Final Version MINUTES

Transcription

1 Final Version MINUTES Minutes of the Audit and Risk Committee private pre-meeting with External Auditors held on Wednesday 4 June 2014 at 10.30am in Room B1.26, Stenton Campus, Glenrothes. Present: Apologies: In Attendance: Don Munro (Chair), Bob Black, Bryan Poole Violeta Ilendo, Steven Wexelstein Marianne Philp, Claire Gardiner (Grant Thornton) 1 External Audit Process It was confirmed that there had been no issues with the audit for The audit for had just commenced and no issues had arisen so far. It was reported that staff had been helpful throughout and that papers provided were of a good quality. A minor concern that had already been raised with the College was in relation to the formation of the Arm s Length Foundation and whether or not this could be seen as a cash management tool. This was an issue for the sector overall, not specifically for Fife College, and had been raised with the Scottish Funding Council and Audit Scotland by several audit firms. One risk identified by Board Members was the Trust having different priorities to the Board and allocating funding to other organisations, either in the sector or other training/education companies. It was agreed to discuss this at the main Committee meeting as an update was due to be given under item 15 on the agenda.

2 Final Version MINUTES Minutes of the Audit and Risk Committee meeting held on Wednesday 4 June 2014 at 10.45am in Room B1.26, Stenton Campus, Glenrothes. Present: Apologies: In Attendance: Don Munro (Chair), Bob Black, Bryan Poole Violeta Ilendo, Steven Wexelstein, Hugh Logan David Neilson, Marianne Philp, Claire Gardiner (Grant Thornton), Stuart Inglis (Henderson Loggie), Claire Robertson (BDO) 1 Welcome 2 Remit Don Munro welcomed those present to the meeting. The contents of the paper that had been circulated were noted. 3 Declarations of Interests The declarations of interests, as detailed within the paper that had been circulated, were noted. 4 Minutes of the Previous Meeting The minutes of the previous meeting were approved as an accurate record. 5 Matters Arising / Actions Outstanding The contents of the paper that had been circulated were noted. It was highlighted that only the first section of the paper had included, and that the format of future papers should be discussed when the follow-up review was considered later on the agenda. 6 Risk Management 6.1 Risk Management Policy The contents of the paper that had been circulated were outlined and noted. After discussion, the Risk Management Policy was approved. 6.2 Strategic Risk Register : Update The contents of the paper that had been circulated were noted. It was highlighted that further assurances had been added to the table on page 21 of the Boardpack, as had

3 7 Internal Audits been requested at the last meeting. Progress made on mitigating each of the risks was noted. The format of the reporting was commended as best practice. It was suggested that a further development would be to add SMART targets in the Further Action Required boxes for each of the risks to enable the Committee to monitor risk reduction. There was a discussion about how Strategic and Operational Risks were managed and reviewed. After discussion it was agreed it would also be useful to cross reference risks to the Strategic Plan and Operational Plans. It was confirmed that this could be taken forward once the planning process is better established and as the college evolves. Decisions: To add SMART targets in the Further Action Required boxes for each of the risks. To cross reference the risks to Strategic and Operational Plans once plans are in place. Responsibility: David Neilson Deadline: 18 September Voluntary Severance Scheme The contents of the report that had been circulated were noted. An overall report grade of Satisfactory had been given with one priority 2 recommendation identified in relation to confidentiality agreements. It was highlighted that three severance payments, totaling 179,411, had been reclaimed from the Scottish Funding Council in error. It was confirmed that this money had been repaid to the Scottish Funding Council prior to the year-end and that processes had been put in place to ensure a similar error could not arise in the future. 7.2 Key Financial Controls The contents of the report that had been circulated were noted. Five areas had been included in this audit. Due to different systems being in place in the East and West campus, each area had been graded and reported upon separately. Overall report grades were as follows: Area Fife College East Fife College West Payroll Requires Improvement Good Budgetary Control Requires Improvement Good General ledger Satisfactory Satisfactory Sales Good Satisfactory Purchases Good Good Four priority 2 and two priority 3 recommendations had been identified. It was noted that one recommendation had not been agreed by management, as detailed on page 62 of the Boardpack. There was a discussion around this and it was agreed to look into

