Minutes of the Fifty Eighth Meeting of the Audit Committee held on Thursday 9 December 2010 at 5.00pm in the Principalâ€™s Meeting Room at the Shiney Row Campus. PRESENT:
Ms K Murray (Chair), Mr P Gouldsbro.
Ms A Atkinson, Mr P Moran and Mr J Morgan (KPMG), Mr O Tauqir (Grant Thornton), Mr D Howells, Mrs J Ridley, Mr A Cowey.
Mr C Crossman.
Pending the late arrival of Ms A Atkinson (KPMG), the Committee discussed Item A/10/49 first. A/10/49
INTERNAL AUDIT PROGRESS REPORT O Tauqir (Grant Thornton) provided an update on progress in delivering the Internal Audit Plan for 2010-11. He explained that the detailed planning had been completed for all Tranche 1 reviews. Whilst it had been expected that the IT Infrastructure Review would have been presented to this meeting, due to the unforeseen illness of the Principal, who was the main sponsor for the review, together with the delay in obtaining costings from Capita, it was proposed to bring this review to the March meeting. He explained that as further resources were required, it was proposed to defer the review of the transition from LSC to SFA/Local Authority beyond the timetabled June date and utilise those resources for the IT Infrastructure Review. The Vice Principal Resources explained that the Resources Committee had received a report on the New College Network. He explained that management felt that rather than rushing to sign the contract in order to save on VAT, more time was needed to scrutinise the costings and explore opportunities to make savings. It was therefore proposed to prepare a detailed report for consideration by the Capital Projects and Estates Committee. Governors asked whether the College was obliged to continue with the preferred supplier should an independent review suggest that the project proposals would not deliver what it promised. The Vice Principal Finance said that he would have to investigate to determine whether that was an option. 1
The Committee: i. received the report; ii. approved the revision to the Audit Plan.
Ms A Atkinson arrived at 5.20pm A/10/44
DISCUSSION BETWEEN INTERNAL AND EXTERNAL AUDITORS AND MEMBERS All staff members withdrew in order that the discussion between External Audit and Members could be held in private. The meeting resumed at 5.25pm.
APOLOGIES FOR ABSENCE Apologies for absence were received from Cllr Celia Gofton, Mrs A Hodgson and Mr I Falconer (Grant Thornton). Apologies for lateness were received from Ms A Atkinson (KPMG)
MINUTES OF THE PREVIOUS MEETING HELD ON 17 JUNE 2010 The minutes were accepted as an accurate record.
MATTERS ARISING THEREFROM None.
REPORT ON THE IMPLEMENTATION OF AUDIT RECOMMENDATIONS The Vice Principal Finance presented the report explaining that whilst the Committee had agreed to receive the tracking report three times a year in September, March and June, the College had prepared an additional report to advise the Committee of the status of the 34 audit recommendations which had not been fully implemented by September 2010. The Committee noted that of the 8 recommendations left over from 2008/09, the 2 recommendations in relation to Employer Engagement had been fully implemented, the recommendation in relation to Anti-Fraud arrangements was under review by the Vice Principal Finance and the remaining 5 recommendations in respect of a Capital New Build audit had been put on hold but would be noted by the Vice Principal Finance pending the resumption of any new build programme.
Of the 26 recommendations relating to 2009/10, 9 had been fully implemented since September 2010 and the remaining 17 were either partially implemented or had a future implementation date. Governors asked when an updated report may be expected. It was agreed that the Vice Principal Finance would produce a matrix which would be emailed to Members. The Committee: noted the report and requested that a matrix be produced outlining the recommendations which would be completed by March and those which would be carried over into 2011.
EXTERNAL AUDIT MANAGEMENT LETTER Arlene Atkinson (KPMG) took the Committee through the Audit Highlights and Management Letter in Annex C summarising the main points in each section. The Committee noted the following points: The College had incorporated the FRS 17 adjustment into the income/expenditure account however this approach may need to be re-visited (but it was felt that this would not be retrospective) following an ongoing review of accounting practice The budget had been reviewed on a going concern basis as was standard practice across the sector. It was noted that there may be significant implications for some colleges, one being that credit may be more expensive and difficult to obtain. Colleges may be forced into merger or face closure. It was not felt to be an issue at this College The Vice Principal Finance explained that he was attending a KPMG presentation of the ACE diagnostic tool to the 157 Group in January There were no audit differences to report. The Committee: i. ii.
reviewed the College’s Report and Financial Statements for 2009/10; reviewed the Management Letter of the Financial Statements Auditors and that of the statement on Corporate Governance in the light of the financial statements, as required by the Audit Code of Practice.
DRAFT FOURTEENTH AUDIT COMMITTEE ANNUAL REPORT The Vice Principal Finance presented the report and the following information and conclusions were noted: Membership of the Committee had been increased to 4 with the appointment of Celia Gofton. The Committee met, and was quorate, four times during the year. The Committee had discharged all of its obligations under its terms of reference Grant Thornton and KPMG were both re-appointed as the College’s Internal and Financial Statements Auditors. In their annual report, the internal auditors concluded that: - the College had, for both risk management and corporate governance, activities and controls which were suitably designed and operating with sufficient effectiveness; - for internal controls the College had activities and controls which were suitably designed and operating with sufficient effectiveness, and - they can confirm management’s view that change was needed in the areas of strategic financial planning and support services to mitigate the increasing and significant risks facing the College. The Audit Committee was of the opinion, based on all of its work during the year, taking account of the views and management letter of external auditors and in particular on the assurance given in the Internal Audit Annual Report, that: i. the governing body’s responsibilities, included in the annual financial statement had been satisfactorily discharged; ii. the College’s systems of internal control and its arrangements for risk management, control and governance processes, and securing economy, efficiency and effectiveness were at least adequate and effective and on balance commendable and the Board may rely on them. O Tauqir suggested that the College should include an explicit corporate governance statement in its financial statements next year in line with NAO advice. The Committee: i. reviewed the draft Audit Committee Annual Report ii. recommended the report to the Board for approval at its meeting on 14 December 2010.
FINANCIAL MANAGEMENT CONTROL EVALUATION The Vice Principal Finance explained that the LSCâ€™s PFA team had reviewed the full FMCE return prepared for the Ofsted Inspection in January 2010 and had confirmed the Collegeâ€™s self-assessment of its financial management and control arrangements as Outstanding. As there had been no significant changes since then, the College had submitted the short version of the FMCE return to the SFA before the 30 November deadline. The Vice Principal advised that due to the scheduling meetings the return had been submitted to the SFA before the Audit Committee had considered it, however if Governors required the full version to be completed he would do so. The Committee confirmed that, as agreed at the December 2009 meeting, unless it was obliged to do otherwise, the College would routinely submit the short return. Both Internal and External Audit commented that this approach was consistent with the rest of the sector. The Committee: i. approved the completion of the short FMCE return; ii. recommended it to the Corporation for its approval.
CONFERENCES AND CORRESPONDENCE There was nothing to report in terms of conferences attended or correspondence received.
ANY OTHER BUSINESS None.
DATE, TIME AND VENUE OF NEXT MEETING AND CALENDAR OF BUSINESS The next meeting will take place on Thursday 3 March 2011 at 6.00pm in Room 614, Shiney Row Centre.
Meeting closed at 6.10pm