220609 Audit mins
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MINUTES OF A MEETING OF THE AUDIT COMMITTEE HELD ON MONDAY 22 JUNE 2009 AT 8.00am PRESENT: Trevor Cooper – Chair Nigel Hallam Ralph Tonge IN ATTENDANCE: Julie Ashton – Deputy Principal David White – Interim Vice Principal Corporate Val Mattinson – Director of External and Corporate Affairs Ian Falconer – Grant Thornton Will Simpson – Grant Thornton Andy Bush – KPMG Mike Rowley - KMPG Claire Kay - Clerk to the Corporation The Chair welcomed Nigel Hallam to his first meeting. 1. MEETING WITH AUDITORS WITHOUT MANAGEMENT PRESENT The members used this time to consult with auditors on issues arising from the agenda. There were no issues or concerns raised which auditors would not discuss with management present. It was agreed that these confidential sessions would be scheduled for less time in future and consideration should be given as to whether they were on every agenda. Members of College management joined the meeting at 8.10 am. Mike Motley joined the meeting to discuss item 6. 2. APOLOGIES FOR ABSENCE Apologies for absence had been received from Tony Grady, Graham Charlton and Andrew Hartley. 3. DECLARATIONS OF PERSONAL INTEREST IN AGENDA ITEMS There were no declarations of interest recorded. Members of the audit firms were asked to leave the meeting prior to agenda item 13. 4. MINUTES The minutes of the meeting held on 10 March 2009 were confirmed and signed. 5. MATTERS ARISING The Clerk updated members on ...
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MINUTES OF A MEETING OF THE AUDIT COMMITTEE
HELD ON MONDAY 22 JUNE 2009 AT 8.00am
PRESENT:
Trevor Cooper – Chair
Nigel Hallam
Ralph Tonge
IN ATTENDANCE:
Julie Ashton – Deputy Principal
David White – Interim Vice Principal Corporate
Val Mattinson – Director of External and Corporate Affairs
Ian Falconer – Grant Thornton
Will Simpson – Grant Thornton
Andy Bush – KPMG
Mike Rowley - KMPG
Claire Kay - Clerk to the Corporation
The Chair welcomed Nigel Hallam to his first meeting.
1.
MEETING WITH AUDITORS WITHOUT MANAGEMENT PRESENT
The members used this time to consult with auditors on issues arising from the agenda.
There were no issues or concerns raised which auditors would not discuss with
management present.
It was agreed that these confidential sessions would be scheduled
for less time in future and consideration should be given as to whether they were on every
agenda.
Members of College management joined the meeting at 8.10 am.
Mike Motley joined the
meeting to discuss item 6.
2.
APOLOGIES FOR ABSENCE
Apologies for absence had been received from Tony Grady, Graham Charlton and Andrew
Hartley.
3.
DECLARATIONS OF PERSONAL INTEREST IN AGENDA ITEMS
There were no declarations of interest recorded.
Members of the audit firms were asked to
leave the meeting prior to agenda item 13.
4.
MINUTES
The minutes of the meeting held on 10 March 2009
were confirmed and signed.
5.
MATTERS ARISING
The Clerk updated members on the progress of the report due to be submitted by the
Student Union at this meeting.
The content of the report had not been appropriate for
consideration by the Audit Committee without initial discussions at Directorate.
The report
would be scheduled for the next meeting.
6.
LSC: T2G GUIDANCE ON INAPPROPRIATE PROVIDER BEHAVIOUR
MM outlined the background to the guidance issued by the LSC and the report considered
the practices of NCN compared to the guidance.
Members gained assurance from the
report that cash incentives were not provided to employers.
Any payments made to
employers were legitimately for the provision of services i.e. assessors, under a Service
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Level Agreement (SLA).
Members also gained assurance with respect to the eligibility of
learners by the independent audit function undertaken on all contract delivery.
IAS
supported this assurance through the IAS report on contract management to be considered
later on the agenda.
Members enquired as to the process for bring to the LSC’s attention any provider who was
engaging in inappropriate behaviour and were satisfied that opportunities were available
and had been taken, by colleges and the LSC to address such behaviour.
