Peterborough Regional College

PETERBOROUGH REGIONAL COLLEGE

Audit Committee

Unadopted Minutes of a meeting of the Audit Committee held on Thursday, 26thSeptember 2013 at Peterborough Regional College, Park Crescent, Peterborough at 4.30pm.

Present:Robert Phipps(Chairman)

Julie Dair

Mark Jackson(external member)

In Attendance:

Peter Walker(Vice Principal –Corporate Services)

Kevin Limn(Parkhill (IAS[1]))

Steve Chalfont(RSM Tenon (FSA))

Barbara Grange(Procurement Manager for item 8)

Ana Lewis (Chaplin Frobisher Welling – Clerk)

1.Apologies and Membership

Apologies were received from Nigel Barber, Angela Joyce (Principal and Chief Executive)who were attending the UCP Graduation ceremony.

The Chairman reported that interviews had taken place and the Governance & Search panel was to recommend to the Board the appointment of LK as external member of the Audit committee and WR as full governor and member of the Audit Committee.

It was agreed that item 8 be taken next – minuted in agenda order.

2.Declarations of Interest

Peter Walker as Director of UCP and APT. There were none of a financial nature.

3.Other Urgent Business

There were no items of other urgent business

4.Minutes of the Previous Meeting

The minutes of the meeting held on 27th June 2013were agreed as a correct record and signed by the Chairman.

5.Matters Arising from the Previous Minutes

Minute 9.1–Laptops

Peter Walker confirmed that a reconciliation of all issued laptops had been undertaken and all were accounted for.

Minute 8 – governor access

Mark Jackson confirmed that he now had access to the 4Risk system.

6.Financial Statements Audit Plan

6.1Steve Chalfontintroduced himself as Audit Director and outlined the recent changes within RSM Tenon. The firm had merged with Baker Tilly and the ‘Administration’ had been the mechanism to facilitate the transaction. The Audit team would remain and the transfer would be seamless with no changes for the College either practically or with the existing contract. The newly formed organisation would benefit from increased depth and breadth, with a substantial FE sector client list and a good reputation.

6.2Steve Chalfont presented the Audit Strategy for the year ended 31 July 2013. The report confirmed the independence of the auditors and outlined the scope of the audit. The Plan had been prepared with the assistance of the Vice Principal Corporate Services. The committee noted the coverage, the materiality level and the proposed fees which included the fees for the preparation of accounts for APT Ltd. The Plan was considered page by page noting the audit risks relevant to the financial statements assertions. The team would comprise Steve Chalfont (Audit Partner), Claire Lovell (Audit Manager) and Piers Denison (Audit Senior).

6.3Members discussed the plan and the inclusion of APT which would have a separate materiality level. A member raised the issue of charitable status,

Steve Chalfont agreed to consider this technical point - whether as an individual company, APT (and all subsidiary companies) would need to be subject to separate audit in the event that the whole group was above the limits for accounting to the Charity Act. Some guidance from the SFA may be available.

Members noted that the acquisition of APT was noted as a risk. The committee discussed the Internal Audit programme and the need for assurance levels addressing the Risk register needs, as well as advisory reports. Peter Walker confirmed that the college retained a leading professional VAT consultant to address any VAT risks.

The Committee resolved to recommend to the Corporation Board the appointment of Baker Tilly (RSM Tenon)to undertake that Regularity Audit and Report and Financial Statements for Peterborough Regional College for the year ended 31 July 2013 and the Financial Statements for APT Limited.

7.Risk Management Presentation

7.1The committee had agreed to institute a rolling review of all primary risks and Peter Walker presentedthe Finance section of the 4Risk system.It was reported that Baker Tilly now managed the 4Risk system (having taken over Bentley Jennison who had devised the system).

7.2The Primary risk was that of costs exceeding budget and the consequences of a possible deficit arising. The three main controls were the authorisation process, the monitoring of results and regular meetings with the budget holders. The authorisation levels, and value for money process, were outlined, and members advised of the work of the Strategic Staff Planning Group.

7.3Members queried some of the dates on the records, asked for information on the budget setting process and were assured that the aspect was included in the audit of Key Financial Controls.

The committee thanked Peter Walker for the presentation.

8.Value for Money Annual Report

8.1Barbara Grange, the Procurement Manager, presented this report which had been informed by the Efficiency Measurement Model, a software reporting tool, which had been commissioned by the LSC and contained definition of what constitutes a ‘saving’. An example given was the acquisition of ‘Career Coach’, and excellent resource which had initially been discounted but had been subjected to further negotiation by the Procurement Manager following detailed examination of the specification and actual requirements of the college. Year to date savings amounting to £464k, of which £456k was cashable (prior year £298,630), had been made against a target of £300,000 cashable savings. These savings have been made partly tendering out opportunities in relation to the ERG projects and by renegotiating current agreements or contracts. Examples were provided to governors. Some savings were ‘one off’ (eg: the Adobe Campus agreement licences).The Procurement Manager outlined the wider aims of the procurement practices to increase the benefit to the learner experience, promote the college strategy with focus on apprenticeships and improve sustainability.

8.2The Procurement Manager outlined her collaboration and networking activity in the Eastern region where she continues to chair the Procurement Networking Group, is part of the Purchasing Advisory Group to the Crescent Purchasing Consortium and supports the University Centre Peterborough.

The Committee Received the Report and commended the Procurement Manager for her report and excellent work in the achievement of these savings.

