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06 10 08 Audit mins

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MINUTES OF A MEETING OF THE AUDIT COMMITTEE HELD ON MONDAY 6 OCTOBER 2008 AT 8.00am PRESENT: Trevor Cooper – Chair Delroy Brown Tony Grady Ralph Tonge IN ATTENDANCE: Margaret Allen – Interim Deputy Principal David White – Interim Vice Principal Corporate Andrew Hartley – Director of Funding and Financial Resources Val Mattinson – Director of Corporate and External Affairs Ian Falconer – Grant Thornton Will Simpson – Grant Thornton Claire Kay - Clerk to the Corporation 1. MEETING WITH AUDITORS WITHOUT MANAGEMENT PRESENT The members used this time to consult with auditors on issues arising from the agenda. Members noted the concerns expressed by the IAS team regarding their performance presented on the agenda under item 11. There were issues identified in the report which the IAS had not had the opportunity to discuss with management. Members agreed that the issues relating to performance would be discussed under item 11 and Tony Grady offered himself to facilitate an open debate outside the meeting if required. The Chair asked auditors for their experience of the attendance of the Principal at Audit Committees around the sector. IAS reported a discussion at the 157 group asking that exact question, a straw pole showed a 50:50 split of Principals attending and not attending, Grant Thornton reported a split more like 70:30 of Principals attending in their client base. Members discussed the merits of the Principal attending and ...
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MINUTES OF A MEETING OF THE AUDIT COMMITTEE
HELD ON MONDAY 6 OCTOBER 2008 AT 8.00am
PRESENT:
Trevor Cooper – Chair
Delroy Brown
Tony Grady
Ralph Tonge
IN ATTENDANCE:
Margaret Allen – Interim Deputy Principal
David White – Interim Vice Principal Corporate
Andrew Hartley – Director of Funding and Financial Resources
Val Mattinson – Director of Corporate and External Affairs
Ian Falconer – Grant Thornton
Will Simpson – Grant Thornton
Claire Kay - Clerk to the Corporation
1.
MEETING WITH AUDITORS WITHOUT MANAGEMENT PRESENT
The members used this time to consult with auditors on issues arising from the agenda.
Members noted the concerns expressed by the IAS team regarding their performance
presented on the agenda under item 11.
There were issues identified in the report which
the IAS had not had the opportunity to discuss with management.
Members agreed that
the issues relating to performance would be discussed under item 11 and Tony Grady
offered himself to facilitate an open debate outside the meeting if required.
The Chair asked auditors for their experience of the attendance of the Principal at Audit
Committees around the sector.
IAS reported a discussion at the 157 group asking that
exact question, a straw pole showed a 50:50 split of Principals attending and not attending,
Grant Thornton reported a split more like 70:30 of Principals attending in their client base.
Members discussed the merits of the Principal attending and whether it jeopardised the
independence of the Committee.
On balance it was agreed that the Principal should attend
but if necessary could withdraw from the discussions if it would benefit the independence of
the Committee.
The confidential minute from the session at the last meeting was reviewed and agreed by
members, and signed by the Chair.
Members of College management joined the meeting at 8.15 am.
The Chair welcomed
David White to the meeting.
2.
APOLOGIES FOR ABSENCE
Apologies for absence had been received from Graham Charlton and Geoff Hall.
3.
DECLARATIONS OF PERSONAL INTEREST IN AGENDA ITEMS
There were no declarations of personal interest in the agenda items.
4.
MINUTES
The minutes were amended to indicate the Principal as being in attendance.
The minutes
of the meeting held on 30 June 2008
were confirmed and signed.
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5.
MATTERS ARISING
a)
Student union financial strategy
RT informed members that the increased activities reported to the last meeting by
the Student Union Liaison Officer had been well received by students and had
resulted in an increased uptake of NUS membership which in turn increased the SU
income for the year.
b)
Declaration of personal interest
The Clerk updated the Committee on the outcomes of the discussion with the
previous committee Chair and the Principal with regard to his position of Trustee of
the Public Governance Institute set up by KPMG.
It had been agreed the Principal
take up the invitation to be a trustee of this new group but to decline any
remuneration as a result of the position.
The previous Chair had accepted that the
position would be beneficial to the College as a networking opportunity and for the
development of best practice within the organisation.
