MINUTES OF A MEETING OF THE AUDIT COMMITTEE HELD ON ...
MINUTES OF A MEETING OF THE AUDIT COMMITTEE HELD ON ...
MINUTES OF A MEETING OF THE AUDIT COMMITTEE HELD ON ...
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PRESENT:<br />
Trevor Cooper – Chair<br />
Delroy Brown<br />
Tony Grady<br />
Ralph Tonge<br />
<strong>MINUTES</strong> <strong>OF</strong> A <strong>MEETING</strong> <strong>OF</strong> <strong>THE</strong> <strong>AUDIT</strong> <strong>COMMITTEE</strong><br />
<strong>HELD</strong> <strong>ON</strong> M<strong>ON</strong>DAY 6 OCTOBER 2008 AT 8.00am<br />
IN ATTENDANCE:<br />
Margaret Allen – Interim Deputy Principal<br />
David White – Interim Vice Principal Corporate<br />
Andrew Hartley – Director of Funding and Financial Resources<br />
Val Mattinson – Director of Corporate and External Affairs<br />
Ian Falconer – Grant Thornton<br />
Will Simpson – Grant Thornton<br />
Claire Kay - Clerk to the Corporation<br />
1. <strong>MEETING</strong> WITH <strong>AUDIT</strong>ORS WITHOUT MANAGEMENT PRESENT<br />
The members used this time to consult with auditors on issues arising from the agenda.<br />
Members noted the concerns expressed by the IAS team regarding their performance<br />
presented on the agenda under item 11. There were issues identified in the report which<br />
the IAS had not had the opportunity to discuss with management. Members agreed that<br />
the issues relating to performance would be discussed under item 11 and Tony Grady<br />
offered himself to facilitate an open debate outside the meeting if required.<br />
The Chair asked auditors for their experience of the attendance of the Principal at Audit<br />
Committees around the sector. IAS reported a discussion at the 157 group asking that<br />
exact question, a straw pole showed a 50:50 split of Principals attending and not attending,<br />
Grant Thornton reported a split more like 70:30 of Principals attending in their client base.<br />
Members discussed the merits of the Principal attending and whether it jeopardised the<br />
independence of the Committee. On balance it was agreed that the Principal should attend<br />
but if necessary could withdraw from the discussions if it would benefit the independence of<br />
the Committee.<br />
The confidential minute from the session at the last meeting was reviewed and agreed by<br />
members, and signed by the Chair.<br />
Members of College management joined the meeting at 8.15 am. The Chair welcomed<br />
David White to the meeting.<br />
2. APOLOGIES FOR ABSENCE<br />
Apologies for absence had been received from Graham Charlton and Geoff Hall.<br />
3. DECLARATI<strong>ON</strong>S <strong>OF</strong> PERS<strong>ON</strong>AL INTEREST IN AGENDA ITEMS<br />
There were no declarations of personal interest in the agenda items.<br />
4. <strong>MINUTES</strong><br />
The minutes were amended to indicate the Principal as being in attendance. The minutes<br />
of the meeting held on 30 June 2008 were confirmed and signed.<br />
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5. MATTERS ARISING<br />
a) Student union financial strategy<br />
RT informed members that the increased activities reported to the last meeting by<br />
the Student Union Liaison Officer had been well received by students and had<br />
resulted in an increased uptake of NUS membership which in turn increased the SU<br />
income for the year.<br />
b) Declaration of personal interest<br />
The Clerk updated the Committee on the outcomes of the discussion with the<br />
previous committee Chair and the Principal with regard to his position of Trustee of<br />
the Public Governance Institute set up by KPMG. It had been agreed the Principal<br />
take up the invitation to be a trustee of this new group but to decline any<br />
remuneration as a result of the position. The previous Chair had accepted that the<br />
position would be beneficial to the College as a networking opportunity and for the<br />
development of best practice within the organisation. Members noted and<br />
supported the action taken by the previous Chair.<br />
b) Corporation papers<br />
IAS confirmed that they were now receiving corporation papers for information, and<br />
had received copies of the Due Diligence reports.<br />
6. REPORT FROM <strong>THE</strong> <strong>AUDIT</strong> AND RISK MANAGEMENT GROUP<br />
Members received an update report on the work undertaken by this group. All items would<br />
be discussed separately on the agenda.<br />
The report was noted<br />
7. RECOMMENDATI<strong>ON</strong> TRACKING EXCEPTI<strong>ON</strong> REPORT<br />
The report used to track the progress to date of audit recommendations was presented to<br />
members. Members discussed overdue items and their risk rating. The summary of<br />
outstanding items was reviewed. A revised schedule would be circulated to members<br />
following the meeting. Members discussed the contents of the report in detail and were<br />
satisfied that recommendations were being monitored and addressed appropriately.<br />
The report was noted.<br />
D Brown joined the meeting at 8.30am.<br />
8. INTERNAL <strong>AUDIT</strong> REPORTS<br />
Support Services for Learners<br />
The aim of the audit was discussed and it was concluded that the overall strategic view as<br />
