VARNDEAN COLLEGE MINUTES OF THE AUDIT COMMITTEE MEETING

Transcription

1 VARNDEAN COLLEGE MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON TUESDAY 13 th MARCH 2012 AT 8.15 A.M Present: Seager Randall Anderson, Peter Baker, Zoe Longstaff-Tyrrell,, Richard In Attendance: Nicholas Carr, Louise Pennington, Geoff Shanks (proposed Co-opted Committee Member), Michael Cheetham (Internal Auditors, Mazars). Apologies: In the Chair: Philip Harland, Jonathan Russell Zoe Longstaff-Tyrrell 1. Apologies for Absence As above. None. 2. Declaration of Interests 3. Minutes of the Meeting held on 15 th November 2011 The minutes were approved by the Committee and signed by the Chair, subject to the following amendments: Item 4 Minutes of the last meeting should say June and not March and item 9 a) fourth line down delete duplicate were. 4. Matters Arising a) Action Points The Committee noted that all the actions had been completed or were on the agenda, except the following: i) Risk Management reporting measures will be reviewed at the Risk Management Group meeting in May. ii) Query green classification for areas identified within the last internal audit reports ACTION: Michael Cheetham to follow up. iii) Bribery Policy various documents have recently been received from Randall Anderson and Nicholas Carr confirmed that this would be reviewed and the final draft policy would be brought to Committee next term. ACTION: Nicholas Carr/Randall Anderson. iv) Tender Panel for internal and external auditors refer to item 6 on the agenda. Page 1

2 b) Rolling Action Plan i) External Audit/Financial statements audit points 1 and 2 have been completed and item 3 Employment Contracts Ensure changes to contracts are documented this is an on-going process which will be reviewed by the External Auditors in Autumn ii) Internal Audit audit points 1-3 and 5-10 and 12 have been completed. Audit point 4 Carry out a review of Risk Register in regard content and format including gross to net risk - Nicholas Carr confirmed that this was on-going and that the Risk Management Group would review this aspect at its May 2012 meeting and then report to the Audit Committee at its June meeting. Audit point 11 ILR should accurately reflect the active learners with College, Nicholas Carr agreed to follow up the action on this. ACTION: Nicholas Carr Nicholas Carr confirmed that with regard to internal audit 1 in line with best practice College should consider re-performing CRB every 3 years, although the action is listed as completed, management decided that CRBs would only be completed for new members of staff. Following a suggestion by the Committee, Nicholas Carr agreed that on future reports he would include additional information to explain the action taken/decision made by Management. ACTION: Nicholas Carr c) Risk Management Plan Update The contents of the update relating to the College s A and B risks (significant and contingency) were noted by the Committee. The Committee was reminded that the update was presented to the Audit Committee every term and that all categories of risk (A D) were reviewed annually by the director responsible. The Committee noted that at the last meeting, it had been agreed that Bribery should be included as a significant risk. On reflection the Committee resolved that this probably wasn t necessary and agreed that this should be reviewed at the next Risk Management Group meeting in May. ACTION: Nicholas Carr 5. SFA Audit on Learner Numbers Report Nicholas Carr explained to the members that every year the SFA completes a learner number audit on a sample of Colleges both general FE and SFCs (on behalf of the YPLA). Varndean College was included in the 2011/2012 audit work which took place during the Autumn term over a six week period. Two reports are generated: 1) Report of Auditors on Final Returns 2010/2011 which is a factual report required by the SFA and 2) SFA Provider Financial Assurance Audit Report which is equivalent to a Management Letter and sent to the YPLA. The Committee noted the contents of the Reports and the following additional points were made: a) The audit opinion on page 3 of the first document confirms that KMPG has no comments arising from the audit work so that Varndean s funding claim has been properly compiled in accordance with relevant guidance issued by the SFA/YPLA. b) Michael Cheetham gave a summary of the audit process advising Members that the SFA utilised software specifically devised to test sample (normally 10%) learner records including attendance, courses, achievements etc which in effect tests the Page 2

3 College s own system of recording and processing student information. Historically tests of this nature have been completed in order to satisfy the National Audit Office when signing off the SFA s financial statements. Similarly the audit work also gives the YPLA the necessary assurance regarding Colleges processes in respect of Student details and funding allocations. In effect the tests are for compliance purposes with respect to funding rules. c) Nicholas Carr referred the Committee to the last two pages of the first document Ref B4 (Audit of Learner Responsive Final Claim 2010/2011 Reconciliation Statements for and page 2 Adult Learner Response) and highlighted the fairly minor negative funding adjustments made as a result of the audit to the provision and the larger negative funding adjustment in respect of adult learners. However it was noted that the College s funding would have to be adjusted to reflect the adjustment identified via the audit. He explained the discrepancy between the College s assessment of GLH (guided learning hours) for the Access (Adult Learners) courses where a week in May, based upon the students working on their own portfolio without direct tutorial input, had been included but which was disallowed. In future the College would not be able to include this aspect. It was noted that as a result of the SFA s audit work, the College would be improving its recording of student information. The Committee was advised that the College s Internal Auditors would review Learner Numbers at its next audit to reflect the requirement within the action plan. Nicholas Carr confirmed that he would request a final version of the report, which currently is marked draft, although it was noted that there would not be any other changes. ACTION: Nicholas Carr 6. a) Internal Audit March 2012 and b) Review of Auditing Requirements in Sixth Form Colleges a) Internal Audit March 2012 the Internal Auditors are in the process of producing the various reports following the completion of the audit work which took place earlier in March. The final reports will be presented to the June 2012 Committee meeting. Michael Cheetham summarised the work which took place and the outcomes as follows: i) Governance classified green and no recommendations. ii) Strategic Planning classified green and no recommendations. iii) Staff Utilisation classified green/amber. 2 recommendations (ensure all contract changes are signed off; a central internal spread sheet of current staff utilisation during the year should be maintained). iv) Risk Retention nothing fundamental has been identified although the Committee may want to discuss once again, whether they are content for risks to be classified as risk managed or risk enabled. This will be considered by the Risk Management Group in May, reporting to the June Audit Committee. Page 3

