CITY OF WOLVERHAMPTON COLLEGE

Transcription

1 CITY OF WOLVERHAMPTON COLLEGE Minutes of the meeting of the Audit Committee of the Board of Governors held on Wednesday 30 November 2016 at 3.30pm in Room 255, Wellington Road PRESENT Mr J Crockett (Chair) Mrs T Campbell Mrs P Kaur Mrs J Kitchen Ms S Meddings (Clerk) IN ATTENDANCE Ms R Wright (Mazars) Mr P Oxtoby (RSM) Mr D Sharp In welcoming everyone to the meeting, the Chair extended a particular welcome to Mrs Jane Kitchen, the new member of the Committee, who was attending her first Audit Committee meeting. The Chair then requested a round of introductions. DECLARATIONS OF INTEREST There were no declarations of interest. 11/16 COMMITTEE TERMS OF REFERENCE The Committee considered and noted the terms of reference of the Audit Committee. 12/16 MINUTES OF THE PREVIOUS MEETING 11 JULY 2016 Resolved: That the minutes of the previous meeting held on 11 July 2016 be approved as a correct record. 13/16 MATTERS ARISING DRAFT INTERNAL AUDIT STRATEGY 2016/17 Arising on Minute No 09/16, where the Committee had agreed that the draft Internal Audit Plan should be presented for approval to the Board within the context of the three year Internal Audit Strategy, it was confirmed that the Plan had been presented as agreed. 14/16 MATTERS ARISING RISK MANAGEMENT UPDATE Arising on Minute No 10/16, where Mr P Toni had suggested a cross referencing amendment to the numbering of the risk register, the Chair asked the Vice Principal to pick this up with Mr Toni. Final - SM 1

2 15/16 FINANCIAL STATEMENTS AUDITORS AUDIT FINDINGS REPORT 2015/16 Mr P Oxtoby presented the financial statements auditors audit findings report for the year ended 31 July 2016 and the summary of key findings in connection with the audit of the College s financial statements and the regularity review. In presenting the findings report, Mr Oxtoby drew the Committee s attention to the following key areas of audit focus: Going Concern: Mr Oxtoby reported that there was one issue outstanding, the key issue of the College as a Going Concern. From December 2016 to December 2017 the College did not have sufficient cash to finance its liabilities. This was mainly because of the funding profile from the funding agencies. Accounting standards This was the first year that the accounts had been prepared under the new F&HE SORP 2015 and Mr Oxtoby reported that the accounts were compliant. Pension scheme liabilities The pension liability was reviewed with reference to the actuarial assumptions and no issues were noted. Following the College s transition to FRS 102, the comparative figures have been updated in line with the actuary s calculations and the impact of the new accounting standard. The impact has been to reduce the surplus previously reported by the College for Significant deficiencies in Internal Control The College does not hold a fixed asset register which is reconciled to the financial statements. The Vice Principal reported that this would be addressed when the new finance system was installed. The Chair asked the Vice Principal to update the Committee on the Going Concern issue. Mr Sharp reported that discussions had been held with the SFA who had agreed to reprofile the funding payments to the College. A confirmation letter from the SFA to this effect would be required to enable the Board to sign off the accounts at the Board meeting on 12 December. In response to a question from the Chair as to what the current situation was in respect of income recognition, Mr Oxtoby reported that in order to sign off the College s accounts RSM would also require receipt of the final reconciliation statement on the funding claim from the SFA which was still awaited but expected imminently. 16/16 INTERNAL AUDIT ANNUAL REPORT /16 In presenting the Internal Audit annual report for the College for 2015/16, Ms R Wright confirmed that the Internal Audit Plan had been delivered as scheduled and drew the Committee s attention to the Internal Audit Service s opinion, as follows: In our opinion, City of Wolverhampton College has in place an appropriate framework for identifying, evaluating and managing the significant risks faced by the College. Final - SM 2

3 In respect of the areas of activity that we reviewed, and subject to the weaknesses identified and reported in our internal audit reports, City of Wolverhampton College has an adequate, effective and reliable framework of internal control and effective risk management and governance processes which provides reasonable assurance regarding the effective and efficient achievement of the College s objectives. No instances of actual or suspected fraud have been encountered during our audit work. It was noted that there was substantial assurance in all areas reviewed during 2015/16. 17/16 ANNUAL ACCOUNTS 2015/16 The Audit Committee received the draft Annual Accounts 2015/16, prior to their presentation for approval at the Board of Governors on 12 December The Annual Accounts were presented to the Audit Committee to inform the Committee s review of the management letter of the financial statements auditor and consideration of the statement of corporate governance (including assurance that the College has spent its funds with propriety and regularity) with the objective of recommending their approval to the Board of Governors. The following key points were noted: The Annual Accounts were presented in accordance with the new accounting standard FRS102 and the revised FE and HE SORP. The final surplus for the College before FRS 102 pension and holiday pay adjustments, restructuring costs and after revaluation reserve release was 0.514m in comparison to the draft outturn of 0.516m. Restructuring costs totalled 0.883m. Total Comprehensive income for the year showed a loss of m in comparison to a restated loss for 2014/15 of 2.444m. The movement on LGPS pension liability was an increase of m in the year. The College has provided for clawback of 97k for the SFA due to underdelivery of adult apprenticeships ( 81k) and traineeships ( 16k). Other adult skills showed a small over-delivery against contract value. There was no clawback from the EFA although the College did not deliver the full allocation. The College has positive Income and Expenditure Account reserves before pension reserve of 0.602m. The Pension Liability had increased to m taking the College to Net Liabilities of m The College s financial health remained inadequate at this time. The SFA had not issued a Letter of Support that would enable RSM UK Audit LLP to sign the accounts on a going concern basis but would be confirming a re-profiling of payments which would confirm that the College would have sufficient facilities for the next 12 months. This would allow RMS UK Audit LLP to confirm their opinion on the accounts. Final - SM 3