to whether the financial cost of the services provided was matched with the benefit to the<br />
learner of the College providing this service, still needed to be addressed. A more in depth<br />
review was required from a strategic position and it was agreed for this to be returned to the<br />
next meeting. The conclusions of the internal audit undertaken found the operational areas<br />
which could contribute or impact on student achievement and the learner experience were<br />
robust and concluded controls were suitably designed and operating with sufficient<br />
effectiveness to provide reasonable assurance that the related risk management objectives<br />
were achieved during the period.<br />
Train to Gain<br />
Members noted this was a high risk, high growth area for the College and although four<br />
recommendations had been made in the report, similar issues had been seen at other<br />
colleges in the sector especially forecasting and margins. Members noted the strategic<br />
decision to invest in the area of Train to Gain and the overall operating position of the area<br />
in 2007/08. The steps being undertaken to improve the overall margin and reduce the<br />
organisational risk of this provision were discussed. Members noted the LSC PFM report<br />
on Train to Gain would be available for the next meeting. The conclusions reported by the<br />
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IAS were that the controls were suitably designed and operating with sufficient<br />
effectiveness to provide reasonable assurance that the related risk management objectives<br />
were achieved during the period subject to the recommendations made.<br />
Learner number systems<br />
The report provided good assurance in the key area of learner number systems outlining a<br />
robust system. The report also commented on the good progress made against<br />
recommendations for improvement in last year’s report. The conclusions reported by the<br />
IAS were that the controls were suitably designed and operating with sufficient<br />
effectiveness to provide reasonable assurance that the related risk management objectives<br />
were achieved during the period.<br />
Ofsted Inspection follow-up<br />
The report approved by the Committee at the last meeting was presented outlining the<br />
progress made against recommendations from the Ofsted inspection in 2005. IAS<br />
concluded that the College had appropriate mechanisms in place for implementing and<br />
monitoring progress of recommendations.<br />
Data Security<br />
IAS reported to the Committee the significant progress which had been made in the area of<br />
IT. The report made several recommendations to build on the existing good practice in<br />
data security within the College but none were high priority. Members questioned<br />
management about the location and security around sensitive data and data protocols and<br />
requested a cost benefit analysis on the use of encryption to improve data security. The<br />
conclusions reported by the IAS were that the controls were suitably designed and<br />
operating with sufficient effectiveness to provide reasonable assurance that the related risk<br />
management objectives were achieved during the period.<br />
Merger<br />
The Committee received the report presented to the Corporation meeting in July on the<br />
decision making process on merger. This report was an additional review requested in<br />
relation to the identification by the Committee that a risk review on merger should be<br />
undertaken. Members received the report and noted it was considered helpful to the Board<br />
at the time it was presented.<br />
The Committee resolved:<br />
to adopt the IAS reports considered by the Committee.<br />
9. DUE DILIGENCE<br />
The Committee considered the key headlines from the due diligence report on ncn and how<br />
the risks identified were being mitigated in year.<br />
The report was noted.<br />
10. IAS ANNUAL REPORT 2007/08<br />
The draft Annual Report for 2007/08 was presented by Grant Thornton. Members noted<br />
this report formed an important part of the assurance mechanism for the statement on<br />
internal controls within the annual financial statements. The report concluded that controls<br />
were suitably designed and operating satisfactorily in the areas of risk management,<br />
corporate governance and internal system of controls, with the exception of the monitoring<br />
and management fees in connection with Train to Gain. Operational assurance was<br />
recorded as good in 5 out of the 7 areas in accordance with LSC guidance, and adequate in<br />
the area of managing risk in association with merger and economical and efficient use of<br />
resources.<br />
Members noted the increase of days and cost from budget was due to the additional review<br />
with regard to merger.<br />
Members requested the following changes to the report:<br />
• Text be altered to reflect the correct position with regard to merger<br />
• Identify specifically the additional work, time and cost of the merger review<br />
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• Alter textual commentary on pages 8&9 including reviewing the fundamental<br />
matters.<br />
A final draft would be presented to the Committee at the meeting in November.<br />
