the City’s operating environment and the potential impact they may have on the City’s risk profile.

• Monitor the City’s ethical environment and the appropriateness of the Code of Conduct, policies and operational practices.

• Be aware of the City’s Risk Register and that adequate actions are in place to mitigate risk to a tolerance acceptable to the City.

3. Appointment and Removal of the City’s External Auditor Council appoints the External Auditor for a five year term under the provisions of the Local Government Act 1999. The Audit Committee will provide advice to Council for its consideration in relation to the appointment and removal of the External Auditor. The role of the External Auditor is to audit the City’s financial statements and provide an opinion on their accuracy, compliance with accounting standards and to note any particular matters arising from the audit. 4. Appointment and Removal of the City’s Internal Auditor The Internal Auditor or independent, suitably qualified person, may be a person or firm appointed for a fixed term (maximum 5 years) or may be engaged per commission / assignment. Authority to appoint rests with the Audit Committee under delegation within the confines of the allocated budget. Termination of the Internal Auditor during the term of an appointment is at the decision of the Committee. The Committee shall cause a specific report to be presented to Council detailing the reasons for the termination.

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The role of the Internal Auditor shall be separate from that of the External Auditor to as far as possible maintain independence. 5. Membership The Committee will comprise two appointments of the Council (one being the Mayor) and three independent positions. At least one member of the Audit Committee be a woman and at least one member be a man. One of the five appointments shall be appointed by Council as the Chair for the Committee. Only members of the committee are entitled to vote in committee meetings. Unless otherwise required by the Act not to vote, each member must vote on every matter that is before the committee for decision. Executives and senior managers as relevant shall attend Committee meetings as observers and/or be responsible for preparing papers for the Committee. The committee shall be appointed for a term ending 31 October 2008. In considering appointments to the Committee it is highly desirable that Committee members possess the following qualities between them: • financial reporting/auditing background • inquisitiveness • knowledge of Council business and/or public sector administration.

Committee members are to declare any interests in accordance with the declaration of interest clauses within the Local Government Act 1999. Independence means not a supplier/receiver of goods and services to/from the City or its related bodies, either personally, or by direct relatives or entities which members own or have a controlling interest in. Non-compliance with these independence standards must be brought to the attention of the Committee at the time of nomination to the Committee and as they occur once a Committee Member. 6. Quorum A quorum for the Committee consists of at least 50% of the number of committee members (ignoring any fraction) plus one. Meetings are to be rescheduled if there is no quorum. 7. Secretarial and Meeting Procedure Secretarial services will be provided by the Council. Meetings shall be held in accordance with meeting and confidentiality provisions of the Local Government Act as appropriate.

8. Meetings The Committee will meet up to four times a year at appropriate times in the reporting and audit cycle and otherwise as required. One of the meetings will be a workshop forum to discuss and develop the External and Internal audit plans.

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The Chairperson is to call a Committee meeting if requested by any Committee Member or either of the Auditors. 9. Self Assessment The Committee shall conduct a self assessment to determine its effectiveness every 12 months, and report the outcome to Council. The CEO is to furnish the Committee with the information necessary to perform the review. These Terms of Reference are to be reviewed as part of the self-assessment procedure, and approved by Council.

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Attachment 48 51

Risk Management Policy

Adopted by Council

DRAFT

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H:\Reports\Audit Committee\2007\19 Mar 07 - Corporate Governance Attachment - Risk Management Policy.doc ** 2002-03

Contents

1. Background ........................................................................................................................ 1

2. Policy.................................................................................................................................. 2

3. Objectives of Risk Management ........................................................................................ 2

4. Responsibilities .................................................................................................................. 2

5. Risk Assessments ............................................................................................................... 4

6. Acceptable Level of Risk ................................................................................................... 4

7. Risk Registration, Treatment and Reporting...................................................................... 4

8. Reporting and Evaluation................................................................................................... 4

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1


Review Responsibility: Executive Management Team (EMT) Review Date: Annually in May

1. Background 1.1 Risk is inherent in all of the City’s activities. Risk can be defined as "the chance of

something happening that will have an impact on objectives".

1.2 Sources of risk may include: -

1.2.1 Business risks associated with achieving the City’s Vision;

1.2.2 Commercial and legal relationships between the City and our clients, customers and service providers;

1.2.3 Technology and technical issues;

1.2.4 Occupational health and safety risks due to the nature of the City’s work environment;

1.2.5 Management activities and controls; and,

1.2.6 Risks arising from natural events.

1.3 The term risk often carries negative connotations however a risk is merely the uncertainty of an outcome. This uncertainty may be in relation to an opportunity or a threat and is typically measured in terms of likelihood and consequence.

1.4 The purpose of the Risk Management Policy and Procedures is not to eliminate risk but rather to establish the systems and processes required to manage the risks involved in the City’s activities so as to maximise opportunities and minimise negative outcomes. Central to the City’s approach is the achievement of a balance between the costs of managing a risk and the anticipated benefits.

