the
COURT
AUDIT COMMITTEE
MINUTES of the secondmeeting of the 2012/2013 academic year held on
Monday, 12th November, 2012, in Room 084, Queen Anne Court, Greenwich Campus,
Park Row, Greenwich SE10 9LS, commencing at 5.00 pm.
Present:
Mr S Davie (Chairman)
Mr S Howlett
Mr J Stoker
In attendance:
Mrs T A Brighton (Minutes Clerk)
Mrs L Cording (Secretary and Registrar)
Mr R Daly (Director of Finance)
Mr L Devlin (Head of Campus Services)
Professor M Snowden (Dean: School of Science)
Mr D Barnes (External Auditor)
Mr T Davies (External Auditor)
Ms A Mason-Bell(Internal Auditor)
Apologies:Ms S Patel
AUD 12/14PRIVATE MEETING
The meeting was preceded by a private meeting of the Committee Members.
AUD 12/15DECLARATION OF CONFLICTS OF INTEREST
There were no declarationsof conflict of interests.
AUD 12/16MINUTES OF PREVIOUS MEETING (AUD 12/P20)
The minutes of the meeting held on 22nd October 2012 were agreed and signed as a true record.
AUD 12/17MATTERS ARISING FROM THE MINUTES
17.1Finance Office Staffing
The Director of Finance reported that there had been no changes in Finance Office staffing since the last meeting.
AUD 12/18REPORT AND FINANCIAL STATEMENTS FOR YEAR ENDED 31 JULY 2012 (AUD 12/P21)
Introducing the 2011-2012 financial statements, the Director of Finance said that, since circulating the documents, the Finance Committee had requested some textual changes to them following its meeting on 5 November 2012.
He reported that the surplus for the year was £3.8m. As this had taken account of the £3.6m cost of the recent university wide voluntary severance scheme, the University had had an underlying surplus of £7.4m. This represented an improvement of £4.1m against the forecast outturn reported to the June Finance Committee meeting. He recalled that Committee Members had in the past been concerned about the disparity between forecast and final outturn and he gave an explanation of the causes of the individual variations. The Committee accepted that some of the variations were outside the control of the University but noted £900k of under-spending in Schools. He advised that Schools often forecast conservatively in order to prevent over-spending. The Committee acknowledged that this was a likely occurrence but registered concernabout the opportunity costs to the University. The Director of Finance assured the Committee that improved forecasting in the future would become a priority.
The Director of Finance drew the Committee’s attention to the continued health of the balance sheet including increased cash reserves. He also pointed out that net current assets - an important metric for the Bond –had fallen. This would need careful monitoring in the period to 2014/15 when the forecast was to be substantially lower as a consequence of capital spending on the Stockwell Street development.
The Committee scrutinised the financial statements in detail. There was some discussion on the Statement on Internal Control. The Committee discussed the means of providing assurance to Court. The absence of a formal statement from the Vice-Chancellor to the Court was noted. The Committee advised that, in future, for reasons of good practice, the Vice-Chancellor, in his capacity as designated Accounting Officer,should confirm each year to Court that the areas of responsibilities delegated to the executive had been appropriately discharged. For the purposes of this year’s financial statements, it was agreed that an additional sentence should be added to the statement on internal control. For next year and beyond, the Committee asked that the Vice-Chancellor issue a statement to Court setting out the nature of his assurances. This could take the form of a letter of representation along the lines of the one issued by the External Auditors.
The External Auditor presented the Key Issues Memorandum arising from the audit of the financial statements. He reported that the audit had proceeded smoothly and was substantially complete. He highlighted a number of matters which had been examined during the course of the audit including the following:
ithe University continued to have relatively high provisioning levels for student tuition debts. Based on extrapolations of the results of a review of the recoverability rate of debtors held at the end of July 2011, it had been established that the current level of provisioning was appropriate;
iitesting of the payroll procedures for starters and leavers had identified a number of missing National Insurance numbers. The majority of these related to EU nationals on short term contracts and overseas students working within the conditions of their student visas via the University Jobshop. National insurance had been properly accounted for in all cases;
iiia large credit balance relating to tuition fee deposits paid in advance by international students had accumulated. In accordance with institutional policy, deposits were only returned in the event that a student failed to have a visa granted. As the remainder of the balance was able to be released as income, a policy needed to be formulated regarding the release of older student deposits.
In relation to the draft report and financial statements for Greenwich University Enterprises Limited (GUEL), the Director of Finance reported that the company was expected to return 100% of its profits and gains to the University annually as a charitable donation. This was a requirement of the Memorandum of Understanding (MoU) between the University and GUEL and any other variation required the approval of the Court. In the case of the 2011-12 financial year, GUEL would be covenanting the entire surplus of £91,757 save for the taxable element. In order to comply with the MoU the Board of GUEL had recommended that the company make a charitable donation of £88,223 to the University.
The MoU was currently being reviewed and the wording of this clause would be amended tovary the amount of net profits returned to the University subject to ensuring that the company remained in good financial health.
The External Auditor drew the Committee’s attention to a new paragraph within the Directors’ Letter of Representation covering the use of HEFCE income and grants. The Chairman asked that the paragraph include a reference to materiality in the final sentence.
Subject to modifications requested in discussion, the Committee agreed to recommend to Court for approval:
ithe report by the Director of Finance on the 2011-12 financial statements
iithe draft Report and Financial Statements for the year ended 31 July 2012
afor the University of Greenwich
bfor Greenwich University Enterprises Limited
cfor Greenwich Property Limited
iiithe draft External Auditor’s Key Issues Memorandum and response from the Director of Finance
ivthe draft Directors’ Letter of Representation to the External Auditors for signature by the Vice-Chancellor and Chair of Court.
AUD 12/19 2011/2012 AUDIT COMMITTEE ANNUAL REPORT (AUD 12/P22)
Subject to the amendments agreed, the Committee agreed to recommend to Court that the revised draft annual report for 2011-2012 be approved for submission to HEFCE.
AUD 12/20INTERNAL AUDIT
20.1Internal Audit Progress Report
The Internal Auditor reported that, save for two areas of review, dates for the entire programme of audits for 2012-13 had now been agreed.
20.2Internal Audit Annual Report 2011-2012 (AUD 12/P23)
The Committee noted that the draft internal audit annual report for 2011-2012 had been amended as requested at the last meeting and agreed that it be recommended to Court for approval.
AUD 12/21MATTERS FOR REPORT (AUD 12/P24)
21.1External Audit – Approval of Non-Audit Services
The Committee received a schedule of non-audit work carried out by Grant Thornton during the current session to date.
The meeting ended at 7.20 pm.
T.A.Brighton
17.11.12
U/VCO/LC/AuditCtte/Minutes/Audit/12 November 2012
AUD 12 M-212 November2012 page 1