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ConfirmedHIGHER EDUCATION CORPORATIONAUDIT COMMITTEEMinutes of the twenty-ninth meeting held on 12 March 2002 in the Boardroom,Queen Square House.MembersMr N Watt (Chair) Mr D HoulistonMrs L PhippsIn attendanceMs L Allen, Executive Support Officer Mr M Briggs, Contracts and Purchasing OfficerMr G Collins, Director of Finance Mr S Denton, University SecretaryMs R J Earl, UNIAC Dr G Hitchins, Deputy Vice-ChancellorMr M Hodge, PriceWaterhouseCoopers Mr G Long, UNIACProfessor L Wagner, Vice-Chancellor20 Apologies for absenceMrs V Sharma Mrs L Wharmby21 Declaration of interest21.1 Members’ attention was drawn to the requirement of Article 7.9 that ‘if aGovernor has a pecuniary, business, family or other personal interest in anymatter under discussion, that Governor shall declare such interest and shalltake no part in the consideration of the matter and shall not vote on it.’21.2 No declarations were made.22 MinutesRESOLVEDThat the minutes of the twenty-eighth meeting held on 20 November 2001 beconfirmed, subject to an amendment to the last sentence of minute 6.2 toread ‘PWC further confirmed that because the provision was within sensiblemateriality of being accurate, it was not appropriate to refer to it in theaccounts.’Aud29m.doc23 Matters arising23.1 External auditor’s management letter (minute 6.1 refers)23.1.1 The Committee noted that discussions continued between the University’sadvisors and HM Customs and Excise on the VAT position of ...
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Aud29m.doc
Confirmed
HIGHER EDUCATION CORPORATION
AUDIT COMMITTEE
Minutes of the twenty-ninth meeting held on 12 March 2002 in the Boardroom,
Queen Square House.
Members
Mr N Watt (Chair)
Mr D Houliston
Mrs L Phipps
In attendance
Ms L Allen,
Executive Support Officer
Mr M Briggs,
Contracts and Purchasing Officer
Mr G Collins,
Director of Finance
Mr S Denton,
University Secretary
Ms R J Earl,
UNIAC
Dr G Hitchins,
Deputy Vice-Chancellor
Mr M Hodge,
PriceWaterhouseCoopers
Mr G Long,
UNIAC
Professor L Wagner
, Vice-Chancellor
20
Apologies for absence
Mrs V Sharma
Mrs L Wharmby
21
Declaration of interest
21.1
Members’ attention was drawn to the requirement of Article 7.9 that ‘if a
Governor has a pecuniary, business, family or other personal interest in any
matter under discussion, that Governor shall declare such interest and shall
take no part in the consideration of the matter and shall not vote on it.’
21.2
No declarations were made.
22
Minutes
RESOLVED
That the minutes of the twenty-eighth meeting held on 20 November 2001 be
confirmed, subject to an amendment to the last sentence of minute 6.2 to
read ‘PWC further confirmed that because the provision was within sensible
materiality of being accurate, it was not appropriate to refer to it in the
accounts.’
Aud29m.doc
23
Matters arising
23.1
External auditor’s management letter
(minute 6.1 refers)
23.1.1 The Committee noted that discussions continued between the University’s
advisors and HM Customs and Excise on the VAT position of Leeds Power
and Construction Services Ltd.
23.2
Internal audit needs assessment update
(minute 11.3 refers)
23.2.1 The Committee noted that initial discussions had taken place between the
University Secretary and UNIAC to ensure that the risks identified in UNIAC’s
risk map fully correlated with the approach of the University to risk
management.
24
Risk management and update on key risks arising from the operational
plan 2001/02
24.1
The Committee received a report from the University Secretary (agenda item
5) on the progress to date in implementing the policy on management of risk.
24.2
The University Secretary reported that consideration was being given to the
incorporation of risk management into the 2000-2004 Corporate Plan. This
would be reflected in the report to the Board in March 2002; an update report
would be brought to the Committee before the revised Corporate Plan was
approved in July 2002.
24.3
The University Secretary reported that compliance with the HEFCE Accounts
Directive was one of the drivers behind the risk management strategy and
institutions had to demonstrate by 31 July 2002 that they had built risk into
their strategic planning process to enable them to demonstrate compliance
with the directive.