1.5 Effective risk management will enable managers and staff to understand the nature of risks in their work areas and systematically identify, analyse, evaluate, treat, monitor and review risks.

1.6 Risk management is the systematic approach to managing the City’s risks through the process of identification, analysis, evaluation, treatment, communication and monitoring of risks. This approach is based on the Australian Standard for Risk Management (4360:1999). To be effective, these processes must be integrated into the corporate culture and business operations at the strategic, project and operational levels.

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2

**2002-03 H:\Reports\Audit Committee\2007\19 Mar 07 - Corporate Governance Attachment - Risk Management Policy.doc

2. Policy 2.1 The City of Prospect is committed to maintaining a robust and integrated Corporate

Governance Framework that will assure stakeholders that the City is pursuing its objectives and fulfilling its responsibilities with due diligence and accountability. A fundamental component of this Framework is the effective management of the City’s risks in order to protect its employees, assets, liabilities and community against potential losses, to minimise uncertainty in achieving its goals and objectives and to maximise the opportunities to achieve its Vision.

2.2 It is the City’s policy to fully support risk management as an integral element of its Corporate Governance Framework. The Audit Committee Executive Management Team oversees the Executive Management Team’s management of the City’s risk management activities in addition to the City’s Senior Management Group and External Audit function.

3. Objectives of Risk Management 3.1 The objectives of the City’s risk management activities are to: -

3.1.1 Maintain the highest possible integrity for services provided by the City;

3.1.2 Safeguard the City’s assets - people, financial and property;

3.1.3 Create an environment where all City employees assume responsibility for managing risk;

3.1.4 Improve the City’s ability to deliver outcomes in a timely, efficient and effective manner;

3.1.5 Identify resource and operational capabilities for responsible and efficient deployment;

3.1.6 Ensure the City can appropriately deal with risk; and

3.1.7 Demonstrate transparent and responsible risk management processes aligned with accepted best practice standards and methods.

4. Responsibilities 4.1 General: -

4.1.1 All City of Prospect employees are responsible for the effective management of risk and as such will have access to information regarding the City’s risk management processes and identified risks in their work area from the City Risk Register.

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3


4.1.2 All staff are responsible for identifying potential risks. Management is additionally responsible for risk analysis, evaluation, assignment, registration and the development of mitigation plans and risk reduction strategies. These risk management processes should be integrated with other planning processes and management activities.

4.2 City ManagerChief Executive Officer: -

4.2.1 The City ManagerChief Executive Officer is responsible for ensuring that a risk management system is established, implemented and maintained in accordance with Risk Management Policies. Assignment of responsibilities in relation to risk management is the prerogative of the City ManagerChief Executive Officer.

4.3 Executive Management Team: -

4.3.1 The Executive Management Team (EMT), chaired by the City ManagerChief Executive Officer, is responsible for oversight of the City’s risk management system, determining an acceptable level of risk for the City and monitoring the City’s overall risk profile and mitigation strategies.

4.3.2 While the EMT provides the oversight role, the majority of the activities identified in the Risk Management Action Plan will be the responsibility of the Directors and their Team LeadersSenior Management Group.

4.4 Senior Management GroupDepartmental Directors/Team Leaders: -

4.4.1 The Senior Management Group Departmental Directors/Team Leaders areis responsible for the implementation of the Risk Management Policy and Procedures within their respective areas of responsibility including the identification, assessment and recording of risks identified, and the acceptance or assignment of risk responsibility, on-going assessment and registering of risk as part of business and project planning and management.

4.5 Financial Services ManagerRegional Risk Co-Ordinator: -

4.5.1 The Regional Risk Co-Ordinator Financial Services Manager is responsible for assisting the EMT with the establishment of the City’s risk management systems and processes, the development of information and training tools and templates, the monitoring of risk registration, and is responsible for reporting to the EMT regarding the City’s risk profile and mitigation strategies.

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**2002-03 H:\Reports\Audit Committee\2007\19 Mar 07 - Corporate Governance Attachment - Risk Management Policy.doc

5. Risk Assessments 5.1 The City has adopted a standard methodology consistent with the Australian Risk

Management Standard AS4360 for identifying and measuring risks. The methodology will be integrated into the City’s project, business and corporate planning and review processes and can be performed outside of these as required.

5.2 The objective of the risk assessment process is to establish a consistent and comparable basis for quantifying and measuring risk across the organisation. These risk levels can then be compared to the City’s acceptable level of risk to determine an appropriate strategy for treatment.

6. Acceptable Level of Risk 6.1 The Executive Management Team (EMT) is responsible for oversight of the City’s

risk management system and monitoring the City’s overall risk profile and mitigation strategies.

6.2 As part of this role, EMT has determined that Residual Risks rated in the “Active Management” quadrant of the Residual Risk Matrix exceed the City’s acceptable level of risk (or risk tolerance) and will require regular monitoring by the EMT. This monitoring role will include the regular submission of mitigation strategy reports from the responsible officer until that risk have been successfully mitigated to or below the acceptable risk level.

