Audit Committee held on Tuesday 19th April 2016 from 5.00pm.
Confirmed Minutes
Present:Mr A Nelson, Ms H Haigh, Ms L Swinden, Mr K Webb, Mr N Uppal
In attendance:Mr A Shaw, Mr D Scott (Wylie & Bisset), Mr A McCulloch (Tiaa) and Mr G
Mellor (for agenda item 3 only)
Clerk: Mrs C Coupland
- Apologies for Absence/ Declaration of Interest
Apologies had been received from Mr G Craik (Co-opted Member). There were no declarations of interest.
Mr Nelson welcomed Mr Webb (External Governor), aswell as Mr Scott and Mr McCulloch (Audit representatives) to their first audit meeting. Time was taken for introductions to be made.
- Minutes from Meeting held on1st December 2015
Resolved:
- That these be accepted as a correct record.
- Matters arising
1)Whistle-blowing policy:
The Clerk confirmed that the approved whistle blowing policy was now accessible to all stakeholders via the Colleges website and Virtual Learning Environment – Moodle.
2)Regularity Audit – Self Assessment Annual review.
The Clerk confirmed that the register of personal interests (in advance of returns for 2015/16) now includes the newly appointed Estates Manager _ Mr Mark Hirst.
3)Financial Statement and Members Report 31st July 2015:
The Committee recalled that at its last meeting in December 2015 the Financial Statements were considered in detail. As a result of work undertaken, unqualified audit opinions were also received from Wylie & Bisset showing that:
In relation to the financial statements, they
-gave a true and fair view of the state of the College’s affairs as at 31 July 2015 and of the College’s results for the year then ended and
-had been properly prepared in accordance with United Kingdom GenerallyAccepted Accounting Practice.
And that
-proper accounting records had been kept and
-the financial statements were in agreement with the accounting records.
In relation to Regularity, Wylie & Bisset’s reasonable assurance engagement with the College was undertaken in accordance with the Joint Audit Code of practice, the Regularity Framework and the engagement letter. It was the opinion of the Auditors that the College’s Statement of Regularity, Propriety and Compliance was fairly stated in respect of whether the transactions underlying the College’s financial statements were in all material respects regular for the year ended 31 July 2015.
At this meeting it was also noted that the financial health category of the College had been maintained at ‘Outstanding’, and that this grading was confirmed by the EFA in November 2015.
Based on the committee’s recommendations of the Annual Report and the Financial Statements, the Corporation, at its full meeting (also held in December 2015), resolved that:
-The College has an adequate and effective framework for governance, risk management and control and has fulfilled its statutory responsibility for ‘the effective and efficient use of resources, the solvency of the institution and the body and the safeguarding of their assets’.
-The Corporation is able to identify any material irregular or improper use of its funds by the college, or non-compliance with the Education Funding Agency’s terms and conditions of funding under the college’s funding agreement.
-The College has adequate resources to continue in operational existence for the foreseeable future.
-Mr Shaw was to forward on the approved Financial Statements and Members’ Report to the EFA.
Mr Nelson drew members’ attention to the letter sent by the Education Funding Agency (EFA) to the college on 8th March 2016. The letter confirmed that HNC had provided the EFA, prior to the deadline of 31 December 2016, with copies of the audited financial statements, finance record, management letter and annual report of the audit Committee for 2014/15.
It was also noted that within the letter, the EFA had confirmed that no issues were identified with the Audit Management Letter or the Audit Committee’s report and that their assessment of the colleges’ financial health grade is also outstanding. However upon reviewing the financial statements – comments were raised and responses from management were sought:
i)The Statement of Regularity, Propriety and Compliance is not signed by the Chair of your Governing Body and Accounting Officer, which is contract to the requirements of the Accounts Direction Handbook 2014-15.
The Committee acknowledged that the College had promptly provided the EFA with a signed copy. Mr Shaw had explained to the DFE that the new format was taken from a draft version of the Casterbridge accounts which did not include signatures. The response was accepted by the EFA and by the Committee.
ii)The regularity audit report does not follow the model wording, as set out in JACoP (August 2015), particularly in relation to the opinion. Would you please explain why your external auditors have not used the model regularity report and ensure that the correct wording is used in financial statements.
The Committee was informed that a revised regularity audit report was immediately provided by the External Auditors and duly forwarded onto the EFA by the College. The External Auditors apologies for the administration error and that a stronger review process has now been put in place. Again this response was accepted by the EFA and by the Committee.
Resolved:
- That the Letter from the Education Funding Agency dated 08.03.16 be received
- That the Committee is satisfied with the Managements response.
