Becta | Minutes of the March 2009 Audit Committee Meeting

Draft Minutes of the Becta Board Audit Committee

Held at RSA, London, WC2N 6EZ. 18March 2009

Attendees:

Board: John Roberts (Chair), Graham Moore, Rose Luckin, Steve Gill.

Becta: Stephen Crowne, Alan Cowie, Richard Pearse, Peter Avis, Mark Crook, Leigh Fish, Nick Shacklock, Niel Mclean

Auditors: Sid Sidhu (NAO), Brian Ingleby(NAO)

Item 1. Apologies

  1. Apologies were received from Peter Wood (Bentley Jennison).

Item 2. Declarations of Interest

  1. There were no declarations of interest expressed by members.

Items 3, 4 & 5. Minutes of the Last Meeting, Actions and Matters Arising

  1. An amendment was made to paragraph 9 of the minutes that the revised approval process for travelling expenses was discussed and agreed.
  2. The text of Action 94 on the action log was amended to focus on organisational development and capability, reward policy and recruitment.
  3. Richard Pearse was asked to remind Peter Wood about actions 89 and 92.
  4. Richard Pearse and Sid Sidhu advised against action 91 that separate management accounts will be presented to the board and to the audit committee independently of the project highlight reports. Reporting of finance is to the board as an entity and the Audit Committee will pick up as required.
  5. A workshop to progress action 99 will be scheduled for September or January. Sid Sidhu and Peter Avis to agree and set up.

Item 10. Home Access

  1. Niel McLean introduced the paper. John Roberts asked howreliant Home Access was on othersto mitigateits risks and Graham Moore asked about risk owners. Are any of these risks with the Department?
  2. Niel Mclean respondedby saying that he risks are within Becta’s control and that this is a project that is bound by targets, timescales and an associated budget.
  3. Steve Gill asked about the quality of bidders against the tenders let and Niel Mclean said that they had received some good returns.
  4. John Roberts asked about the risk of one of the accredited suppliers failing. Niel Mclean said that he is aiming for a mix of local SMEs and larger national companies for full roll out. Given that home access is currently looking at about 200 suppliers, this is not currently a significant risk to the overall programme.
  5. John Roberts asked about information and data protection. Niel Mclean responded that data protection is considered in the fraud risk register being used to manage risk in home access. Proposed mitigation is to ensure that the managed service provideris fit for purpose. The fact that Becta will be seen to be in control of personal data is to be added to key programme risks for home access. Steve Gill said this needs to be a consideration in the procurement process.
  6. Rose Luckin asked about a timeline for home access risks giving the likelihood of when the risks are most likely to happen. Niel Mclean agreed to provide this.
  7. John Roberts said that it is important to look at the risks that are most immediate and review information on how we are handling these. The audit committee and home access team agreed.
  8. Graham Moore asked about ongoing audit as part of the programme.Nick Shacklock said that both Bentley Jennison and NAO were involved in auditing home access. Specific attention is being given to: mystery shoppers, a line by line fraud analysis on a sample of transactions and working with Barclaycard on fraud detection. Graham Moore asked about whether this level of detail is scalable to the full programme. Nick Shacklock confirmed that it was.
  9. John Roberts asked that the home access programme risks are considered with the Board risks. This was agreed.
  10. Sid Sidhu said that the Department also share some of these risks. It is worth thinking about how risk escalation will work and that supplier failure should be carefully considered with the mitigation already discussed. John Roberts asked for this to be added to the risk log.
  11. John Roberts said that if the audit committee sees something that ought to be reflected in the Department’s risks this should be escalated.
  12. Stephen Crowne suggested that the home access programme risks be made a formal part of his quarterly meeting with Jim Knight. This was agreed.
  13. Rose Luckin asked about other models that use free school meals to assess eligibility, and whether we are learning from them? Niel Mclean said that other metrics for eligibility are available but none have offered the simplicity of this measure.
  14. John Roberts asked about supplier and retailer associated risks. Niel Mclean agreed to look atrisks in these two areas.
  15. Rose Luckin asked whether identity was checked at point of purchase. Niel Mclean said that this had been considered but perceived impact on take up means that this has not been implemented.
  16. Sid Sidhu said that it is important to separate out error reporting and fraud reporting.Having this data at the pilot stage is very important to identify how to proceed with this project.
  17. John Roberts said that it is important to work with the internal and external auditors at every step so that there are no unplanned surprises. Niel Mclean said that a conversation is starting around fraud tolerance and that this will be continued. Stephen Crowne added that Becta should be in a position to understand the trigger level that would affect Becta’s accounts to make them qualified.
  18. The Chairman thanked Niel Mclean for the paper. He asked Niel to consider the best way to undertake a regular report to the audit committee and confirmed that he was pleased NAO were providing advice on the risk to Becta of our accounts being qualified.

