MEETING OF THE AUDIT COMMITTEE Tuesday 19 th November 2013, 5.30pm MINUTES

Transcription

1 MEETING OF THE AUDIT COMMITTEE Tuesday 19 th November 2013, 5.30pm GOVERNORS AUDIT COMMITTEE PRESENT: Mr M Lucas, Chair (until 5.55pm) Miss H Everett Mr R Vianello MINUTES IN ATTENDANCE: Mr A Taylor, Associate Principal Mrs M Searle, College Accountant Mrs S Flannery, Principal Mrs E Lewis, Clerk to the Governors Mrs C Biscoe, Partner, Buzzacott LLP Mr Lucas opened the meeting at 5.32pm. It was quorate throughout. Mrs Flannery, Mrs Searle and Mr Taylor were in attendance at the request of the Committee. 1. Opening Prayer - offered by Mrs Flannery 2. Apologies: Ms S Jones 3. Declarations of Interest: there were none 4. Committee time with Auditors if required. Not required. Apologies noted from Internal Audit Service (Baker Tilly) 5. Minutes of the meeting held on 14 th May 2013 had been included in the papers for the meeting and previously circulated in draft on 18 th June 2013 were agreed to be a true and accurate record and duly signed by Mr Lucas. Mr Vianello took the chair. 6. Matters Arising, not covered by agenda items: 6.1. Membership: It was noted that Ms Sandra Jones had been reappointed as a Co-opted Governor, July 2013 and her membership of the Audit Committee therefore continues Regularity Audit Self-Assessment: The final version as submitted to auditors had been included in the papers for the meeting and was duly noted. Information is awaited with regard to a revision of the questionnaire JACOP: The committee noted the publication of Parts 1 and 2 of the Joint Audit Code of Practice (JACOP) applicable from 1 st August Governors Self-Assessment: The summary of responses from 10 of a possible 16 governors (63%, equitable with last year) for made via an online survey tool was reviewed. It was noted that 80% of respondents judged the effectiveness of Eleanor Lewis Page 1 of 6

2 the Governing Body as good. A report on governor attendance for the same period was received Timetable for : the final version had been included in the papers for the meeting. 7. Internal Audit Service: Mrs Lewis explained that Mr Cheetham had informed her that Baker Tilly bought the operating companies of the old RSM Tenon and renamed them to be part of the Baker Tilly group. Mr Cheetham had advised that there is no need to novate contracts or make any other changes at this stage. 8. Internal Audit: College Action Report: Mrs Searle confirmed that no report has been provided as it is currently clear of outstanding action. 9. Risk Management: 9.1. Mr Taylor introduced the risk register and policy which had been updated for the autumn term and included in the papers for the meeting. He explained where changes in the ranking and impact of risk had been identified and adjusted so that Quality and Governance each move up one place. Funding remains the top ranked risk. Minor revisions to the Risk Management Policy were accepted Mrs Flannery reviewed the key active risks, commenting that: Student Recruitment: had exceeded target by 38 students The ranking of Governances and Estates and Plant have been switched in recognition of issues around the curriculum and quality Funding: remains the top ranked risk and is expected to remain so. The position is much as reported in July The agreed 1% cost of living increase awarded to staff for this year had been factored in to budgets (there had been no award last year). Major changes including the reduction in ALS funding are as expected and the overall loss is 100k Quality: the inspection had demonstrated a desire by OfSTED to see a more school based approach to Teaching and Learning. Mrs Flannery said it was difficult to differentiate stretch and challenge in the first teaching week of term. She said inspectors had observed around 60 lessons of which 20% were judged to be outstanding. The requirement to secure an overall outstanding grade was 30%. Mrs Flannery noted that no Sixth Form College had retained a grade 1 outcome in the new round of inspections. She noted that AS difficulty had always been reported thoroughly. A responsive plan will be drawn up. Mrs Flannery was asked whether the inspection outcome would impact on recruitment or the reputation of the College. She confirmed that there had been no questions on OfSTED from visitors or prospective students and that she did not anticipate any effect on reputation. Mr Lucas left the meeting at 5.55pm The committee noted that the registered risks have been mapped in the assurance framework and that the audit regime will target the top risks. Eleanor Lewis Page 2 of 6

