SHEFFIELD HALLAM UNIVERSITY. Mr L Hunter, Deloitte Mr P Severs, Director of Finance Ms S Suchoparek, KPMG Ms A Temple (Minute Secretary)

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1 SHEFFIELD HALLAM UNIVERSITY confirmed A/2/14/M AUDIT COMMITTEE Minutes of Meeting held on Thursday 19 June 2014 Present: In Attendance: Prof. J Simons (Chairman) Ms J Brown Ms R Downs Mr C Kinsella Dr J Morrissy Ms E Winders (Secretary) Mr A Bush, KPMG Mr L Hunter, Deloitte Mr P Severs, Director of Finance Ms S Suchoparek, KPMG Ms A Temple (Minute Secretary) Apologies for Absence: Mr R Plews and Prof P Wiles Paper ref Minute ref A/1/14/M A/14/ A/14/ A/14/ A/14/ A/14/ Chair's Opening Remarks The Chair welcomed Dr Julie Morrissy to her first meeting of the Committee. Dr Morrissy had been appointed by the Board as a member from 25 March 2014 until 31 July 2016 (BG/14/53.1 refers). Declaration of Interests There were no declarations of interest. Minutes of the meeting held on 27 February 2014 The minutes were approved. Matters arising There were no matters arising. Report on Academic Quality and Standards at Sheffield Hallam University The Secretary and Registrar reported that a draft report on academic quality and standards had been prepared on behalf of the Deputy Vice-Chancellor whilst she was away from the University. The Secretary and Registrar had reviewed the report and requested some changes. Updates had been made but following a review of the second draft of the paper by the Deputy Vice- Chancellor and the Secretary and Registrar it was felt that the report did not meet the requirements of the Committee. In consultation with the Chair it had been agreed to defer the item to September The Chair confirmed that, in the light of the Higher Education Review which was scheduled for 2016, the Committee was seeking assurance that the mechanisms that were in place at the University to assure the quality and standards of its awards were robust, fit-for-purpose and met national standards. Page 1 of 6

2 A/2/14/8.1 A/14/ Internal Audit: Progress Report It was noted that the Secretary and Registrar, the Director of Finance and the Chair had discussed the balance of work expected to be submitted to the September 2014 Audit Committee meeting and had agreed that the TRAC review and the Faculty Process Compliance: Procurement should be submitted to the November 2014 meeting. KPMG confirmed that they were content with the proposed deferrals. It was also noted that University Strategy: Performance Framework report would be submitted to the Committee in November 2014 as field work would take place in September This delay was because the University Strategy had been agreed by the Board later than originally planned The Committee noted the additional work undertaken by KPMG as set out in 3.3 of the paper The Committee received the 2013/14 reports on Asset and Inventory Management (confidential); Information Technology: Service Management (Governance and Relationship Management) (confidential); Payroll (a key financial systems report) and Carbon Reduction Commitment Health-Check The Committee observed that recent internal audit reports indicated a number of areas where there was a lack of consistency of practice across the University and possible failure of compliance. Concern was expressed about this and whether this was a systemic issue. It was noted that the 2013/14 audit of Faculty Process Compliance: Procurement would be a further test of consistency and compliance. A/2/14/8.1i Confidential 23.5 Asset and Inventory Management The Committee noted that the report was advisory and that a further report would be issued to the November 2014 Audit Committee meeting in which KPMG would follow-up the implementation of the recommendations in the advisory report. This would be an assurance report which would include an overall conclusion In response to a question concerning the University's decision to set its capitalisation threshold at 5,000, which was at the lower end of the range in the sector of 5,000 to 30,000, it was noted that the University was modelling the impact of changing the threshold with a view to a change at year end. A/2/14/8.1ii 23.7 Carbon Reduction Commitment Health-Check The Committee noted that as part of the review KPMG tested to confirm the robustness of supporting information to ensure that the University s data would withstand an independent audit from the Environment Agency. The report was graded as good. A/2/14/8.1iii 23.8 Payroll The review addressed key controls/processes in the new Core payroll systems together with a review of the proposed controls on electronic timesheets prior to implementation. It was noted that the review included use of KPMG's data analytics tool to evaluate information across the whole data set rather than using sample testing. The Committee noted that a Page 2 of 6