7. Risk Registration, Treatment and Reporting 7.1 The City has developed a Risk Register that will require managers to record the risk

description, assessment, responsible officer and treatment plans. This information will be a useful tool for managers and staff to consider in both strategic and operational planning and will be available to managers and staff on a Departmental basis.

7.2 The EMT will monitor the risk profile of the organisation with particular regard to those risks that exceed the City’s acceptable risk level. The Financial Services Manager Regional Risk Manager will report to the Committee periodically on matters relating to the City’s risk management function.

8. Reporting and Evaluation 8.1 Risk Management Strategic Goals and Action Plan will be reviewed on an annual basis

and incorporated into the Council’s Strategic Planning Processes.

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Extract from Best Practice Model – Internal

Financial Controls

4. Methodology Employed The Australian/New Zealand Standard on Risk Management (AS/NZS 4360:1999) describes a 5-step process on how to address risks facing an organisation, including the requirement to identify and assess the adequacy of existing controls in place to manage these risks.

Com

mun

icat

e an

d C

onsu

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1. Establish context Strategic & Operational

2. Identify risks Hazards & Opportunities

5. Treat risks Identify Further Controls

4. Evaluate risks Adequacy of Existing Controls

3. Analyse risks Likelihood & Consequence

Mon

itor a

nd R

evie

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(AS/NZS 4360:1999)

The 5 steps outlined are described in more detail below, along with a description of how they are to be applied to designing internal financial controls. In order to demonstrate this process practically, we have extracted a “Control Assessment & Design” worksheet from the Manual, and applied the methodology described for an example financial risk. A blank worksheet is provided below, and will be built up step by step as we move through the process.

This is a project of the South Australian Local Government Financial Management Group Inc. which has been assisted by the Local Government Research & Development Scheme. H:\Reports\Audit Committee\2007\19 Mar 07 - Corporate Governance Framework - Attachment - Risk Management Methodology.doc 1

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This is a project of the South Australian Local Government Financial Management Group Inc. which has been assisted by the Local Government Research & Development Scheme. 2

Control Assessment & Design Worksheet

Inherent Risk Assessment Risk Category – Location - Likelihood Business Activity - Consequence Risk No. Rating Risk: Accept Yes/No Description Possible Controls My Council’s Controls to

Address the Risk What else does my Council need to do?

Resp. Officer

Target / Review Date

1

2

3

4

Residual Risk Assessment- Current

Residual Risk Assess – After New Controls

Likelihood Likelihood Consequence Consequence Rating Rating

Prepared by: Date:

Accept Yes/No Accept Yes/No

To assist in understanding the process as each step in the methodology is described, the relevant area of the worksheet has been completed for the example risk and shaded for ease of reference.

Step 1: Establish the context

The context in which the Council operates risk should be established prior to commencing a risk assessment. Establishing the context requires an examination of the external, organisational and risk management environment in which the risk identification, analysis and treatment options will be considered. This assists in establishing the assessment criteria for risk and the structure of the analysis. Other key elements include:

Agreement on the definition of risk to the organisation

Consensus on the roles and responsibilities associated with risk management

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Step 2: Identify risks

The next step in the risk management process is to carry out risk identification and recording. Identification should include all risks that impact the achievement of the Council’s objectives, whether or not they are under the Council’s control.

To assist in the risk identification process, it is useful to identify and group risks under various classifications as outlined in the diagram below. The diagram provided illustrates how this identification process can be applied across all aspects of Council’s operations, including financial risks. The risk classifications provided are suggestions only and can be tailored to meet the specific requirements of an individual Council.


This Manual, however, focuses on those risks that are specifically of a financial nature. By applying the risk identification methodology detailed above, these financial risks can be identified and grouped under relevant risk categories. Again the financial risk categories provided below are suggestions only and can be tailored to meet the specific circumstances of an individual Council. Such categorisation can also prove useful for measuring and reporting where risk lies within the organisation.

Strategic Management

Stakeholder Relations

Business Development

Information Technology

ProjectManagement

Compliance

Human Resources

Financial

Council

Governance

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Stakeholder Relations

Revenue

Expenses

External Services /

Contracting

Assets

Strategic Financial Planning

Liabilities

Financial Risk

The aim of the risk identification process is to generate a comprehensive list of events which might affect the achievement of the Council’s objectives and operations. Comprehensive identification of risks is important because a potential risk not identified at this stage may not be included in further analysis.

In this Manual each risk category has been further broken down into suggested “business activities” which may also be tailored to meet individual Council requirements. For each activity the Manual provides a suite of suggested risks for consideration. These risks are a guide only, with the identification of the actual risks relevant for each Council being a fundamental component of the risk management methodology described herein.