3 10. Board Assurance Framework: It was noted that the framework compiled in spring 2013, mapped to the risk register and approved by the Governing Body provides the basis of assurance in conjunction with the IAS assignments for The framework document had been included in the papers for the meeting and the committee confirmed that it provided the necessary comfort. 11. Audit Committee Annual Report to Governors for : The draft report was reviewed and agreed to reflect all the activities that the committee has carried out including advice to the governing body on the audit plans and levels of assurance in place. It was noted that this report will be filed to the EFA. There is no annual opinion or report from the IAS. The report was agreed as drafted and will be signed by the Chair of the Audit Committee and presented to the full Governing Body on 3 rd December Committee Terms of Reference: remain under review. 13. Any other business: there was none. This part of the meeting concluded at 6.05pm. 6.15pm. MEMBERS OF THE FINANCE & GENERAL PURPOSES COMMITTEE ARRIVED: Mr M Belfourd, Foundation Governor (Chair of F&GPC) Mrs C Johnston, Foundation Governor Mr J Opara, Foundation Governor (Chair of Governors) Mr Vianello opened the joint meeting at 6.20pm and remained in the chair. Mrs C Biscoe joined the meeting to represent Buzzacott LLP, Financial Statements and Regularity Auditors. 14. JOINT SESSION WITH F&GP COMMITTEE: FMCE, : The Financial Management Control Evaluation return had been completed in its full version by college managers and was included in the papers for the meeting. Mr Taylor introduced the evaluation and explained that there is no longer a mandatory requirement to complete this but it had been agreed that it provided a good review of controls and processes. He confirmed the overall selfassessed outstanding grade for the College s financial management and control arrangements and discussed the assessment of area 1.1 Accountability Arrangements: Strategic Oversight as good. The review had identified two aspects where further work would strengthen governors self-evaluation and monitoring of curriculum quality. Mr Taylor confirmed that the FMCE document does reflect some of the changes around the assurance framework and that the outcome of Internal Audit assignments in the year did not suggest other points of improvement should be included. It was noted that the SFCA 1 has undertaken a project to update the FMCE template for continued use in the sector. FMCE and improvement plan accepted Financial Statements for year ended 31 st July 2013: Mrs Biscoe introduced the report of the audits: 1 Sixth Form Colleges Association Eleanor Lewis Page 3 of 6

4 Report & Financial Statements (Accounts) for year ended 31 st July 2013: the draft had been included in the papers for this meeting and Mrs Biscoe presented this page by page explaining areas of note, including: The Operating and Financial Review and Financial Position with the financial results for the year on pages 3 4. From this was noted an operating deficit in the year of 20k compared with a surplus the previous year of 212k. Mrs Biscoe commented that Appendix 2 of the Management Report indicates that an unadjusted accounting journal (the longstanding correction of an over-provision for Enhanced Pensions Provision) of 58k would have been included as a recognised gain in the year resulting in a small surplus Principal Risks and Uncertainties (page 6) referenced to the risk register and risk management process Disclosure of Information to Auditor (page 9) Professional Advisers (page 10) Statement of Corporate Governance (page11): Mrs Biscoe confirmed that the statement drafted in the report accords with current guidance for She explained that since that was issued an update was proposed which she and Mrs Lewis had discussed and agreed needed some consideration before being incorporated so that the increased detail about the way in which compliance with governance codes of practice is met at SFX as a generic template-based statement may no longer be appropriate due to changes in accounting practices. It was noted that inclusion of the attendance by individual governors at meetings would be good practice. Governors agreed that the governance statement should reflect what the position actually is Internal Control (page 5): Mrs Biscoe explained that the wording in the final paragraph of the section of The risk and control framework had been adjusted to reflect the extent of the work of the Internal Audit Service Statement of Responsibilities of the Board of Governors (page 17): is unchanged from prior years Independent Auditor s Report to the Board of Governors of St Francis Xavier College (page 18 19): records the scope and clean opinion on the financial statements audit for Independent Auditor s Report on Regularity to the Board of Governors of St Francis Xavier College and the Chief Executive of the Education Funding Agency (page 20): also records a clean opinion resulting from the regularity audit for Income and Expenditure Account for the year ended 31 July 2013 (page21): shows the result of a deficit on continuing operations of 20k for the year. Mrs Biscoe commented on the decrease in funding income to the college and that expenditure is well controlled so that it is in line with the agreed budget Balance Sheet as at 31 July 2013 (from page 23): Mrs Biscoe and Mr Belfourd reviewed items on the balance sheet clarifying fixed assets, capitalisation of BCIF projects and the classification of short term deposits. Eleanor Lewis Page 4 of 6

