A&R 4 Action 2 Final follow-up report for to be presented at the next Audit meeting in November See agenda item 5.5

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1 AUDIT COMMITTEE MEETING CONFIRMED MINUTES OF THE AUDIT AND RISK COMMITTEE MEETING HELD ON FRIDAY 1 ST DECEMBER 2017 AT AM THE BOARDROOM, THETFORD BUILDING, CITY COLLEGE NORWICH Members Present: Bree Sherwood (Chair), Zak Virgin In Attendance: Martin Colbourne (NES Finance Director), Corrienne Peasgood (Principal), Stephanie Beavis (KPMG), Liandi Venter (KPMG), Paul Goddard (Scrutton Bland), Hannah Monk (Minute Clerk) 1. Apologies for Absence Nikki Gray 2. Declaration of Interests There were no new declarations at the meeting. 3. Minutes of the Meeting held on 20 th June 2017 The minutes of the meeting held on 20 th June 2017 were approved and signed by the Chair. 4. Matters Arising from the Previous Minutes A&R 4 Action 1 David Johnson to amend the External Audit Plan And Strategy document on Page 10 and to finish the sentence at the word expenditure and remove in respect of the additional sub-contract expenditure. Action completed. A&R 4 Action 2 Final follow-up report for to be presented at the next Audit meeting in November See agenda item 5.5 A&R 4 Action 3 The Learner Retention and Satisfaction audit report, HEFCE report and NSS results to be presented at the next Curriculum and Standards committee in September Action Completed. 5. Section A 5.1 Draft Annual Report & Financial Statements 2016/17 The Finance Director noted that this is a draft document that will be finalised in time for the full CCN Corporation Board meeting on 12 th December. The Finance Director gave an overview of the Draft Annual Report & Financial Statements 2016/17, as included in the papers for the meeting with the following highlights: Notes on the Narrative; 1

2 In the highlighted section on page 6, these targets will be updated ready for the Corporation Board papers. Academic performance and progress was good in the 2016/17 period and Ofsted awarded the College a Good rating across the board. The Business Committee have been through the management accounts. Funding is lagged therefore demography/funding challenges continue. The Chair queried whether the Annual Report should make more of the Future Developments section in relation to the merger with Paston. The Principal responded that there will be much more on the merger with Paston in next year s Annual Report with the added acquisition accounting. It was agreed that the Principal and Finance Director will add in more on the merger with Paston using information from the business plan. The Chair queried whether the Paston merger presented an additional risk. The Principal confirmed that as present there are no additional Paston based risks. She went on to note that when looking at recruitment CCN and Paston will be combined to manage any risk as a whole. The Principal further noted the possibility of reputational risk, as the consultation period progresses, but added that any risk is not felt to be significant enough to have a wide-reaching effect. The Committee agreed with this approach. Notes on Financial Statements; The LGPS liability is increasing, however this has been actuarially planned for and reported. The revised rates and adjusted schedule following merger are in line with expectations. NES staff and contracts increase the wage bill from 20m to 27m. In note 20, Provisions the 303,000 in the Other column refers to the St Andrews House dilapidation provision. NUA have agreed that there are no dilapidation costs to pay but this figure remains in the current year figure and will be unwound post balance sheet. Stephanie Beavis queried whether a narrative on further staff moves at CAN post balance sheet should be added to the Pensions section on page 49. The Finance Director agreed to review the section. Stephanie Beavis further noted the reduced risk to CCN as a result of the further staff movement. The Chair queried whether a PWC event at Debut restaurant needed to be added to the related party transactions. The Finance Director agreed to check on the value of the PWC event. The Principal queried whether a note should be added regarding the completion of the Gazelle Global liquidation. The Finance Director agreed to check. Action 1 - It was agreed that the Principal and Finance Director will add in more on the merger with Paston to the Future Development Section using information from the business plan. (CP/MC) Action 2 - The Finance Director agreed to review the Pensions section on page 46 regarding further movement of staff at CAN. (MC) Action 3 - The Finance Director agreed to check on the value of the PWC event. (MC) 2