The example risk we have used to demonstrate this process is “Loans are not repaid in accordance with the terms of the loan”. This is from the risk category “Liabilities”, and the business activity “Borrowings”. A table outlining the risk categories and business activities used in this Manual is provided in Attachment 1.


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When identifying a risk, the methodology also requires that a brief description be recorded. This should be included on the worksheet and allows those involved in the identification and analysis of a particular risk to have a common understanding of the exact issue. The description should provide a brief background to the risk and cover how and why it may arise.


Inherent Risk Assessment Risk Category – Liabilities Location - Likelihood Business Activity - Borrowings Consequence Risk No. Rating Risk: Loans are not repaid in accordance with the agreed terms. Accept Yes/No Description: If repayments required by the loan agreement are missed, made late, or made in the wrong amount, the lender may have the right to impose penalties or call the loan. Possible Controls My Council’s Controls to


Resp. Officer


1

2

3

4

Residual Risk Assessment - Current



Prepared by: Date:


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Step 3: Analyse risks

Once all risks have been identified they are analysed in terms of how likely the risk event is to occur (likelihood) and the possible magnitude (consequence) of the risk event. From this analysis the level of inherent risk can be determined. This represents the level of risk associated with the particular issue without considering any controls that might already be in place.

The suggested parameters for quantification of likelihood and consequence as provided in the Standard are attached (refer Attachment 2). Councils may wish to consider tailoring the parameters provided for their individual circumstances.

The final inherent risk score for each risk is calculated by plotting the likelihood and consequence response scores on the Inherent Risk Rating Matrix to give a risk rating of Extreme, High, Moderate or Low. The resultant risk ratings as suggested by the Standard are provided in the matrix below.

Risk Ratings - Per Standard

EH H

1

2

3

4

5

Like

lihoo

d

Consequence

RISK

LOW RISK

A

B

C

D

E

Extreme risk – Immediate action required.

High risk – Senior management attention needed.

Moderate risk – Management responsibility must be specified.

Low risk – Manage by routine procedures.

1 2 3 4 5

EXTREME

E E

E E

E E

E

H H

H

H

H H

M

M

M

M

L

L L

L L


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Inherent Risk Assessment Risk Category – Liabilities Location - Likelihood A Business Activity - Borrowings Consequence 3 Risk No. Rating E Risk: Loans are not repaid in accordance with the agreed terms. Accept Yes/No Description: If repayments required by the loan agreement are missed, made late, or made in the wrong amount, the lender may have the right to impose penalties or call the loan. Possible Controls My Council’s Controls to


Resp. Officer


1

2

3

4


Residual Risk Assess – Add Controls


Prepared by: Date:


X

In order to decide whether this inherent risk position is acceptable or not, a tolerance level needs to be set. Any risk that is assigned a risk rating at or below this “tolerance level” may not require further analysis. Although the tolerance level for each Council will vary, it should be quantified as part of this process. For example, tolerance may be set such that a risk rating of Moderate or Low is an acceptable position, with no need for further action.

Steps 4 & 5: Evaluate & treat risks

Those risks that are rated above the established tolerance level will require further analysis.

This will firstly require identification and documentation of any management processes (“controls”) presently in place that reduce the level of risk. To assist in this process a suite of “possible controls” is provided on the worksheet for each risk listed in the Manual. It is important to note that:

not all of the suggested possible controls need to be in place;

one well designed control may be sufficient to appropriately manage the particular risk.


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The adequacies of these controls are then assessed by revisiting the likelihood and consequence parameters in order to establish the residual risk position. This residual position is compared to the previously established tolerance parameters to determine whether any further controls may be required.




Resp. Officer

Target / ReviewDate

1

X

Statements received from lenders are reconciled to the loan register and differences are acted upon by personnel independent from the process of recording the loan.

2 The loan repayment and covenant schedule, including dates and amounts to be paid is established when the loan is setup.

3 Actuals are compared to budget regularly; management reviews and approves significant variances.

4 Loan repayments are subject to internal audit.

5 Loan repayments are made via automated direct debit and approved appropriately.

6 Management reviews loan repayment and covenant schedule to ensure that all payments are made and recorded accurately and timely.

• Schedule of Loan

Covenants is maintained

• 1 & 2 from “Possible

Controls”



Likelihood C Likelihood Consequence 3 Conseque

nce

Rating H Rating

Prepared by: Date:


X

In this example the Residual Risk position still results in an unacceptable risk rating of “High”. As this is above our determined tolerance level, it is recognised that further controls are required, and hence the section titled “What else does my Council need to do?” should be addressed.


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The process described above is demonstrated in the following graph:

InherentRisk

Residual

Risk

AdditionalControl(s)

Controls

ACCEPTABLEResidual Risk

Controls Effective

Controls

Tolerance Level

LEV

EL

OF

RIS

K

Assess Assess Determine Risk Controls Additional Controls (Step 3) (Step 4) (Step 5)

It is then appropriate to identify the further controls that will be required to ensure that the risk is being managed at or below the tolerance level. Consistent with the accountability principles of a robust corporate governance environment, each additional control to be implemented should be accompanied by a nominated responsible officer and a target completion date.