3 number of implementation dates were June 2014 and sought assurance that progress had been made. The Director of Finance contacted the Director of Human Resources who was able to confirm that actions scheduled for June 2014 completion date were on track for completion by the end of June A/2/14/8.1iv Confidential 23.9 Information Technology: Service Management (Governance and Relationship Management) The review had considered whether IS&T met the requirements of stakeholders across the University. The review had found that IS&T had made efforts to improve relationships but that arrangements were ineffective. The report had been graded as weak During discussion concerns were expressed that there had been a number of issues in recent years concerning IT. It was felt that the development of a Digital Strategy was key to enabling the University to be sustainable and keep pace with the changes in use of IT. Failure to maintain competitive advantage was a key risk and there was a need for a clear Digital Strategy to mitigate the risk Recommendation 3 of the review related to the need to agree the new Digital Strategy, including the supporting architectural principles (these were due to be finalised in autumn 2014). It was noted that a strategy and implementation plan was key in order to assess the financial implications. The Committee felt that the recommendation should be graded as high priority It was noted that the University had commissioned a management review of IS&T which would cover organisation, governance and management. It would last three months and be conducted by an external chief information officer The Committee felt that a key issue remained leadership and strategic vision in relation to IT It was agreed to invite the Deputy Vice-Chancellor to present a report to the Committee in November 2014 on the IS&T management review and to report progress with the Digital Strategy and associated implementation plan. A/2/14/8.2 A/14/ Report on Implementation of Internal Audit Recommendations The Committee received a report on progress to implement outstanding recommendations made by the internal auditors The Committee agreed to sign-off the recommendations in the 2011/12 Costing report, the 2011/12 Financial Management Reporting and Forecasting report and the 2012/13 Financial Forecasting report as these were being taken forward by an established project to review management accounting practices. It was noted that the Chair, Secretary and Registrar and Director of Finance had agreed to defer the report on the review of management accounting practices from the September 2014 meeting to the November 2014 meeting (due to the amount of business scheduled for September 2014) The Committee agreed to sign-off the recommendations in the Partnership Arrangements internal audit. It was noted that the recommendations were Page 3 of 6

4 being taken forward as part of a new business process which would be in place from September 2014, not as a project. The Committee received a report on the work to review partnership arrangements under agenda item A/2/14/ In relation to the recommendation in the Benefits Realisation of the Employability Projects report on reviewing contracts in use with external providers it was noted that one contract had been terminated early, one had not been renewed at its expiry date and one remained in place. An in-depth review had been undertaken concerning the terminated contract and the others had also been reviewed. In the event that similar arrangements were entered into in the future the lessons learned from the contract reviews and the internal audit review would be taken into account. The action was therefore complete In relation to the action in the KIS review on reconciling a sample of learning and teaching hours returned to module guides/information on Blackboard a member commented that the action to review module handbooks appeared to be being driven by work to prepare for the QAA Higher Education Review (HER) rather than being driven by the need to improve information to students. The Secretary and Registrar confirmed that the issue of consistency across module handbooks had already been identified as an issue that needed addressing and that the action was not being driven by the QAA HER, but that the HER provided added impetus. It was not possible to implement the action any quicker than indicated in the progress report due to the volume of handbooks to be reviewed The Committee noted that the outstanding recommendation in the Financial Management of international Offices report had been completed and that the recommendation on the Complexity of Bursary Scheme in the Review of Data Assurance - SLC Data Management report had been completed In relation to the recommendation in the Review of Data Assurance - SLC Data Management report on allocation of payments to student accounts the Committee agreed to sign this off as complete following assurance from the Director of Finance that he was confident that the action would be delivered by the end of June A/2/14/8.3 Confidential A/14/ Report on Implementation of Recommendations in Internal Audit of Systems and Controls in Relation to Income from Disabled Students' Allowances The Committee noted that considerable progress had been made to implement the recommendations. Short term work had been completed to improve processes related to the Disabled Students' Allowance and longer term work was planned to create processes and systems to further improve efficiency and effectiveness. It was noted that the implementation dates of the recommendations that were showing as TBC would be known in August 2014 once the project was considered by the relevant Board KPMG would include this review as part of its 2013/14 follow-up audit work and would use the same member of staff to undertake the follow-up. A/2/14/8.4 A/14/ Internal Audit Planning for 2014/15 The Committee noted that KPMG had discussed the priorities for the internal audit programme for 2014/15 with the Secretary and Registrar and the Page 4 of 6