3 Action 4 - The Principal queried whether a note should be added regarding the completion of the Gazelle Global liquidation. The Finance Director agreed to check. (MC) 5.2 FSA Letter of Representation The FSA Letter of Representation was agreed subject to the change of address to the KPMG Norwich office. Action 5 Clare Johnson to change the address on the Letter of Representation to the Norwich KPMG office. (CJ) 5.3 FSA Management Letter Stephanie Beavis gave overview of the management letter from KPMG noting that KPMG expect to issue clean opinion. Stephanie Beavis noted that they have issued an update for the responsibility statement. MC asked Stephanie Beavis to include this in KPMG s overall comments so that it can be updated in the Annual Report. Stephanie Beavis noted that the bad debt provision relates to debt that remains unpaid from the Student Loan Company. The Finance Director confirmed that chasing the SLC payment will be a priority in the new year. Stephanie Beavis went on to note that otherwise, bad debt provision has improved. 5.4 Audit Committee Report 2016/17 The Audit committee agreed the report subject to the following changes; Salena Dawson s resignation date to be corrected to Paul Goddard noted that in the Opinions section Assurances are not specifically mentioned, as one of the seven required opinions Assurances should be added. Action 6 - Salena Dawson s resignation date to be corrected to (CJ) Action 7 Assurances to be added to the Opinions section of the Audit Committee report. (CJ) 5.5 Final IAS Annual Report 2016/17 Paul Goddard gave an overview of the report included in the papers for the meeting with the following highlights; One area of challenge that Scrutton Bland have identified for the College is student retention and satisfaction in HE. Note has been made of the good work undertaken in Governance. IT and Key Significant Contracts work in NES was also given strong assurances. Paul Goddard thanked the CCN and NES management teams for the planning and preparation that goes into the audits at CCN. 3

4 5.6 Final IAS Audit Plan 2017/18 Paul Goddard noted that the plan included in the papers for this meeting is for information at this stage. The plan was noted by the Committee. The Principal noted that the plan and the review of work undertaken was very useful. Paul Goddard noted the following audit areas; Business Continuity Received a strong assurance with one low risk recommendation. Contract Management and High Value Procurement There were a lot of new initiatives at the time of the audit. Therefore, assurances have been based on the developing processes. The Dardan contract was identified as needing a performance review. Updates were identified and accepted for the procurement policies. The Finance Director noted that the review of the whole purchase ledger to identify the highest value purchases and contracts had been a very useful exercise. Strategic Level Review and Customer Satisfaction Scrutton Bland had identified that there is no traditional strategic plan linked to NES and therefore, recommend a review of the approach to NES and strategy. The strong feedback mechanisms in place were noted. The thirteen recommendations in the 15/16 audit are due to be closed in January Funding Assurance Audit The Principal expressed her thanks to the Finance Director and his team for their work during the Funding assurance audit. The Principal went on to notes that the fact that this was the fourth such audit of CCN in five years has been queried with the ESFA and that she will be working with ESFA in The Principal noted that the Paston College Funding Assurance Audit did not go as well as at CCN. CCN will be working closely with Paston to address the issues raised. Stephanie Beavis noted that the ESFA have responsibility for confirming that funding is accurate. KPMG have been working with the ESFA on this. 5.8 Risk Management Update The Principal noted that the Risk Register update has been waiting for the merger completion and it will be updated for the next meeting. CP highlighted the following risks which are under consideration for addition to the Risk Register; Unreliable lifts. Phone system implementation, which has been acceleration to mitigate the risks posed by the old system. Reputational risk following the national news story about an Autistic student. HE recruitment is an increased risk. The County Lines increased risk is being managed with the police. Managing the apprenticeship budget. Work placements. 4

5 6. Section B 6.1 Assessment of Auditors Performance Indicators for 2016/17 The assessments were reviewed, as included with the papers for the meeting, and the assessments were agreed by the Committee. 6.2 Approval of Auditors Performance Indicators for 2016/17 7. Section C There were no items in section C for this meeting. 8. Other Urgent Business The Chair queried the addition of new members to the Committee and the Principal reported that she and the Finance Director will be meeting with a former Governor at Paston College in January with a view to asking them to join the committee. 9. Confidentiality There were no items to be included in this section for this meeting. 10. Date of Next Meeting Tuesday 13 th March 2018 at All business having been concluded, the meeting finished at 09.45am. CHAIR:. DATE:.. 5