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Resp. Officer

Target / ReviewDate

X

1 Statements received from lenders are reconciled to the loan register and differences are acted upon by personnel independent from the process of recording the loan.


2 The loan repayment and covenant schedule, including dates and amounts to be paid is established when the loan is setup.

3 Actuals are compared to budget regularly; management reviews and approves significant variances.

4 Loan repayments are subject to internal audit.

5 Loan repayments are made via automated direct debit and approved appropriately.

6 Management reviews loan repayment and covenant schedule to ensure that all payments are made and recorded accurately and timely.

• Schedule of Loan

Covenants is maintained

• 1 & 2 from

“Possible Controls”

• Reporting on

compliance with Loan Covenants to be established on a quarterly basis

• 3 from “Possible

Controls”

PB

PB

31/7 (T) 31/8 (R) 31/7 (T) 31/8 (R)



Likelihood C Likelihood D Consequence 3 Consequence 3 Rating H Rating M

Prepared by: Date:


X X

4 5

11 12 13

1918

2

26

027

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Communicate and Consult

Communication and consultation are important elements during each step of the risk management process. Effective communication is essential to ensure that those responsible for implementing risk management, and other stakeholders, understand the basis on which risk management decisions are made and why particular actions are required.

It is important that a communication approach recognises the need to promote risk management concepts across a broad spectrum of management and staff, from the Leadership Team to operational staff, and to staff from a range of locations and business areas.

Monitor and Review

It is necessary to incorporate monitoring and review procedures into day-to-day operational and management activities in order to capture any new risks arising from changing business circumstances and to review implementation of risk reduction strategies.

In addition, regular reporting to the Leadership Team on the status of implementing additional controls should be undertaken. In particular, those additional controls that have not been implemented in terms of their targeted implementation dates will be highlighted, along with an update on their status and a revised target completion date. Attachment 3 provides an example of an implementation checklist that can be used to manage the process of implementation.

The Leadership Team will also monitor the status of all risks rated as Very High on a regular basis, to ensure that rating assigned, controls identified and treatment plans remain valid.

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H:\Reports\Audit Committee\2007\19 Mar 07 - E&E Audit.doc City of Prospect

ITEM NO.: 9.2 ON AGENDA TO: Audit Committee on 19 March 2007 FROM: General Manager Infrastructure & Corporate Services SUBJECT: Efficiency & Economy Audit FILE NO.: 1. PURPOSE OF REPORT

1.1 To provide Council with recommendations regarding the conduct of an Efficiency & Economy Audit.


2.1 Strategic Directions 2004 – 2007 : Maintaining the traditions of good government - As a Council our first priority is to apply sound and responsible financial management practices.

2.2 Strategic Directions 2004 – 2007 : Engaging our community in participatory processes - Supporting a city where the elected representatives, Council staff and the community work in a collaborative and participatory environment.

2.3 There is no relevant policy but the performance of efficiency and economy audits is now possible under Section 130A of the Local Government Act, 1999 (once proclaimed).


3.1 Nil

4. DISCUSSION

Background

4.1 In June 2006, Council adopted its 2006/07 budget which included an allocation of $20,000 to undertake an Efficiency and Economy Audit.

4.2 Reports were subsequently presented to Council in August, September, October and December 2006 regarding this matter.

4.3 The report provided to Council in October 2006 regarding how to progress the conduct of an efficiency and economy audit is provided for information as Attachments 1-11.

4.4 At its October meeting, Council resolved the following:-

“Council adopt the recommendation received from its Auditor dated 11 October, 2006 regarding the performance of an efficiency and economy audit except that the carrying

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out of the audit, once the guidelines are established by Dean Newbery & Partners be open to a selective tender process.”

4.5 Council’s Auditor (Dean Newbery & Partners) subsequently wrote to Council following the interim audit, with advice as to what should be included within the scope of an Efficiency & Economy Audit, refer Attachments 12-13.

4.6 At is December 2006 meeting, Council resolved the following:-

4.6.1 “That Council refer the Efficiency & Economy Audit to the Audit Committee and ask that the Committee report back to Council about the preferred terms of reference, timeline, budget and selection process for the Efficiency & Economy Audit.”

Discussion

Scope of the proposed Efficiency & Economy Audit

4.7 The list of matters suggested by the External Auditor in his letter dated 4 December 2006 (refer Attachments 12-13) is considered to be too long and with too much variety to be included in the scope of one audit. In addition, many to items listed will be addressed by the Audit Committee when reviewing councils risk profile and developing an internal audit program for Council.

4.8 It is suggested that only Item 1, being the review of the overall economy and efficiency of the Council wide organisational structure, be the subject of the proposed efficiency and economy audit. Narrowing the focus of the audit to this one item will reduce the timeframe and cost associated with conducting this audit.