Action: Niel Mclean to update the Home Access risk log in the light of discussion and to regularly report to the Audit Committee.

Item 6. Risk

  1. Peter Avis introduced the paper. John Roberts asked the Committeewhether additional risks should be added and also discussed risk appetite. He suggested that Bectadevelop the risk register to calculate a relative score for each risk.
  2. John Roberts said that getting the risk register right, and identifying those risks that are most proximal is key, he asked that the executive focus on high level risks only. Considering the mitigations and the impacts is also important given that non-delivery of some projects is conceivable, but not for all projects, or programmes like Home Access.
  3. John Robertsasked for a similar approach to be taken across both home access and board risk registers. He asked that the board reviews these risks and Becta considers how best to share themwith the department.
  4. John Roberts said that a safeguarding issue within the education system would have significant impact.Stephen Crowne confirmed that if there is an incident and it dents confidence then Becta may be unable to fulfil our objectives.
  5. The Chairman requested that the executive revise the risks inn the light of the discussion. He confirmed that the audit committee is not looking for a risk appetite for the whole organisation, but specific analysis against risks.

Action: The risk register to be revised to calculate a relative score for each risk.

Item 7. Internal Audit.

  1. It was confirmed that Becta are looking at a matter of internal control in the marketing and communications directorate.

Item 8. Year to Date financial position

  1. Richard Pearse introduced this item. He said that there had beensignificant spend in the last quarter. The Becta projected outturn was £58-60m.
  2. He said that he was disappointed that we had started the year without the detailed budget envisaged. He said thatBecta’s increased remit and the home access programme has changed both the scale and skills requirement for the organisation.
  3. Richard said thatBecta has been refused credit, mostly from hotel chains based on our balance sheet. Herecommended a greater level of solvency in the balance sheet with fixed assets used to create value. John Roberts said that we have worked previously to keep the balance sheet low, in line with charity commission expectations. Sid Sidhu said that he had not come across this issue elsewhere and asked for more detail of where the difficulties lie.
  4. Graham Moore said that we have approved the business plan, but not the budget and asked what theprocess for agreeing this was. John Roberts said that the budget can be signed off as a note sent around before the next meeting. The board will need to sign off a balanced budget. . Sid Sidhu confirmed that it is not defensible to have an unbalanced budget.
  5. Graham Moore asked that the overall income for Becta be included in the budget. Richard Pearse confirmed that this would be included.
  6. The Chairmansummarisedby welcoming the progress to date but said that greater detail would be required by the Boardand Audit Committee for financial reporting in the year 2009/10.

Actions:

  • Richard Pearse to discuss with Sid Sidhu the difficulties in getting credit from suppliers.
  • The Becta budget is to be signed off by email prior to the next audit committee.

Item 9. NAO audit strategy

  1. Brian Ingleby outlined the audit strategy and confirmed that the ISO260 report described in paragraph 10 would to be available for the June audit committee. He reviewed each of the risks and shared the proposed approach with the audit committee.
  2. In discussing the annual accounts John Roberts asked whether the audit committee would have an opportunity to review the accounts. Richard Pearse said that draft accounts would be circulated prior to the June audit committee meeting.
  3. The Chairman summarised by saying the Audit Committee welcomed the NAO approach and supported its strategy.

Item 11. Audit Committee calendar

  1. This was welcomed and agreed as a standing item that would be developed throughout the year.

Action: The Audit Committee calendar to be a standing item for the audit committee agenda

Item 12. Any Other Business

  1. Richard Pearse confirmed that Mark Crook would be leaving Becta and the audit committee thanked him for all of his hard work.
  2. Sid Sidhu will be sending out invitations to non-executives to a series of networking events.
  3. The next meeting is on 24June at RSA, London. WC2N 6EZ.

…………………………………………………………Signed as a true record

Chairman

………………………………………………………….Date

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