Barbara Grange left the meeting 4.47pm

9.College Progress report on Audit Recommendations

Peter Walker reported that all matters had been implemented. The use which had arisen within the audit of Student Systems would be the subject of a ‘Follow Up’ within the Internal Audit plan. A new policy had been introduced for register marking.

The Committee noted the report.

10.Internal Audit Annual Report

10.1Kevin Limm outlined the changes occurring with Parkhill and the proposed merger with TIAA (The Internal Audit Association) which would result in a larger provider with access to greater opportunities (eg: benchmarking). There would be no changes with the service to the College and the terms of appointment would not change.

Kevin Limm agreed to circulate the letter announcing the changes to all members of the committee

10.2Kevin Limm presented the Internal Audit Annual report prepared on behalf of Parkhill IAS on the audit work for the period from 1st August 2012 to 31st July 2013, which had been carried out in accordance with the internal audit plan approved by the Audit Committee. The areas reviewed were Campus Management; Corporate Governance, Income diversification (Capital Plan), Franchise, Recruitment and Retention, Key Financial Controls, Risk Management, Payroll, Student Systems and Marketing.

10.3 In the opinion of the auditors, based on the reviews carried out, the College has adequate and effective risk management governance and control processes

The Annual Report of the Internal Auditors would inform the Committee’s Annual report to the Corporation Board.

The Report was received and recommended to the Corporation for approval.

11.Internal Audit Block 1- 2013/14 - Audit Planning Briefs

11.1A regular agenda item is advance scrutiny of the audit planning briefs to ensure that the planned audits were of appropriate depth and scope to ensure meaningful reports. The Committee reviewed the Audit Planning briefs for Block 1 audit reports which are to cover the areas of Data Protection and a departmental review of APT management.

11.2Members discussed the protection of data within the college, noting that data transmitted externally was sent (under the regulations) to the funding agencies and the Local Authority as required. The committee asked that external data transmission and, in view of the rigorous Payment Card Data Security Standards, payment card data, be included within the scope of the audit. It was also suggested that the audit take account of the amount of student data, how it was used and if it was required and assurances were received that a gap analysis would emerge from the review and subject to compliance check in the follow-up next year. The storage requirements for payment card details will be covered in this audit in addition to coverage within the audit of Key Financial Controls. Penetration testing is a separate exercise and would form part of the IT checks. All laptops were encrypted as are the memory sticks available for use.

11.3The review of governance and management arrangements in relation to APT would be part of the review and

Transaction testing will be added into the brief.

The Chairman requested the inclusion of checks on compliance with policies, the existence of a comprehensive set of policies and cultural aspects of the organisation. As thisprovision is not on site, the Chairman queried the nature and frequency of visits to APT, and the college confirmed that some visits were undertaken. Members raised the potential risk to reputation and sought assurance that this is managed.

12.Risk Management Policy – review

The Policy had last been subject to full review in 2011. Members were taken through the proposed changes (all highlighted) which made reference to the subsidiary companies and sub contractors, governance changes (to highlight governor presentations and challenge) and the changes in composition and personnel within the Risk Management Group. It was noted that an equal opportunities impact assessment had been completed for the policy.

The Committee approved the Risk Management Policy for adoption by the Corporation Board.

13.Risk Management Update

The Committee was provided with a copy of the complete Primary RisksRegister and a report which indicated that a further risk had been added – risk 197 – college building works impact on business performance ( in the light of the commencement of works on the ERG3 capital project). The Primary Risk Register now comprised 11 risks.

Members discussed the current access position where student enrolment had not yet completed and the issue of badges.

Peter Walker will consider options to mitigate and the Internal Audit Service will enquire of other colleges as to systems in place.

A member raised the increasingly prevalent issue of cyber bullying and was assured that there were substantial coverage within the Safeguarding risks within the register.

The Clerk agreed to pursue the provision of a personal badge to the external member of the committee.

The Report was received.

14.Risk Management Annual Report

14.1Peter Walker presented this report. The College has a Risk Management Policy which was approved by the Audit Committee in March 2011 for review in September 2013. The Risk Management Group meets each term. On 31 July 2013 there were 10 primary risks in the Risk Register, which is maintained on 4Risk software.

14.2 There were no material losses arising from risks that crystallised during the year.

14.3 The College complies with the guidance issued by the SFA relating to risk management, the recommendations of the Turnbull Committee and the current accounting standards for corporate governance.

The report was received and recommended to the Corporation Board.

15.Confidential Minutes – annual review

The Clerk had considered confidential minutes of meetings of the Corporation and committees and recommended thatthose minutes remain confidential and not published on the website for reasons of commercial sensitivity. It was confirmed that minutes of meetings of the Remuneration Panel remain indefinitely confidential.

The Committee accepted the report

16.Committee Terms of Reference – annual review

The Committee reviewed the Terms of Reference and agreed the two proposed changes to include the self assessment of the committee and the annual review of confidential minutes.

The Committee AGREED the amended Terms of Reference of the Committee and recommended the adoption by the Corporation Board.

17.Fraud

The College reported that they were not aware of any instances of fraud and the Committee confirmed that they were not aware of any instances of fraud arising in the College.

The Committee noted the report

18.Date of Next Meeting

The next meeting would take place on Wednesday 20thNovember 2013at 4.30pm

The meeting closed at 6.15pm.

Signed…………………………………………..Dated ………………

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PRC Audit Cmte 26.09.13

[1] Internal Audit Service