Timeline and Budget for the proposed Efficiency & Economy Audit

4.9 Until tender responses are received, the timeframe and cost associated with conducting this audit are unknown. It is considered however that cost of undertaking this audit with the proposed scope listed above will be less than the budget available for the audit.

4.10 It is understood that a number of elected members are keen for this audit to be performed as soon as possible so that Council may consider any recommendations emanating from the audit. It is anticipated that there maybe some efficiency improvements identified as result of the audit that Council would consider during its deliberations of the 2007/08 Draft budget or early in the new financial year depending on the timing of the audit.

4.11 An illustrative timeframe for this process is as follows. The actual timeframe will be determined following receipt of tender responses which will indicate availability of person(s) to undertake audit and an indication of audit duration:-

27 March - Council adopts Audit Committee recommendations re scope of audit

28 March – Request for Tenders Called

10 April – Closing Date for Tenders – Note Easter public holidays

12 April – Agenda sent to Audit Committee – Note limited time for assessment of responses by administration

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16 or 18 April – Audit Committee Meeting to consider responses received and make recommendation to Council

19 April – Agenda sent to Council (including recommendations from Audit Committee

24 April – Council adoption of Audit Committee recommendations

May – Audit conducted

June – Efficiency & Economy Audit Report to Audit Committee and Council

4.12 The above timeline is particularly tight. It should be noted that if the April Council meeting date is missed, the process will be one month longer unless a Special Meeting of Council is convened to progress this item.

Selection process for a suitably qualified person(s) to undertake the Audit

4.13 Given the nature of such an audit (and the timing implications listed above), it is strongly recommended that a selective tender process be undertaken to engage a suitably qualified independent person to undertake the audit. It is suggested that the following parties have the relevant experience (including Local Government experience) to undertake work of this nature and should be invited to tender an expressions of interest:-

4.13.1 Mark Booth 4.13.2 John Comrie 4.13.3 Ian McDonald 4.13.4 UHY Haines Norton 4.13.5 Ernst & Young

4.14 It is further recommended that once tender responses are received, that these responses be referred to the Audit Committee for review with the Audit Committee then making a recommendation to Council regarding the appropriate person to be appointed to undertake this Audit.

4.15 Council staff have prepared a draft expression of interest (EOI) (refer Attachments 14-17) for the Audit Committee’s consideration to be used to engage an appropriate independent person to undertake the Efficiency & Economy Audit. This EOI has been prepared consistent with the recommendations of this report,.

5. PREFERRED OPTION & JUSTIFICATION

5.1 Refer body of report.

6. RECOMMENDATION


(1) That the expression of interest for the conduct of an Efficiency and Economy Audit as provided in Attachments 14-17 be approved.

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(2) That the following parties be requested to tender expressions of interest to undertake the efficiency and economy audit:-

1. Mark Booth

2. John Comrie

3. Ian McDonald

4. UHY Haines Norton

5. Ernst & Young

(3) That the tender responses received be referred to the Audit Committee for consideration and subsequent recommendation to Council regarding the preferred tenderer.



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ITEM NO.: 10.3 ON AGENDA TO: Finance & Administration Committee on 17 October 2006 FROM: General Manager Infrastructure and Corporate Services SUBJECT: Efficiency and Economy Audit FILE NO.: 1. PURPOSE OF REPORT

1.1 To assist Elected Members to progress the performance of an Efficiency and Economy Audit at the City of Prospect.


2.1 Strategic Directions 2004 – 2007 : Maintaining the traditions of good government - As a Council our first priority is to apply sound and responsible financial management practices.

2.2 Strategic Directions 2004 – 2007 : Engaging our community in participatory processes - Supporting a city where the elected representatives, Council staff and the community work in a collaborative and participatory environment.

2.3 There is no relevant policy but the performance of efficiency and economy audits is now possible under the Local Government Act, 1999 following recent changes to the Act. Refer to Attachments 6-7 for a copy of section 130A.


3.1 No formal consultation is required by legislation.

4. DISCUSSION

4.1 Recent amendments to the Local Government Act have introduced a number of new concepts, including a specific provision regarding the capacity for a Council to conduct an efficiency and economy audit (amendments will take effect from 1 January 2007).

4.2 The LGA has provided an Information Paper (refer Attachments 1-7) to assist councils understand the nature of Efficiency & Economy Audits.

4.3 As listed in the LGA Information Paper:-

4.3.1 The audit should provide both policy makers and management with an opinion on the efficiency and economy of the programs or activity(ies) under review. In addition it may include recommendations for future action and identify issues that may require further investigation or consideration.

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4.3.2 Some of the key questions that may be explored during an efficiency and economy audit might be:

(1) Are sound and valid procurement procedures in place and being followed?

(2) Is the council employing the appropriate amount of resources at the appropriate time to ensure efficiency?

(3) Are property resources being adequately maintained and protected?

(4) Are human resources being used to the best of their ability?

