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Minutes of the Sixty-Fourth Meeting of the Audit Committee held on Thursday 14 June 2012 at 6.00pm in Room 614 at the Shiney Row Campus. PRESENT:

Mr G Blyth (Chair), Cllr C Gofton.

IN ATTENDANCE:

Mr D Howells, Mrs J Ridley Mr I Falconer and Mr D Claybrook (Grant Thornton) Mr P Moran, Mr D Mitchell and Mr J Robson (KPMG)

CLERK:

Ms R Ferguson (Dickinson Dees).

A/12/15

DISCUSSION BETWEEN INTERNAL AND EXTERNAL AUDITORS AND MEMBERS All staff members and the Clerk withdrew in order that the discussion between Internal and External Audit and Members could be held in private. The meeting resumed at 6.05pm.

A/12/16

APOLOGIES FOR ABSENCE Apologies were received from Ms J Johnson and Mrs A Hodgson.

A/12/17

MINUTES OF THE PREVIOUS MEETING HELD ON 1 MARCH 2012 The minutes were accepted as an accurate record.

A/12/18

MATTERS ARISING THEREFROM There were none.

A/12/19

RESERVED BUSINESS OF THE AUDIT COMMITTEE This item was recorded as reserved business of the Audit Committee and documented in a separate appendix.

A/12/20

REPORT ON THE RECOMMENDATIONS

IMPLEMENTATION

OF

INTERNAL

AUDIT

The Committee received the report noting that as of March 2012, all recommendations brought forward from previous meetings had been implemented. It was noted that six new recommendations had been added to the tracking report in respect of the Estates Strategy and Risk Management and that these recommendations have all now been implemented.

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The Committee: i. received the report on the implementation of Internal Audit recommendations; ii. commented that the tracking report was working well. A/12/21

REPORT ON THE RECOMMENDATIONS

IMPLEMENTATION

OF

EXTERNAL

AUDIT

The Vice Principal Finance presented an update in respect of all recommendations made as part of the 2010/11 ILR and Financial Assurance audit process. He advised that there were six recommendations in respect of ILR controls, nine in respect of the ILR substantive report and two in respect of financial assurance. It was noted that the college was taking action to implement all of the recommendations in accordance with the agreed timescales. The Committee: received the report recommendations. A/12/22

on

the

implementation

of

External

Audit

EXTERNAL AUDIT ILR FOLLOW UP The Vice Principal Finance introduced the report explaining that, as requested by the Audit Committee, KPMG had undertaken a follow up ILR audit in April 2012. It was expected that the College would be subject to an external funding audit by the SFA in the coming year and KPMG had been engaged to provide assurance that the proposed management actions outlined in the funding assurance report presented to the Committee in November, had been implemented and were operating effectively. The Committee noted the opinion issued by KPMG was that “the College has made good progress in the implementation of the previous recommendations. Some continuing areas were noted which if implemented will increase the accuracy of the College’s funding file.” James Robson (KPMG) took the Committee through the follow up report advising that management had agreed with all the observations made. He commented that the planned year end reconciliations were crucial to ensuring the accuracy of funding claims. Governors raised a number of questions and it was noted that the KPMG carries out its audit in the form of random sampling and is the same approach taken by the SFA. In terms of sampling, External Auditors took on board the Chair’s suggestion that it might be useful to concentrate the audit based on some form of risk assessment and would hold discussions with management.

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Paul Moran (KPMG) commented that in relation to earlier discussions, it may be necessary to adjust the scope of work for future audits to include areas of emerging risk. The Committee: received the ILR Follow Up Report. A/12/23

EXTERNAL AUDIT PLANS AND STRATEGY Paul Moran (KPMG) presented the report outlining the proposed approach external auditors would take in respect of auditing the financial statements of the College and its subsidiary companies. Reference was made to the high risk areas which had been identified as key issues for focus, some of which were generic to the sector and others, such as capitalisation of IT costs and the Capital Strategy which were specific to the College. Mr Moran confirmed that there were no issues in maintaining independence. It was noted that fees had been held in line with the previous year in reflection of the spending cuts facing the sector. Governors commented that the audit timetable and the section on sector developments were particularly useful. The Committee: received the report.