5 Notes to the Financial Statements (from page 25): Noted that the accounting policies were unchanged from last year Post - Audit Management Report for 12 13: The draft report had been included in the papers for the meeting. Mrs Biscoe introduced the report which, she explained is issued, as required, following the audits to confirm the findings and incorporates the regularity audit. She expressed thanks to Mrs Searle and her team for the preparation of information which had all been ready for the audits. Mrs Biscoe reviewed the Management Report page by page: Introduction: Sets out the purpose and extent of the work that was undertaken and how much the audit looked at internal controls Page 2: notes the format of the financial statements and compliance with the regulations set out by the funding agency. Mrs Biscoe explained that going forward the format would be less structured to encourage college tailoring. Reference to a comparison of the College s key financial ratios appended to the report was noted including at appendix 3 the impact of pension liability on the figures Page 3: Statement of Objectivity and independence of auditors Page 4: Audit Status. It was noted that as of 16 th October the audit work was complete with the exception of three matters including EFA funding reconciliation statements. Mrs Biscoe was asked whether the accounts are dependent on that reconciliation. She explained that as the college is in receipt of no SFA funding, this is not so much of an issue. She was hopeful the statements would be received on time Page 5: Confirmation that both audit opinions (Financial Statements and Regularity) are unqualified. The paragraph relating to Internal Audit set out the review of the overall scope of the work undertaken by the IAS (RSM Tenon now Baker Tilly) Page 6 onwards: set out the conclusions and findings from the audit work in the higher risk areas. The accounting treatment was agreed to be compliant. Mrs Biscoe explained that the key audit risk of Future Funding reviewed the financial forecasting which shows small deficits in the next two years which are well within the current level of reserves Page 9: Confirmed that there had been no adjustment to figures as presented to the auditors and no significant deficiencies in the accounting and internal control systems Appendix 1, Ratio Analysis: Mrs Biscoe explained the comparison of the College s key financial ratios against the prior two years and College sector (which includes all types of colleges) and Group averages for She noted that the College is in a strong position with liquidity; that diversity of income is low and that the current ratio is It was noted that based on the financial health model, the statutory financial statements indicate that the College would be graded as good. Mr Vianello commented that in the ratio analysis the Operating surplus as a percentage of income (excluding depreciation, release of capital grants and FRS17 adjustments) was 8% Appendix 2, Unadjusted misstatements: shows the 58,739 correction of an over provision for Enhanced Pension Provisions which Eleanor Lewis Page 5 of 6

6 remains unadjusted in the accounts. The Management Report noted that if this journal were to be adjusted the College s total recognised gains for the year would increase by 58, Appendix 3, Retirement Benefits, FRS17: shows the impact of the pension s liability Appendix 4, Recent FE sector developments: Provides a summary of recent developments in the sector. From this Mrs Biscoe highlighted an expected update to the Regularity Audit framework; noted that the assurance role of the Audit Committee is becoming more significant and the introduction of a new accounting standard and a revised FE / HE SORP Letter of Representation: Mrs Biscoe explained that this letter is a standard format to be signed on behalf of the Governing Body at the same time as the accounts are agreed. It was unanimously agreed that the Report & Financial Statements (Accounts) for year ended 31 st July 2013 would be recommended to the full Governing Body on 3 rd December 2013 for approval and signing. The post-audit management report was noted. The letter of Representation would be transposed onto College headed paper and presented to the full Governing Body for approval and signing. Mrs Biscoe left the meeting. The business of the Audit Committee was concluded and this part of the meeting closed at 6.55pm. SIGNED: DATE: 2 Statement of Recommended Practice Eleanor Lewis Page 6 of 6