(5) Is there no (or minimal) duplication of work or unnecessary wasted effort?

(6) Have optimum resource levels been adequately identified?

(7) Are internal measures of efficiency and economy valid and appropriate?

When commissioning the audit, the auditor should be advised of the program area(s) and required to develop an understanding of the policy that drives the program and once fully understood, adopt the appropriate audit procedure.

4.3.3 Economy and efficiency audits should be undertaken by Council’s auditor, or an independent, suitably qualified person. The person identified to undertake the examination, and to produce the report, must do so without undue influence from any individual Council Member or the Chief Executive Officer or other staff of the Council.

4.4 In the absence of an Audit Committee to develop the proposed terms of reference for the requested efficiency and economy audit, Council has the following options to progress the performance of an Efficiency and Economy Audit:-

4.4.1 Option 1 – Use the External Auditor to do Audit.

4.4.2 Option 2 – External Auditor to provide advice on how to do the Efficiency and Economy Audit and recommend an independent, suitably qualified consultant to under take audit; or

4.4.3 Option 3 – Tender for Independent consultant to undertake audit.

4.5 Council staff have spoken with Council’s Auditor, Dean Newbury and Partners, regarding this matter.

4.6 As the Auditor has prior commitments that prevents him from attending the Finance and Administration Committee meeting to address Council regarding this issue, the Auditor has provided the attached letter (Refer Attachment 8) to the Mayor for inclusion with this agenda item.

4.7 It should be noted that once an Audit Committee has been established, it would be appropriate for the Audit Committee to oversee the conduct of the audit.


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5. PREFERRED OPTION AND JUSTIFICATION

5.1 As Council wants the Efficiency and Economy Audit to be scoped out and performed “post haste”, it is recommended that Council accepts and use the Auditor’s recommendation (set out in Attachment 8).

5.2 Alternatively, Council could develop a specification (including Terms of Reference) for the audit and seek tender responses. This process would obviously take longer as it would require tender development, tender call and tender evaluation prior to the audit commencing.

6. RECOMMENDATION

6.1 It is recommended that:

(1) Council adopt the recommendation received from its Auditor dated 11 October, 2006 regarding the performance of an efficiency and economy audit.



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City of Prospect

Expressions of Interest

Re : Conduct of Efficiency and Economy Audit

1. Introduction The City of Prospect (Council) is an inner suburban Council, immediately to the north of the Adelaide CBD. The Council has approximately 10,000 property assessments, most of which are residential with a population of approximately 19,000. Income from rates for the 2006/2007 financial year is approximately $10 million dollars with an overall budget of $13 million dollars. The Council employs approximately 70 full time equivalent staff. The major proportion of Council’s civil construction and capital works is undertaken by contractors. Council operates the Civica “Authority” Local Government system which is an integrated system comprising accounting and financial modules including payroll, rates, accounts, receipting, infringements, planning etc.

During 2006/07 Council will establish an audit committee in accordance with the Local Government Act 1999.

Expressions of interest are now sought for the conduct of an efficiency and economy audit to the Council consistent with this specification.

2. Objective of the Audit To provide an independent audit opinion of the efficiency and economy of Council’s operations in accordance with Section 130A of the Local Government Act in relation to those matters listed within the scope of the audit (see below).

3. Term of Audit Appointment This is an appointment to conduct of an efficiency and economy audit in the 2006/07 year consistent with the scope of works listed below.

4. Scope of Audit The auditor is to –

4.1 Review the overall economy and efficiency of the Council wide organisational

structure, in particular following the restructure in August 2005, including in areas such as passive and non-passive infrastructure management, information

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technology, customer services, extent of multi-skilling, time management, and focusing on matching the resource needs of all other Council functions against the service level requirements set by the Council. This component of the review should incorporate benchmarking FTE against comparable councils.

4.2 Include in his or her audit report the findings and recommendations emanating

out of the above-mentioned work. This report should be addressed to the Mayor of City of Prospect.

4.3 Any recommendations made for improvement should be the subject of a second

review six months after the issue of the initial review report.

4.4 The auditor is required to liaise with and attend meetings (periodically) with the Audit Committee and present the audit findings to both the Audit Committee and Council.

5. Audit Methodology and Approach

(a) The auditor is required to comply with the requirements of the Local Government

Act 1999 (b) The auditor is to provide the Council with a general outline of his or her

methodology. (c) The auditor is to provide the Council with a plan for the audit including:

• timing of audit visits;

• the method to be used to communicate with, and provide advice and

information to the Audit Committee/Council. (d) The auditor is required to produce an audit report as required by Section 130A of

the Local Government Act 1999. 6. Expressions of Interest Fees and Costs − The Expression of Interest price shall be firm and shall not be subject to any

variation unless mutually agreed. − The Expression of Interest price shall be inclusive of GST, with the GST amount

shown separately. − The Expression of Interest must be submitted by 5.15 pm Tuesday 10 April 2007. 7. Data Required in the Expression of Interest Expression of Interest Details − Provide full name of organisation and/or individual, address and contact details.