MM was asked if NCN had offered cash incentives in the past, MM assured the Committee
that he had found no evidence of this type of activity.
Members noted the report.
MM left the meeting.
7.
AUDIT AND RISK MANAGEMENT GROUP
The ARM Group had met twice since the last Audit Committee and the work of the Group
was reviewed.
Members noted the summary data of audit recommendations and reviewed
the 7 overdue recommendations.
VM updated members that she had further assurance
that one of these recommendations was now completed and an updated report would be
shared with members outside of the meeting.
The risk management processes had been reviewed by ARM Group and the outcomes of
the review were to be presented under item 8.
Members noted the report.
8.
RISK MANAGEMENT
Annual Review
The 2008/09 risks had been reviewed and all changes in year noted as having been
reported to the Audit Committee with the exception of the risk identified at the March
Corporation meeting around the development of the College Foundation.
Risks had been
monitored appropriately by the Corporation and its Committees and members supported
the continuation of the risk management strategy into 2009/10.
Risk Strategy and register for 2009/10
Following the Audit Committee’s comments in March, development work had been
undertaken on the scoring and presentation of the risk register.
Members reviewed the
changes and supported the inclusion of completion dates for actions needed to mitigate
risks and also a direction of travel of the risk score between reports.
It was considered
these additional developments would help crystalise the impact of mitigating actions.
Members welcomed the new features of the risk strategy, especially the numeric scoring of
the risk.
The Committee agreed to receive a summary report of the high level risks at each
meeting and for the report to include any changes to the overall risk register.
The full report
would be reviewed annually.
The Committee passed the following resolution:
The Committee recommend the Risk Management Strategy 2009/10 and the
Risk Register 2009/10 to the Corporation for approval.
9.
INTERNAL AUDIT REPORT
The Committee reviewed 7 internal audit reports from the audit work-plan.
Budgetary Control
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The review indicated there was good integration between the Finance Department and
budget holders.
The report included 2 low priority recommendations but concluded the
controls were suitably designed and operating with sufficient effectiveness to achieve the
objectives of the College.
Staff Utilisation
The review was considered appropriate given the background of potential merger and the
economic climate.
The review focused on the systems for monitoring the utilisation of staff
to ensure a consistent approach to the management of staff.
The report included 12
recommendations, 2 high level recommendations and 8 medium level recommendations.
It
was recommended that Schools monitor actual timetabled hours against delivered hours on
a weekly basis and a robust management information reporting system be developed.
Improvements in register inputting was recommended to ensure the integrity and accuracy
of staff utilisation reports.
Management recognised the work required in this area and welcomed the
recommendations resulting from the IAS review.
The systems development work was
substantial and would take time to implement and IAS supported the inclusion of realistic
timescales during 2009/10.
Members requested an action plan with agreed timescales be
reported to the next meeting and this action plan be monitored during the next 12 months
by the Audit Committee to ensure the issues raised are addressed.
Members recognised the proportion of staffing expenditure was above the sector average
and due to the significant proportion of overall expenditure, required monitoring
appropriately and consistently across the College.
IAS concluded the systems were not
suitably designed to achieve the objectives required by management.
Online Examinations
The audit was commissioned due to the increased proportion of exams being completed
online and to ensure hardware and software systems were robust enough to support this
move and that the system was secure.
The report included 2 medium priority
recommendations but concluded the controls were suitably designed and operating with
sufficient effectiveness to achieve the objectives of the College.
Contract Management
The audit work was around the contract arrangements for delivering Train 2 Gain (T2G)
provision, as this had been identified as a high risk area.
IAS gave assurance that the
independent quality assessors were working well to provide additional assurance to the
College and 3 recommendations were made, 1 medium, 2 low.
IAS reported the College’s
systems included several areas of good practice and concluded the controls were suitably
designed and operating with sufficient effectiveness to achieve the objectives of the
College.
Follow up
The annual review of the systems in place to track progress against recommendations in
year found a robust system of controls and concluded the controls were suitably designed
and operating with sufficient effectiveness to achieve the objectives of the College.