11. INTERNAL <strong>AUDIT</strong> SERVICE<br />
A report was tabled outlining the assessment of the performance of the IAS by<br />
management. The Chair requested this be discussed with the IAS team and a further<br />
report brought to the Committee in November.<br />
Grant Thornton withdrew for this item.<br />
The Committee discussed the re-appointment of Grant Thornton taking into account the<br />
discussion at the last meeting regarding merger and the timing of a re-tender process.<br />
Members considered the financial regulations and the current duration of the Grant<br />
Thornton contract.<br />
The Committee resolved:<br />
• that the re-appointment of Grant Thornton as the College’s Internal Audit<br />
Service for 2008/09 be recommended to the Corporation;<br />
• that the process for re-tendering the Internal Audit Service in accordance with<br />
the Audit Code of Practice and the College Financial Regulations would<br />
commence during 2008/09 for a new contract term starting 2009/10.<br />
The Committee discussed the involvement of members in the tendering and appointment<br />
process for IAS and agreed that 2 members of the Committee (Chair plus Tony Grady),<br />
Director of Finance and VP Corporate Services should form the panel to undertake the<br />
process of appointment and report back to the Committee. Members agreed the Principal<br />
should not be involved in the process to ensure independence of the appointment.<br />
12. INTERNAL <strong>AUDIT</strong> PLAN 2008/09<br />
The full year plan was presented to members building on the 6 month plan discussed in<br />
June. The plan covered the statutory requirements of the Audit Code of Practice and<br />
outlined the number of audit days required to deliver the plan and the overall cost to the<br />
College. Members noted that proposed areas covered in the plan and discussed them in<br />
relation to the overall risk to the College and the relevance areas had to Framework for<br />
Excellence.<br />
The Committee resolved:<br />
to recommend the Internal Audit Plan for 2008/09 to the Corporation.<br />
13. RISK MANAGEMENT<br />
The Committee received the Annual Review of risk management for 2007/08 noting the<br />
changes in process for monitoring the mitigation of risks in year and the changes made to<br />
the risk register in year. The risk management strategy for 2008/09 was presented along<br />
with the risk register. Members questioned management about some of the detailed risks<br />
around staffing, merger and insurance.<br />
The Committee resolved:<br />
• to recommend the risk management strategy for 2008/09 to the Corporation;<br />
• to recommend the 2008/09 risk register to the Corporation.<br />
14. WHISTLEBLOWING POLICY AND PROCEDURE<br />
A revised policy was presented to the Committee. The policy had been revised following<br />
an IAS recommendation and now reflected current legislation and best practise. Members<br />
discussed the relevance and use of this policy by students and requested a reference to<br />
students within paragraph 1.3. Members noted the means by which the policy would be<br />
promoted to staff, students and stakeholders and encouraged the training of staff named as<br />
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a first point of contact to ensure appropriate use of the policy. An amendment was required<br />
to ensure consistency of contacts within the policy.<br />
The Committee resolved:<br />
to recommend the Whistleblowing Policy to the Corporation, subject to the<br />
amendments noted above.<br />
15. <strong>COMMITTEE</strong> ANNUAL SELF ASSESSMENT<br />
The Committee considered the self-assessment circulated prior to the meeting. Members<br />
discussed the evidence provided in the report and noted that although value for money<br />
remained satisfactory additional reports had been received by the Committee in year, it was<br />
noted that the KPI’s in Framework for Excellence would help quantify this for the<br />
Committee. Risk management was graded good due to the cancellation of the September<br />
2007 meeting which resulted in the Committee being unable to perform their role in<br />
overseeing the annual risk management review. Although the Committee accepted the risk<br />
management framework overall remained outstanding, members considered their duties in<br />
this process were not fully carried out. Members considered the Committee now had a high<br />
level of expertise. Members agreed their performance against the predetermined criteria<br />
as:<br />
• Effectiveness good<br />
• Risk management good<br />
• Value for money satisfactory<br />
• Decision making outstanding<br />
16. C<strong>ON</strong>FIDENTIALITY <strong>OF</strong> BUSINESS<br />
No items were considered confidential.<br />
17. DATE <strong>OF</strong> NEXT <strong>MEETING</strong><br />
The next scheduled meeting was 26 November 2007.<br />
Members had received for information the KPMG benchmarking data on college’s financial<br />
performance for 2007/08 - it was noted this was for KPMG clients only.<br />
The Chair closed the meeting at 10.00am.<br />
SIGNED: ___________________________________________________ ______<br />
DATE: _______________________________________________________ _<br />
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