4 options to eliminate or reduce the risk. It was confirmed that the deadlines suggested for the actions had been met. Decision: To investigate whether it would be technically possible to change the ALBACS system to have two people authorising payments rather than one. Alternatively to look at other possible controls, such as sending a report back to the staff member creating the request after payment has been made to check that the payment is the same as the request. Thereafter to agree if the report should be updated to reflect any action that can be taken. Responsibility: David Neilson Deadline: 30 June Corporate Governance The contents of the report that had been circulated were noted. An overall report grade of Satisfactory had been given with one priority 2 and seven priority 3 recommendations identified. It was noted that, as well as reviewing the College against the UK Corporate Governance Code, a comparison had been made against the Draft Code of Good Governance for Scotland s Colleges and areas for review highlighted. 7.4 Interim Review of SUMs The contents of the report that had been circulated were noted. An overall report grade of Requires Improvement had been given with five priority 2 and two priority 3 recommendations identified. The main findings and recommendations on page 89 of the report were outlined. Committee Members commented that similar concerns had been reported by management at previous meetings, so it was reassuring to see actions documented that could now be monitored. 7.5 Follow-Up Reviews It was noted that the report that had been circulated contained recommendations that had been made in relation to both former colleges. These had been reviewed and categorised as summarised on page 102 of the Boardpack. It was confirmed that the College intended to pick up on all remaining actions, unless indicated otherwise in the Boardpack. The auditors confirmed that there was one action (as detailed on page 108 of the Boardpack) that had been considered by management but not implemented that they remained concerned about. It was noted that this risk would remain for the new College as payroll would be part of HR in the new structure. It was therefore agreed that the report should be amended to categorise this as To be Covered by Merger Integration Activities. Decisions: To amend the action detailed on page 108 of the Boardpack and categorise this as To be Covered by Merger Integration Activities rather than Considered but Not Implemented. Responsibility: Stuart Inglis / David Neilson Deadline: ASAP

5 To review the deadlines for each of the recommendations still to be taken forward, ensuring that these are realistic. Responsibility: David Neilson Deadline: 31 August 2014 The Clerk sought views from Members on how they would like to monitor progress towards meeting internal audit actions. It had previously been part of the Actions Outstanding papers, but recent comments had been that there was duplication and discussion over the same issues at each meeting. It was agreed that a summary showing progress should be prepared, and updates given only for those risks whose deadlines had been met since the last meeting showing them as complete or reporting as to why they had not been completed. Decision: To draft a paper on internal audit action progress and discuss this with the Chair. Responsibility: Marianne Philp Deadline: 31 August Adam Smith College Recommendations Summary and Action Plan The contents of the paper that had been circulated were noted. It was agreed that most of the actions related to European Funding, which had been discontinued in Fife College so were no longer relevant. All others were included in the merger activity and actions previously discussed. It was agreed that no recommendations required to be added into the internal audit action progress paper. 9 Internal Audit Plan Committee Members were reminded that there had been a recent tender for internal audit services, with BDO being the successful contractor. BDO representatives had met with the Senior Management Team and newly appointed managers in order to prepare the internal audit plan. This had been drafted by BDO and subsequently approved by the Senior Management Team, and submitted to the Audit and Risk Committee for approval. Comments were made about some of the timings of the reviews for and the progress made by the College to date. After discussion it was agreed it was useful to go ahead with these reviews as it would give the College the opportunity to review its current position and track progress and development. It was noted that reviews for had been suggested, but would be reviewed annually to ensure they best reflected the College s priorities at that time. 10 External Audit Plan The contents of the paper that had been circulated were noted. It was agreed that it would be helpful to name the report External Audit Plan in order to easily differentiate between the internal and external audit plans. Otherwise members of the Committee were content with the plan. 11 External Audit Fee The contents of the paper that had been circulated were noted. Member queried why the audit fee remained the same as had been paid by the two Colleges the previous year, despite now being one College. It was clarified that the fee should reduce in subsequent years. However