Internal and External Auditors withdrew from the meeting at 7.21pm A/12/24

MANAGEMENT REVIEW OF INTERNAL AUDIT PERFORMANCE AND REAPPOINTMENT AND REMUNERATION OF INTERNAL AUDIT The Vice Principal Finance presented the report explaining that College management had reviewed the performance of Grant Thornton over the last 12 months using the performance indicators attached to the submitted report alongside Grant Thornton’s own self assessment. He confirmed that management were satisfied with the way in which Grant Thornton had carried out their work during 2011/12 and recommended that Grant Thornton be reappointed for the 2012/13 financial year. The Committee noted that Grant Thornton had again agreed to hold their fees at the 2011/12 rate of £34,420 plus VAT, plus a capped sum of £2,000 for expenses. The Committee: agreed to recommend to the Board the re-appointment of Grant Thornton as internal auditors to the College for the year to 31 July 2013. 3


Internal and External Auditors re-joined the meeting at 7.28pm A/12/25

INTERNAL AUDIT PROGRESS REPORT The Committee: received the Internal Audit Progress Report noting that the Internal Audit Plan remains on target to be completed within the agreed timescale.

A/12/26

INTERNAL AUDIT REPORTS David Claybrook (Grant Thornton) presented the Internal Audit Reports. Review of Governance of Sub-contracting Arrangements (Annex A) This was an advisory review, carried out at the request of the SPG to assess the progress of the revised arrangements relating to sub-contracting arrangements. It was noted that the report provided a positive message that the College was heading in the right direction of travel. Mr Claybrook outlined the three recommendations relating to the role and responsibility of the Partnership Office, procedural aspects of contracting and documentation. The Committee noted the actions for implementing the recommendations. In response to questions, Internal Audit commented that the establishment of a central partnership office to provide support to all sub-contracted work to ensure consistency across the college was unusual within the sector. The Chair asked how many of the 32 subcontractors were tested. Internal Audit said that they would email the Chair to provide further information. IT Upgrade Project Review (Annex B) The Committee received the report noting that it provides positive assurances that, at the time the review took place, the project management processes were progressing effectively. The Committee: received the Internal Audit Reports.

A/12/27

INTERNAL AUDIT PLAN 2012-13 Ian Falconer (Grant Thornton) presented the draft Internal Audit Plan for 2012-13. It was noted that the plan is informed by the key developing issues in the sector and the key challenges facing the College identified during planning discussions with the SPG and the Audit Committee Chair. It was noted that the plan was designed to be flexible and would evolve. As a result it would be expected to change the light of any emerging risks. 4


The key areas proposed for review during 2012-13 were outlined in detail in Appendix A as being: • Interim management arrangements and the role of Governors • Risk Management • Higher Education • IT Infrastructure Investment Project • Estates Capital Project Management • Workforce Restructuring (Human Resources) • Marketing • Follow Up In response to a question relating to the interim management arrangements following the departure of the Principal and Vice Principal, it was noted that the focus of the review would be to provide assurance to the Governing body that key functions were being maintained, key risks managed and that strategic objectives were still being delivered during the interim period. The Chair requested that Internal Audit reports be condensed to reflect only key issues to be followed up, so as not to overburden the reduced Senior Management Team. The Committee: agreed to approve the Internal Audit Plan 2012-13. A/12/28

REVIEW OF INFORMATION RECEIVED FROM THE COLLEGE EXECUTIVE The Clerk introduced the paper explaining that the College’s Standing Orders requires that each Committee should undertake a formal review of the information received from the College Executive at least once every two years to ensure that Governors were getting the information they needed to enable them to make decisions. Governors were invited to give feedback and the following comments were noted: • whilst it was accepted that the majority of reports provided to the Audit Committee were from Internal and External Audit who have their own house style, it was hoped that they would take on board the spirit of the report writing protocol when producing their reports. In terms of reports provided by College Management: • the reports got the message across in a structured manner • the summary provided at the beginning of the report was helpful in drawing attention to the key issues to be considered, especially when the agenda was large • there was a tendency to use jargon and acronyms and it would be helpful if these were explained in full when first mentioned 5


The Committee: received the report and commented as set out above.

A/12/29

ANY OTHER BUSINESS There was none.

A/12/30

DATE, TIME AND VENUE OF NEXT MEETING AND CALENDAR OF BUSINESS The next meeting will take place on Thursday 27 September 2012 at 6.00pm in Room 614, Shiney Row Centre.

Meeting closed at 8.20pm

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14th June 2012 - 64th Audit Committee Minutes  

Minutes from the 64th Audit Committee meeting on the 14th of June 2012

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