AT A MEETING of the AUDIT COMMITTEE held in the College on MONDAY 5 JULY 2010 at 6.00 pm. Present B Allen P Ball C Holliday and E Lugg. An apology for absence was received from B Guthrie. Also in attendance L Oliver (Clerk) A Isherwood (Principal) N Davison and S Ruddock (Directorate) A Keelty and L Elliott (KPMG) and L Taylor (Baker Tilly). 1
Appointment of Chair Resolved That B Allen be elected Chair of the Committee for the ensuing year. B ALLEN in the Chair
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Appointment of Vice-Chair Resolved That E Lugg be appointed Vice-Chair of the Committee for the ensuing year.
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Declarations of Interest There were no Declarations of Interest made prior to the commencement of business.
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Minutes The Minutes of the meeting held on 1 March 2010 were confirmed as correct record and signed by the Chair.
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FIP (PFAR) report and Action Plan The Committee considered a report on progress with implementation of the Provider Financial Assurance Review (PFAR) Action Plan. Attached to the report was the Action Plan with progress updates noted against each item.
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The report also reviewed the monitoring and control arrangements for the Financial Improvement Plan which was the major activity that linked to the PFAR Action Plan. With regard to those items still meriting attention – a) Paragraph 16 relating to the monitoring of student numbers the Committee was reminded of the extensive considerations by the Finance & General Purposes Committee and the Financial Improvement Plan Monitoring Group which included student numbers. b) Paragraph 17 of the PFAR Report relating to performance management of senior post holders the Committee was reminded that the recommendation had been made in June 2008 and that the Remuneration Committee had yet to report. The Committee was assured that the Remuneration Committee would be resolving the issue of performance management at its next meeting. Resolved 1. 2. 6
That progress on the implementation of the PFAR Action Plan be endorsed. That the monitoring and control arrangements for the FIP be endorsed.
Risk Management The Committee considered a report providing an update of the risk management process for 2009/10 together with a revised Risk Management Policy. The Risk Management Policy had been reviewed by the Working Group and the 3 minor amendments proposed were highlighted in the report. The Risk Register had also been reviewed and the significant risks identified were attached in a separate document though it was recognised that some of them might alter following the election of a new Government and its soon to be published spending plans. The report advised that the internal auditor had audited the Risk Management and Corporate Governance process and had found it to be ‘Good’. Two issues had been identified however namely – Not all Annual Register of Interests Forms had been returned, and The College website in respect of Minutes of the Corporate Board was not up to date.
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The Committee was assured that all Register of Interest Forms had now been returned and with regard to the website revisions to the website itself and staffing difficulties had contributed to the Governance part of the website being out of date. The Committee was assured however that site would be updated shortly and that it was intended to include committee minutes on the site. A follow up audit had also been carried out to ensure that the findings identified in the 2006/7 and 2008/9 had been addressed. Further audit comments on the Risk Management processes could be found in the following Audit Report 01.10 Risk Management and Corporate Governance – Minute 7, post. Resolved 1. 2. 7
That the Risk Management Policy as amended be ratified. That the list of significant risks be endorsed.
Internal Audit Reports 2009/10 The Committee considered the following Internal Audit Reports – 01.10 02.10 03.10 04.10 05.10 06.10 07.10 08.10 09.10
Risk Management and Corporate Governance Fixed Assets High Level Financial Controls Work Based Learning/Employer Responsive Training Curriculum Planning ILR General IT Controls Capital Build Follow up Audit Recommendations
As all audits were assessed at Risk Rating ‘Good’ with the exception of report 04.10 (assessed as ‘weak’) it was still expected that a satisfactory opinion on internal controls for the annual report will be received. The High Priority recommendation in report 04.10 has already been implemented and a further report on progress will be issued in due course. Resolved That the Internal Audit Reports 01.10 through to 09.10 be endorsed.
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Programme of Work 2010/11 The Committee considered a report detailing the programme of work for 2010/11. During discussions on whether the current system of presenting the annual financial statements to both the Audit and Finance & GP Committees it was noted that some Colleges only presented to the Audit Committee as they were not obliged to establish Finance Committees under the Instrument and Articles of Government. Resolved 1. 2.
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That the Programme of Work 2010/11 be endorsed. That the current system of presenting the annual financial statements to the Audit and Finance & GP Committees be continued.
Internal Audit Operational Plan 2010/11 The Committee considered a report presenting the Draft Internal Audit Strategy and Annual Plan 2010/11. The Committee discussed – whether 29 audit days was sufficient the need to expand the proposed audit on Train to Gain to include Employer Responsive provision, and the frequency of some areas of audit as outlined in Appendix 2. Resolved That the Internal Audit Operational Plan 2010/11 be endorsed subject to the proposed audit of Train to Gain being expanded to include all Employer Responsive provision.
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Year End Audit Planning The Committee considered a report outlining the aspects of the 2009/10 financial year end audit arrangements and included in the report were details of changes required. Significantly the major change, given the current economic climate, is that each College must form a view that it is sufficiently solvent (Going Concern and Liquidity Risk) that it can carry on its activities for the 12 months from the date of approving the accounts. Attached to the report were the following documents – Page 4 of 5
Regularity Self Assessment 2009.10 year end at 11 June 2010 Baker Tilly Audit Plan Baker Tilly Advice Issued in 2007 Challenges arising from the current economic climate Going Concern and Liquidity Risk Learning & Skills Sector emerging issues The Committee’s attention was brought to Appendix 2 (Audit Strategy – Page 17 Materiality) and the need to establish a financial limit under which it was not necessary to identify any error in the annual financial statements. In considering this issue the Committee took into account that all major contract provision was audited and accounted for separately. The guideline figures offered to the Committee were between £1K and £5k. With regard to Appendix 4 – Challenges to Audit Committees arising from the current economic conditions - the Committee discussed the usefulness of using some of the listed Key Questions for Audit Committees as guidance for the Committee when considering audit reports. Resolved 1. 2. 3. 4. 5.
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That the Regularity Audit Self Assessment document be approved. That the Baker Tilly Audit Plan be approved. That the financial limit under which errors in the accounts need not be brought to the attention of the Governing body be set at £2,500. That the article on Corporate Governance and internal control systems and other information sources provided be noted. That a further report be presented to the Committee on the issue of which Key Questions be used to assist in the assessment of audit reports.
Dates of Next Meetings The Committee noted that its next meetings will be held on 8 and 22 November 2010.
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