4 18/16 ANNUAL REPORT OF THE AUDIT COMMITTEE TO THE BOARD OF GOVERNORS 2014/15 The Committee considered a draft of the annual report of the Audit Committee to the Board of Governors for 2015/16 which is a requirement of the Joint Audit Code of Practice. The Clerk reported that the draft report had been completed apart from the Audit Committee s opinion to the Board of Governors on the adequacy and effectiveness of the College s audit arrangements, its framework of governance, risk management and control and its processes for securing economy, efficiency and effectiveness. The Committee gave detailed consideration to the draft opinion and, following discussion, agreed that the wording of the opinion to be included in the annual report should remain the same as the previous year in respect of the College s financial health but should be amended in respect of the College s risk management framework to reflect that the focus should be continued development of the framework rather than further embedding. Mr Oxtoby reported that the current approach to risk management in the FE sector was on developing Board assurance. It was noted that AoC West Midlands was undertaking a research project in this area which, it was agreed, would be useful for the Audit Committee to receive in due course. Resolved: That the annual report of the Audit Committee for 2015/16 be approved and submitted to the Board of Governors on 12 December /16 INTERNAL AUDIT REPORTS 2016/17 Ms R Wright presented 2 internal audit reports to the Committee, commencing with a summary progress report on work completed on the Internal Audit Plan. It was noted that progress against the Plan was on track. The following internal audit reports were presented for consideration by the Committee: Business Continuity Planning Property Strategy The Business Continuity Planning audit received substantial assurance with 5 housekeeping recommendations one of which related to the College s IT disaster recovery plan being documented in more detail. In noting that the implementation date for this recommendation was July 2017, the Committee accepted the deadline date but urged management to complete this earlier with an update to the Audit Committee in May The Property Strategy audit received substantial assurance with 1 housekeeping recommendation relating to no bespoke property development risk register being in place. The Vice Principal Finance and Estates explained that a draft property development risk register had been developed as part of the College s submission to the LEP and that this would be finalised and operational at the start of the new build development. Final - SM 4

5 20/16 INTERNAL AUDIT RECOMMENDATIONS IMPLEMENTATION PROGRESS REPORT The Committee received a summary of progress to date on the implementation of internal audit recommendations. The Clerk reported that in respect of 2015/16, 11 recommendations were reported to Committee 9 of which have been signed off by the Internal Audit Service as implemented. The remaining 2 recommendations were not yet in scope for implementation. 21/16 SFA FUNDING AUDIT The Committee received the final report of the SFA s funding assurance review of the Colleges EFA and SFA funding. The Vice Principal reported that the full funding audit, which was undertaken by RSM, had involved substantive testing of a sample of 80 learners from each core funding stream, along with further tests to confirm compliance with requirements for sub-contracting, English and maths, 24+ advanced learning loans, ESF match funding and Discretionary Learner Support funding. The audit in effect required review of many thousands of pieces of evidence. In respect of the outcome of the review it was noted that the total sum of adjustments as a result of audit findings were 40,834 on total funding of 15,630,223. A number of recommendations were made by the Auditors which had been accepted by the College. The Audit Committee considered all the recommendations in detail. In response to a question as to how the recommendations would be followed up in respect of implementation, the Chair reported that follow up would be undertaken through an Internal Audit funding review as part of the 2017/18 Internal Audit Plan. 22/16 ANNUAL ASSESSMENT OF RISK MANAGEMENT The Committee received a report assessing the College s Risk Management Framework in the context of the Audit Committee s responsibility to assess whether the risk management framework provides assurance that risks are managed and controlled appropriately and to advise the Board of Governors accordingly. The following key points were noted: There were many practices and processes which gave assurance that risk was being managed, including regularity and internal and external audit. During November, the Executive Management Team completely refreshed the risk register which encompasses a scoring mechanism for risk together with a risk matrix heat map. There were 32 risks included on the register from the previous 31 following the addition of a new risk in relation to Annual Provider Assurance Statements from Governors to HEFCE. Final - SM 5

6 Each of the risks were RAG rated with 8 high risks (red), 19 medium (amber) and 65 low risks (green) Each of the risks was owned by at least 1 member of EMT. The risk register was updated on a termly basis. The Vice Principal Finance and Estates leads on risk management. The Risk Policy had been reviewed with no changes proposed to the policy and approval was recommended for a further year. In response to a question from Mrs Kaur as to why Risk 26, which related to the Governor Links programme, was rated amber, it was clarified that although the Governor Links programme was taking place, activity was sometimes difficult to track and therefore evidence. The Chair suggested that given the programme had run for two years, a review was timely. The Committee agreed to request the Search and Governance Committee to undertake this review. Final - SM 6