6 currently systems are not integrated which creates additional work during the audit process; and one off pieces of additional work are required with regards to ONS issues. This meant that any savings in workload for this year (eg from having one management structure in place) were eaten up by the one-off pieces of work. Members of the Committee agreed the audit fee of 42,000 for on the understanding that this would reduce in subsequent years. Bryan Poole left the meeting. The meeting was no longer quorate therefore decisions made should be ratified at the next meeting. 12 Annual Review of Internal Control and Risk Management The contents of the paper that had been circulated were noted. One amendment was suggested to page 204 of the Boardpack. Decision: To change the wording of paragraph 2 of page 204 of the Boardpack in relation to the UK Corporate Governance Code and to submit the document to the Board of Governors for approval. Responsibility: David Neilson Deadline: 18 June Draft Policies: 13.1 Bribery 13.2 Fraud Prevention 13.3 Whistleblowing It was noted that the three draft policies had been reviewed by the Senior Management Team and discussed at meetings with the Trade Unions. Members of the Committee confirmed they were happy to approve the policies. There was discussion around how best to communicate these to staff and ensure staff have read and understood policies. 14 Sign Off of Chair s Fee/Expenses The arrangements as outlined within the paper that had been circulated were noted and approved. 15 Update on Arm s Length Foundation The contents of the paper that had been circulated were noted. It was highlighted that, since writing the paper, Julie Tindal had indicated she was no longer able to take on the role of Trustee, however Elizabeth Porter had agreed to continue. A summary of the discussion that had taken place at the pre-meeting was given. One risk identified by Board members was the Trust having different priorities to the Board and allocating funding to other organisations, either in the sector or other training/education companies. It was clarified that the constitution of the Arm s Length Trust states that funding must be used by Fife College or projects supported by Fife College, which should minimise the risk.

7 The concerns raised by the auditor were also discussed. It was noted that the Trust requires to be independent. If funding is paid from the College, to the Foundation, and then comes back to the College this may mean that the auditors would take a view that the monies should be consolidated in the College accounts, which could impact on funding thereafter received by the College from the Scottish Funding Council. It was noted that this was a sector wide issue that required to be resolved with Audit Scotland and the Scottish Funding Council. 16 Self Evaluation The internal and external auditors left the meeting. On behalf of the Committee and the College, the Chair of the meeting thanked Stuart Inglis and the Henderson Loggie team for their expertise and professionalism Evaluating the External Audit Service 16.2 Evaluating the Internal Audit Service 16.3 Audit Committee: Self Assessment Review The self-evaluation forms were discussed. It was agreed that Bob Black should not complete the forms as he had only attended one Audit and Risk Committee meeting. Decision: To complete the self-evaluation forms and return these to the Clerk, who will collate results and present these at the next meeting. Responsibility: Committee Members/Clerk Deadline: 30 June Review of Committee Structure: Audit and Risk Committee The contents of the paper that had been circulated were noted. The Committee agreed that arrangements in place with the new Committee structure seemed adequate, and timings were appropriate. A concern was raised about having a Committee member with appropriate financial / audit experience, and this would also be reflected in the self-evaluation item above. It was noted that the remit of the Audit and Risk Committee had been updated to reflect comments made by the External Auditors at a previous meeting. The changes were agreed. The Chair highlighted that this was his last meeting, and that Bob Black would take over as Chair from the next meeting. Those present expressed their thanks to Don Munro for chairing the meeting and for his contribution to the work of the Committee. Decision: To submit the revised remit to the Board of Governors for approval. Responsibility: Clerk Deadline: 18 June Date of Next Meeting: Wednesday 18 September 2014 at 4.00pm, Rosyth Campus