4 b) Review of Auditing Requirements in Sixth Form Colleges Michael Cheetham gave a summary of current issues within the College s regulators and the following points were recorded: i) ONS Office for National Statistics) issued an opinion in October 2010 that all Colleges should be re-classified into the Public Sector (with significant accounting implications) and as a result of this opinion the SFA s financial accounts for 2010/2011 were qualified accordingly. However it was clear that the opinion had no support within the sector or by Government and as a result of discussions on this the ONS has announced in the last two weeks that Colleges will stay in the private sector. ii) The new Education Act will come into force on 22 nd April 2012 which will give greater freedoms to Colleges. Colleges will be able to write their own Instrument and Articles if they so wish. Allied to this will be changes to Audit requirements and assurance arrangements for Colleges and in this regard the SFA and the YPLA are consulting separately. iii) Although announcements have not been made yet, it is thought likely that External Audit will remain unchanged, particularly owing to Charities Act requirements but it may be the case that the Regularity Audit requirements could change. It s unlikely that the latter would be removed altogether owing to the fact that the funding body will continue to require assurance regarding the management and use of funding. iv) FMCE (financial management and control evaluation) this has been used annually to confirm to the YPLA the extent to which Colleges are well-managed. It is expected that the requirement to complete this will be removed although each College will still want to satisfy itself that the College is well-managed so it may be thought necessary to continue to use this for internal purposes. v) Internal Audit it is predicted that the requirement for IA will be discontinued. Colleges may wish to continue using the service or finding a replacement, perhaps within their own organisations, in order to seek assurance that the College continues to be managed properly. The College will still have to sign off the Corporate Governance statement within the financial statements annually. If IA is removed this would also have an impact upon the External Audit work owing to the existing assurance relied upon by the External Auditors from the internal audit work. There may be an opportunity to extend the scope of the external auditor to include a systems and control review as part of their processes. vi) Consultation on proposed changes is expected to be issued in April and will affect the 2012/2013 academic year. vii) The Committee agreed that the decision to delay the tender process for both External Auditors and Internal Auditors should continue until the outcome of the consultation process is known. viii) Discussions are currently underway between the AoC and SFCF regarding the possibility of issuing a new I & A model which Colleges may wish to adopt going forward. ix) The Committee was advised to ensure that all the options are considered prior to making any decision regarding changing the I & A and it was agreed that no Page 4

5 decision could be made until all consultations had been completed and further guidance issued by the AoC/SFCF. The impact of the new freedoms were noted briefly including potential changes in tax treatment, Charities Act implications, future funding issues, legal matters, bank lending issues etc. x) The Committee was also reminded that with effect from 1 st April 2012 the YPLA, would be dissolved and replaced by the Education Funding Agency (EFA an agency of the Department for Education). 7. Financial Statements Audit Performance Review and Establish PIs for Current Year The Committee considered the proposed Performance Indicators (PIs) for external auditors in respect of the financial statements audit for 2010/2011 and also reviewed whether to retain the same PIs for the current year. Nicholas Carr confirmed that he was satisfied with the External Audit arrangements currently and that he had a good working relationship with the partner and managers. It was agreed to amend question 12 reference to LSC/YPLA to funding body. ACTION: Nicholas Carr. Subject to the above change, the performance indicators for External Audit were recommended to Corporation for approval. ACTION: Nicholas Carr 8. Date of Next Meeting TUESDAY 26 th JUNE 2012 at 8.15 a.m. 9. Any Other Business Nicholas Carr agreed to circulate the bulletins issued by the Internal Auditors regarding current issues within the sector, to the Committee members. ACTION: Nicholas Carr On request from Michael Cheetham regarding the future of Internal Audit, the Committee agreed to raise the issue at the next Corporation meeting to resolve whether to continue with the current internal audit work, so that preparation may be made before the next Audit Meeting in June. ACTION: Nicholas Carr 10. Meeting Assessment It was agreed that information provided by Michael Cheetham during the meeting had generated useful discussion. Chair. Date. Louise Pennington 13/03/12 Page 5