5 Director of Finance. KPMG were scheduled to meet the University Executive Group in September 2014 to discuss the internal audit plan The Secretary and Registrar suggested that 2014/15 would be a challenging year for the University as it took forward the new strategy and associated improvement agenda. In view of this it was important to construct a manageable and practical internal audit programme A member suggested that the separate workshop on the internal audit plan that had been held in the past had been very useful to facilitate the Committee contributing to the development of the plan. It was agreed that subject to members' availability a workshop would be held in summer 2014 to further discuss the internal audit plan. It was suggested it would be useful to reinstate a more detailed consideration of areas for future internal audit reviews in future years It was suggested that it might be useful to map audit areas to the new University strategy and to strategic and compliance risks A member felt that an element of unallocated contingency within the plan was important to enable in-year developments to be addressed without the need to defer existing reviews. KPMG suggested that it was permissible to agree initial reviews at the start of the year and defer decisions on later reviews to a future date. A/14/ External Audit for year ended 31 July 2014 The Committee noted that that the external audit strategy presented to the last meeting remained unchanged. So far their work had not raised any issues/concerns. A/2/14/9.2 A/14/28 Additional work carried out by the external auditors 28.1 The Committee received a report on additional work carried out by the external auditors since the last meeting. It was confirmed that there were no issues of auditor independence arising from undertaking the work set out in the report.. A/2/14/10 A/14/29 Review of Partnership Arrangements: Progress Report 29.1 The Committee received the report and felt that it provided assurance in relation to work around partnerships. A/2/14/11 A/14/ Risk Management The Committee noted the report on risk management, together with the Corporate Risk Register (dated 1 May 2014). The Committee: i) noted that the recommendations in the 2012/13 risk management report had been implemented; ii) iii) was content with the proposed new timings for reporting to the Committee on risk management whereby it would receive an annual report on risk at its November meeting and an update on risk management at the June meeting; noted that the IS&T risk was red, that the risk related to service Page 5 of 6

6 For info item A/14/ confirmed effectiveness in this area and that this linked into the discussion under A/14/ Forward Programme The Committee noted that the Chair, the Secretary and Registrar and the Director of Finance had discussed the forward plan for the September 2014 meeting. The following reports would be deferred from September 2014 to November 2014: Annual report on VfM; Annual report on risk management (A/14/30.1ii refers); TRAC, Faculty Process Compliance: Procurement and University Strategy: Performance Framework internal audit reports (A/14/23.1 refers); Report on Progress to Implement Changes to Management Accounting Practices (A/14/24.2 refers) A report on the Review of the Student and Curriculum Management System (A/14/04.4 refers) would not be submitted to the Committee as there was a two year programme overseen by the Process Improvement Portfolio Board to review the system Overall members were content with the schedule of meetings of the Committee and felt that the business had been generally manageable within the time available. It was felt that effective agenda planning was key, including advance consideration of which reports required discussion and which could be simply noted. It was agreed that the Secretary and Registrar and KPMG should discuss which internal audit reports needed introduction and discussion and which could be noted at the September 2014 meeting. A/14/ A/14/ Vote of thanks The Committee thanked Ms Jenny Brown for her work as an externally coopted member of the Committee for the last 8 years. She was commended for her high quality engagement with the work of the Committee. Date of next meeting Tuesday 23 September 2014 Page 6 of 6