Members noted and
supported the action taken by the previous Chair.
b)
Corporation papers
IAS confirmed that they were now receiving corporation papers for information, and
had received copies of the Due Diligence reports.
6.
REPORT FROM THE AUDIT AND RISK MANAGEMENT GROUP
Members received an update report on the work undertaken by this group.
All items would
be discussed separately on the agenda.
The report was noted
7.
RECOMMENDATION TRACKING EXCEPTION REPORT
The report used to track the progress to date of audit recommendations was presented to
members.
Members discussed overdue items and their risk rating.
The summary of
outstanding items was reviewed.
A revised schedule would be circulated to members
following the meeting.
Members discussed the contents of the report in detail and were
satisfied that recommendations were being monitored and addressed appropriately.
The report was noted.
D Brown joined the meeting at 8.30am.
8.
INTERNAL AUDIT REPORTS
Support Services for Learners
The aim of the audit was discussed and it was concluded that the overall strategic view as
to whether the financial cost of the services provided was matched with the benefit to the
learner of the College providing this service, still needed to be addressed.
A more in depth
review was required from a strategic position and it was agreed for this to be returned to the
next meeting.
The conclusions of the internal audit undertaken found the operational areas
which could contribute or impact on student achievement and the learner experience were
robust and concluded controls were suitably designed and operating with sufficient
effectiveness to provide reasonable assurance that the related risk management objectives
were achieved during the period.
Train to Gain
Members noted this was a high risk, high growth area for the College and although four
recommendations had been made in the report, similar issues had been seen at other
colleges in the sector especially forecasting and margins.
Members noted the strategic
decision to invest in the area of Train to Gain and the overall operating position of the area
in 2007/08.
The steps being undertaken to improve the overall margin and reduce the
organisational risk of this provision were discussed.
Members noted the LSC PFM report
on Train to Gain would be available for the next meeting.
The conclusions reported by the
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IAS were that the controls were suitably designed and operating with sufficient
effectiveness to provide reasonable assurance that the related risk management objectives
were achieved during the period subject to the recommendations made.
Learner number systems
The report provided good assurance in the key area of learner number systems outlining a
robust system. The report also commented on the good progress made against
recommendations for improvement in last year’s report.
The conclusions reported by the
IAS were that the controls were suitably designed and operating with sufficient
effectiveness to provide reasonable assurance that the related risk management objectives
were achieved during the period.
Ofsted Inspection follow-up
The report approved by the Committee at the last meeting was presented outlining the
progress made against recommendations from the Ofsted inspection in 2005.
IAS
concluded that the College had appropriate mechanisms in place for implementing and
monitoring progress of recommendations.
Data Security
IAS reported to the Committee the significant progress which had been made in the area of
IT.
The report made several recommendations to build on the existing good practice in
data security within the College but none were high priority.
Members questioned
management about the location and security around sensitive data and data protocols and
requested a cost benefit analysis on the use of encryption to improve data security.
The
conclusions reported by the IAS were that the controls were suitably designed and
operating with sufficient effectiveness to provide reasonable assurance that the related risk
management objectives were achieved during the period.
Merger
The Committee received the report presented to the Corporation meeting in July on the
decision making process on merger.
This report was an additional review requested in
relation to the identification by the Committee that a risk review on merger should be
undertaken.
Members received the report and noted it was considered helpful to the Board
at the time it was presented.
The Committee resolved:
to adopt the IAS reports considered by the Committee.
9.
DUE DILIGENCE
The Committee considered the key headlines from the due diligence report on ncn and how
the risks identified were being mitigated in year.
The report was noted.
10.
IAS ANNUAL REPORT 2007/08
The draft Annual Report for 2007/08 was presented by Grant Thornton.
Members noted
this report formed an important part of the assurance mechanism for the statement on
internal controls within the annual financial statements.
The report concluded that controls
were suitably designed and operating satisfactorily in the areas of risk management,
corporate governance and internal system of controls, with the exception of the monitoring
and management fees in connection with Train to Gain.
Operational assurance was
recorded as good in 5 out of the 7 areas in accordance with LSC guidance, and adequate in
the area of managing risk in association with merger and economical and efficient use of
resources.