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Relevant Skills and Experience − Provide full details of relevant skills and experience of the party submitting the

Expression of Interest. − Provide names and contact details of persons who are prepared to act as referee

in respect of relevant projects and experience of the Expression of Interest. Quality Assurance − Provide details of any quality assurance procedures in place and/or accreditation. Insurances − Provide details of any public liability and/or professional indemnity insurance. Program − Provide a detailed program for provision of Services under the Expression of

Interest. − The Program must show the inter-relationship between all activities and must

show a critical path for the Project.

8. Hours, Fees and Expenditure The auditor is to provide: • Estimate of the hours to be spent on the audit. • Fees for completing the audit in accordance with this specification. • Provide a GST inclusive quotation to fulfil the outcomes required

The Auditor should indicate the following fee structure: • The total fee proposal for the auditing work required above, incorporating the

estimated duration of the work involved. • The scale of hourly rates of the personnel likely to be involved in the audit.

9. Terms of Appointment • The auditor shall confirm that he or she has, and will maintain during the duration

of the audit term, professional indemnity insurance covering the legal liability arising out of any neglect, default, error, or omission of at least $2m.


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10. Further information

For further information or discussion about this expression of interest, you should contact Mr David O’Loughlin, Mayor, City of Prospect on 0408 598 863 or email David.O’[email protected].

Your submission should reach this office no later than the close of business (5.15pm) on Tuesday, 10 April 2007 and be addressed:

CONFIDENTIAL Appointment of Efficiency and Economy Auditor Mr David O’Loughlin Mayor City of Prospect PO Box 171 Prospect SA 5082


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ITEM NO.: 9.3 ON AGENDA TO: Audit Committee on 19 March 2007 FROM: General Manager Infrastructure & Corporate Services SUBJECT: Meeting Dates for Audit Committee FILE NO.: 4/14/49 1. PURPOSE OF REPORT

1.1 For Council to adopt meeting dates for Audit Committee meetings up until 31 October 2008.


2.1 The Strategic Directions includes the goal of “Supporting a city where the elected representatives, Council staff and the community work in a collaborative and participatory environment.” The public meetings held by the Audit Committee contribute to this goal.

2.2 The openness, transparency and accountability of Council is covered in the Local Government Act. Consistent with this act, Council has a number of related policies, including:-

2.2.1 Meeting Procedures for Council & Standing Committees

2.2.2 Public Access to Meetings and Documents - Code of Practice

2.2.3 Review of Council Actions Grievance Procedures


3.1 The Community is advised of the meeting dates of Council and Committee meetings. All council and committee meetings are open to the public. Councils deliberations in public meetings are open, transparent and accountable. Members of the community have the right to attend any of these meetings and may make deputations in accordance with the Local Government Act Regulations.

4. DISCUSSION

4.1 It has been the practice at Prospect for many years for virtually all business to be debated in Committees. The resultant Committee recommendations are then referred to Council for consideration.

H:\Reports\Audit Committee\2007\19 Mar 07 - Meeting Dates.doc City of Prospect

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4.2 Although still bound by the formality of meeting procedures, in practice, Committee meetings are conducted more informally and hence encourage more discussion.

4.3 Committee recommendations have no legal status until they have been adopted at a Council meeting. It has been the custom at Prospect for committee recommendations to be considered by a meeting of the Council held a week or two after the committee meeting so that Elected Members have time to consider the recommendations and, if necessary, to discuss them with other members of the Council, staff or residents.

4.4 The Terms of Reference for the Audit Committee operation were adopted by Council in December 2006. The Terms of Reference states:

“The Committee will meet up to four times a year at appropriate times in the reporting and audit cycle and otherwise as required. One of the meetings will be a workshop forum to discuss and develop the External and Internal audit plans.”

4.5 This purpose of this report is to set the Audit Committee meeting dates and times up until 31 October 2007. Dates for the period 1 November 2007 – 30 October 2008 can be determined at a later date.

4.6 When considering the timing of upcoming meetings it is important to consider:-

4.6.1 The recommendation in Agenda Item 9.1 regarding holding a Risk Workshop to inform the development of an Internal Audit Program. The timing of this workshop and development of the Internal Audit Program may influence the timing of an Audit Committee meeting.

4.6.2 The need to meet and review tender responses received in relation to the Efficiency and Economy Audit (refer Agenda Item 9.2).

4.6.3 Given that Council has only just established the Audit Committee, there maybe a need for additional meetings to establish the Audit Committee’s work program.

5. PREFERRED OPTION & JUSTIFICATION

5.1 Refer body of report.

6. RECOMMENDATION


(1) That Council adopts the schedule of Audit Committee meetings up until 31 October 2007, as follows:-

• ____________________< to be determined at Committee Meeting >




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(2) That the Meeting Schedule for Standing Committees and Council be updated to include Audit Committee meeting dates.



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