24.4
Further discussion with the external auditor was required to ensure that they
were satisfied with the arrangements in place by year-end to allow adequate
disclosure to be made in the annual report and financial statements.
24.5
The University Secretary further reported that he had met with Faculty
Management Teams; amongst the issues discussed was the institutional
approach to risk management. From these discussions, he was satisfied that
the majority of schools and faculties incorporated an effective approach to the
management of risk in their planning and decision making.
However, this
needed to be applied in a more systematic way, and consistently documented
for audit purposes. Accordingly, decisions were ongoing with UNIAC on how
they might be able to assist in the role out of development and awareness
raising in faculties and schools, without compromising their role in reviewing
and testing the institutional strategy.
24.6
The Committee noted the detailed analysis of the nine key risks arising from
the 2001/02 Operational Plan. Some of these risks had been recategorised
due to a movement from forecast to actual.
24.7
The Committee received and noted the report.
Aud29m.doc
25
LMU internal audit progress report, December 2001 – March 2002
25.1
The Committee received a progress report from UNIAC on the internal audit
reviews conducted, December 2001 – March 2002 (agenda item 6). These
were personnel planning – reward and recruitment, transparency review
2000/01, payroll, income accounting, Students’ Union, related companies and
SCT Banner update.
25.2
UNIAC reported that the payroll review was a follow-up to an audit carried out
several years ago. The review had noted that not all of the recommendations
made previously had been fully addressed.
UNIAC had observed that there
were a number of opportunities for the payroll process to be streamlined and
for new technology to be embraced. The Committee acknowledged the need
for action prior to the introduction of a new payroll system and noted
management plans for this. However, they were reassured that management
had recognised that this was not solely an IT systems issue, and had plans to
address this also.
25.3
UNIAC updated the Committee on the assistance they had provided to the
SCT Banner project. The Committee noted that the Academic Registrar and
colleagues in the Academic Registry had taken on management responsibility
for SCT Banner and were managing it effectively. UNIAC would continue to
be involved in the implementation of Banner and Agresso as part of the
programme
of
risk
management.
The
Committee
noted
that
the
implementation date for Banner had been revised to 1 August 2002. Agresso
would be implemented on the same date as planned.
25.4
UNIAC reported that work in progress included a project to maximise the
income generated from research grants and contracts; estates and facilities
management and continuing work on Agresso and Banner.
25.5
In conclusion, UNIAC reported that it was anticipated that the work in
progress and outstanding projects would be completed as scheduled by year-
end.
25.6
The Committee noted the report.
26
ESF activities – a new beginning
26.1
The Committee received a report from the Deputy Vice-Chancellor, Dr
Hitchins (agenda item 7) on the new management arrangements for
ESF/ERDF projects. The report also outlined steps taken to build confidence
with the Government Office (GOYH) and a new round of ESF contracts
awarded since January 2002.
26.2
Dr Hitchins reported that a meeting had taken place with GOYH
representatives on 30 November 2001. GOYH had expressed increased
confidence in the strengthened management arrangements for ESF/ERDF
projects at LMU, and GOYH had subsequently confirmed that it was willing to
consider further ESF/ERDF bids from the University. Four new ESF projects
were being co-ordinated through the Centre for Access and Lifelong Learning
(CALL) which would receive grant funding in the region of £1.5m in 2002 and
2003.
Aud29m.doc
26.3
UNIAC reported that a review of the ESF projects managed by CALL had
been completed. UNIAC felt that these projects were effectively managed,
despite a number of minor issues. However, UNIAC had carried out an initial
review of ESF projects managed by the Northern Film School, and had found
that the arrangements were not as robust. The potential liability on these
three projects was more than had been anticipated, but should be covered by
the provision in the 2000/01 accounts. UNIAC confirmed that it aimed to have
completed the fieldwork for this review by the end of the month and a meeting
scheduled with GOYH on 29 April 2002.
The Committee noted that no
adverse publicity had been generated by these projects.
26.4
The Committee noted the report.