Members noted the increase of days and cost from budget was due to the additional review
with regard to merger.
Members requested the following changes to the report:
Text be altered to reflect the correct position with regard to merger
Identify specifically the additional work, time and cost of the merger review
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Alter textual commentary on pages 8&9 including reviewing the fundamental
matters.
A final draft would be presented to the Committee at the meeting in November.
11.
INTERNAL AUDIT SERVICE
A report was tabled outlining the assessment of the performance of the IAS by
management.
The Chair requested this be discussed with the IAS team and a further
report brought to the Committee in November.
Grant Thornton withdrew for this item.
The Committee discussed the re-appointment of Grant Thornton taking into account the
discussion at the last meeting regarding merger and the timing of a re-tender process.
Members considered the financial regulations and the current duration of the Grant
Thornton contract.
The Committee resolved:
that the re-appointment of Grant Thornton as the College’s Internal Audit
Service for 2008/09 be recommended to the Corporation;
that the process for re-tendering the Internal Audit Service in accordance with
the Audit Code of Practice and the College Financial Regulations would
commence during 2008/09 for a new contract term starting 2009/10.
The Committee discussed the involvement of members in the tendering and appointment
process for IAS and agreed that 2 members of the Committee (Chair plus Tony Grady),
Director of Finance and VP Corporate Services should form the panel to undertake the
process of appointment and report back to the Committee.
Members agreed the Principal
should not be involved in the process to ensure independence of the appointment.
12.
INTERNAL AUDIT PLAN 2008/09
The full year plan was presented to members building on the 6 month plan discussed in
June.
The plan covered the statutory requirements of the Audit Code of Practice and
outlined the number of audit days required to deliver the plan and the overall cost to the
College.
Members noted that proposed areas covered in the plan and discussed them in
relation to the overall risk to the College and the relevance areas had to Framework for
Excellence.
The Committee resolved:
to recommend the Internal Audit Plan for 2008/09 to the Corporation.
13.
RISK MANAGEMENT
The Committee received the Annual Review of risk management for 2007/08 noting the
changes in process for monitoring the mitigation of risks in year and the changes made to
the risk register in year.
The risk management strategy for 2008/09 was presented along
with the risk register.
Members questioned management about some of the detailed risks
around staffing, merger and insurance.
The Committee resolved:
to recommend the risk management strategy for 2008/09 to the Corporation;
to recommend the 2008/09 risk register to the Corporation.
14.
WHISTLEBLOWING POLICY AND PROCEDURE
A revised policy was presented to the Committee.
The policy had been revised following
an IAS recommendation and now reflected current legislation and best practise.
Members
discussed the relevance and use of this policy by students and requested a reference to
students within paragraph 1.3.
Members noted the means by which the policy would be
promoted to staff, students and stakeholders and encouraged the training of staff named as
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a first point of contact to ensure appropriate use of the policy.
An amendment was required
to ensure consistency of contacts within the policy.
The Committee resolved:
to recommend the Whistleblowing Policy to the Corporation, subject to the
amendments noted above.
15.
COMMITTEE ANNUAL SELF ASSESSMENT
The Committee considered the self-assessment circulated prior to the meeting.
Members
discussed the evidence provided in the report and noted that although value for money
remained satisfactory additional reports had been received by the Committee in year, it was
noted that the KPI’s in Framework for Excellence would help quantify this for the
Committee.
Risk management was graded good due to the cancellation of the September
2007 meeting which resulted in the Committee being unable to perform their role in
overseeing the annual risk management review.
Although the Committee accepted the risk
management framework overall remained outstanding, members considered their duties in
this process were not fully carried out.
Members considered the Committee now had a high
level of expertise.
Members agreed their performance against the predetermined criteria
as:
Effectiveness
good
Risk management
good
Value for money
satisfactory
Decision making
outstanding
16.
CONFIDENTIALITY OF BUSINESS
No items were considered confidential.
17.
DATE OF NEXT MEETING
The next scheduled meeting was 26 November 2007.
Members had received for information the KPMG benchmarking data on college’s financial
performance for 2007/08 - it was noted this was for KPMG clients only.
The Chair closed the meeting at 10.00am.
SIGNED: ___________________________________________________
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DATE:
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