Anti Fraud
The annual review of fraud arrangements was undertaken and found the Policy sufficient,
comprehensive and up to date.
The review noted the fraudulent incident recorded in the
fraud register.
The report concluded the controls were suitably designed and operating with
sufficient effectiveness to achieve the objectives of the College.
Preparedness for Machinery of Government changes to funding
The work was identified as part of the risk based element of the IAS plan.
The Report
concluded that the College was well prepared for the MoG changes especially around
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funding due to the planning portal and sensitivity analysis undertaken on funding.
The
College has good relationships with the Councils and commissioning partnership and was
acting proactively. The report identified areas of good practice and concluded the controls
were suitably designed and operating with sufficient effectiveness to achieve the objectives
of the College.
All 7 IAS reports were noted by the Committee.
10.
INTERNAL AUDIT 2008/09 PROGRESS REPORT
The progress made against the audit plan for 2008/09 was presented by Grant Thornton.
There remained one report outstanding before the Annual IAS Report could be completed.
The audit opinion at 31 July would be clean with the exception of the opinion given as a
result of the work undertaken on staff utilisation.
IAS would recognise the work being
undertaken, and the additional action plan requested by the Committee under item 9 would
demonstrate positive actions going forward.
Geoff Hall joined the meeting for the remaining items.
11.
FINANCIAL STATEMENTS AUDIT STRATEGY AND PLANNING 2009/10
The Financial Statement Auditors (FSA) presented the plan for the year ended 31 July
2009.
Members’ attention was brought to the levels of materiality defined in the report and
the reliance placed by the FSA on the work of the IAS to reach their conclusions.
The
timescale for the audit had been agreed in order to meet the required reporting deadline of
31 December 2009.
Audit risks identified by the FSA included financial management, LSC income levels,
economic climate, expenditure related to capital, contract management, pension liabilities,
risk management and corporate governance arrangements tax compliance and audit of
subsidiaries.
Members welcomed the report and noted the outstanding confirmation from the LSC of the
form of the final funding statement to confirm income for the year and also the current issue
relating to the revised treatment of Land and Buildings inherited on incorporation.
The report was noted.
12.
PARTNERSHIP ARRANGMENTS
Members noted the report requested for their consideration by the Finance and Resources
Committee.
The additional audit work requested to demonstrate probity of the longstanding
contract with Nottingham Training Enterprises (NTE) was considered appropriate subject to
the financial cost of additional assurance not outweighing the financial gains of the contract
arrangements.
It was agreed that the additional work would be considered by the FSA and Director of
Funding and Finance and reported back to the committee.
Representatives of KPMG and Grant Thornton left the meeting.
13.
APPOINTMENT OF AUDIT SERVICES 2009/10 ONWARDS
The process adopted for the interview of short listed firms was reviewed and the criteria
used to score firms noted.
The process undertaken was considered robust and transparent
and the recommendation for appointment from the interview panel was Tenon as IAS and
KPMG as FSA.
The Audit Committee Chair informed members that the objective of the Committee had
been achieved, to identify the right firms for the right audit service.
The Chair requested an
update on the follow-up action from the panel in respect of meeting one of the key
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employees of Tenon who was not at the interview.
As the Director of Funding and Finance
was not at the meeting it was agreed this would be follow-up outside the meeting.
The Clerk request confirmation of the tenure of the contracts.
This was confirmed as 3
years extendable to 5 years.
The Committee passed the following resolution:
•
The Committee recommend the appointment of Tenon to provide the
College’s Internal Audit Service from 2009/10 for 3 years (extendable to
5 years).
•
The Committee recommend the appointment of KPMG to provide the
Financial Statements Audit from 2009/10 for 3 years (extendable to 5
years).
14.
CONFIDENTIALITY OF BUSINESS
The report relating to the appointment of audit firms would remain confidential as it
contained commercially sensitive information, however the minute would be open to public
scrutiny.
It was agreed that the report relating to partnership arrangements would be an
open document.
15.
DATE OF NEXT MEETING
The next scheduled meeting was 23 September 2009.
The Chair closed the meeting at 9.10am.
SIGNED: ___________________________________________________
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DATE:
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