27
Revised HEFCE Audit Code of Practice
27.1
The Committee received a report (agenda item 8) from the University
Secretary on the proposed revisions to the HEFCE Audit Code of Practice.
27.2
The University Secretary reported that a draft-revised version of the Code had
been published on the web only for consultation in December 2001. The final
published Code was expected at the end of March 2002. The revisions to the
Code reflected the new requirements on institutions arising from the HEFCE
Accounts Directive in respect of internal control and risk management.
A
more fundamental review would be undertaken in 2003/2004. Officers of the
University did not believe that the requirements of the Code would impose
any additional requirements on the University of which they were not already
aware.
27.3
The Committee noted the report.
28
Purchasing report for the year ended 31 July 2001
28.1
The Purchasing and Environment Officer presented the Purchasing Report for
the year ended 31 July 2001 (agenda item 9). He reported that last year had
been a typical year and that the University had continued to achieve high
quality and value for money in the procurement of goods and services. A
total of forty-four tender exercises had been carried out, significant savings
had been made and there were a number of examples of good practice to
note. These included environmental purchasing and the involvement of the
University in the expanding North Eastern Universities Purchasing Group.
28.2
The Purchasing and Environment Officer further reported that process costs,
as well as costs for bought-in services, had been considered last year. A new
procurement system run by HEFCE would be linked to Agresso and this was
to be introduced during the first year of operation of the new system.
28.3
The Contracts and Purchasing Officer informed the Committee that there
remained some work to be done in persuading certain individual MOC’s to
use best value goods and services.
The role of the division was to
disseminate good practice, but not to manage individual areas.
The
Committee further noted that the majority of MOC’s recognised the
professionalism of the Purchasing Division and were happy to work with it in
the interests of saving money and selecting best value.
Aud29m.doc
28.4
The Committee discussed the issues raised in the report relating to travel,
deliveries and purchase cards. The Purchasing and Environment Officer was
asked
to
consider
further
the
marketing
opportunities
arising
from
environmental initiatives.
28.5
The Committee received and noted the report, and congratulated the
purchasing team on their continuing good work.
29
Appointment of external auditor
The internal and external auditors left the meeting.
29.1
The Committee received a tabled report from the University Secretary
(agenda item 10) on the process for appointment of a new external auditor.
29.2
The University Secretary reported that PriceWaterhouseCoopers’ term of
office as external auditor was due to expire at the end of the current audit
year. The Board was therefore required to go through the process of inviting
tenders for a new external auditor, which would have to be undertaken in
accordance with the EC procurement directive. The Committee noted that
the new external auditor would be required to undertake the external audit for
the 2002/2003 year.
29.3
Members discussed the factors to be taken into account in carrying out the
appointment process, as well as the timescales involved. It was agreed to
commence the exercise in November 2002 and it was anticipated that the
timetable for the process from the commencement of the exercise to
appointment of external auditor would be three months.
29.4
The Committee agreed to establish a small panel to conduct the evaluation
process and to advise the Audit Committee and the Board. The panel would
comprise:
•
Chair of Audit Committee
•
One other Committee member
•
Director of Finance
•
Deputy Vice-Chancellor
•
University Secretary
RESOLVED
a) That the tender for the external audit should commence in November 2002;
b) That an evaluation panel be established to conduct the appointment exercise
and advise the Committee and Board accordingly.
30
Schedule of future business
30.1
The Committee received and noted a report (agenda item 11) setting out its
anticipated business for the remainder of the academic year. The Committee
noted that an outline business programme for 2002/2003 would be brought to
the final meeting of the year on 2 July 2002.
Aud29m.doc
31
Any other urgent business
31.1
The Director of Finance reported that a case of cheque fraud had been
identified during the reconciliation process.
31.2
The University bankers and the police had been contacted and in accordance
with the University’s fraud plan, a fraud management team had been set up.
UNIAC was working closely with the University and the bank to put measures
in place to avoid similar incidents in future. Their initial view was that the
University had not been negligent in any way.
31.3
A full report would be brought to the Committee in July.
32
Date of the next meeting
32.1
Tuesday 2 July 2002 at 4.00pm.
The meeting ended at 6.35pm.
Louise Allen
Secretary to the Committee
15 March 2002