4)BAF Assurance Review : Adverse publicity e.g. press reports, inspection reports. Including negative comments on social media forums (risk 4)
Mr Nelson reminded members that this particular item had been deferred from the last meeting to enable Mr Mellor to present his report. Mr Mellor (Associate Assistant Principal) was welcomed to the meeting.
Mr Nelson advised the Committee that this risk was last reviewed in December 2014. Members therefore welcomed the opportunity to hear the thorough explanation of the actions being taken to continue to mitigate the risk. The Committee was confident in the different levels of assurances identified within the BAF for the risk as presented by Mr Mellor. Members therefore agreed that an overall green assurance level shall be re-assigned to this particular risk.
The Committee acknowledged that the College has a strong marketing strategy in place, for staff to promptly respond, once the Ofsted Inspection report is published. At present the risk is only concerned with managing and mitigating against adverse publicity. It was noted that it may be beneficial for the Risk Management Group to revisit the risk title in order for it to recognise the possible impact for the college should it fail to capitalise on positive publicity.
Resolved:
•To assign Green overall assurance to the risk
•For the Clerk to update the Master BAF
Mr Mellor left the meeting at this point.
5)Internal Audit Reports:
Mr McCulloch presented the final internal audit reports which had been undertaken as part of the approved internal audit periodic plan for 2015/16.
-Assurance review of Management Information Systems and Funding
The assurance review focussed on Learner Eligibility specifically testing the accuracy of prime documentation in this area.
The Committee was pleased to note that there were no recommendations raised from the audit and that the Board can take substantial assurance that the controls upon which the organisation relies to manage this area are suitably designed, consistently applied and effective.
-Appraisal Review of Student Experience
This advisory review examined a number of elements of what makes up the student experience or ‘college; life’ for example; pastoral care, enrichment activities, work experience ad employability.
Members acknowledged that many areas of good practice had been noted within the findings report one routine priority recommendation had been made in respect of the college creating a Student Experience Mission Statement. Members were satisfied by the management’s response in that the Assistant Principal, Student Support and Guidance has produced a Student Experience Mission Statement that has clear links with the College strategic Plan and overall college Mission Statement. This will be shared with all staff and published on the College Website by the end of the academic year.
The Committee was also pleased to note that the Board can take substantial assurance that the internal
control arrangements, the expected practices and processes are in place and are suitably designed,
consistently applied and effective.
The Members asked to be reminded of the differences in scopes for actual audits as it was noted from the documentation thatinternal audit opinions are based on four strategic assurance risks – directed, compliance, appraisal and reputational. Mr McCulloch agreed to provide definitions of the distinct stages.
Furthermore, the Committee agreed it useful for future reports to include relevant benchmarking data in order to flag up, where possible, best practice at other establishments. Audit opinions on the operational effectiveness of HNC in comparison to other institutions would also be helpful for the Committee to satisfy its delegated responsibilities. Mr McCulloch agreed to revise the format of future reports to include such information where it is available.
Resolved:
- That the reports be received
- For Mr McCulloch to provide the Clerk with definitions of the distinct differences in audit scopes.
6)Recommendation tracking
Mr Nelson asked the Committee to note that this was a standing agenda item.
Mr Shaw subsequently confirmed that all recommendations on the tracker have been completed but will remain on the tracker until the follow up audit confirms this to be the case. The follow up audit will not be undertaken until May/June 2016.
Mr Shaw confirmed that the Tracker will be updated to include the one recommendation accepted for the Appraisal Review of Student Experience
Resolved:
- That the report be received.
7)External Audit Planning memorandum
Mr Scott presented his report to the Committee.
The purpose of the report was to describe the scope of the Audits of the financial statements and regularity, the proposed audit approaches and to highlight the key risks that Wylie & Bissett will be focussing the external audit work upon.
The Committee considered and agreed to the timetable and communication plan proposed to ensure timely audit findings report.
Resolved:
- To receive the External Audit Strategy and Planning Memorandum
- For the Clerk to confirm dates of meeting for 2016/17.
8)Disaster Recovery and Critical Incident Plan
Mr Shaw advised the Committee that the Disaster Recovery Plan was last reviewed in March 2015. Under the Scheme of Delegation – the Senior Leadership Team are responsible for approving changes to the plan. The Audit Committee is to receive and make comment upon any approved changes.
Mr Shaw confirmed that the College’s Disaster Recovery Plan is normally subject to bi-annual reviews,however an earlier review has been necessary to incorporate reference to critical incidents and to reflect the Prevent Duty.
The Committee was satisfied that the revised Plan has been developed with best practice in terms of the safety and wellbeing of staff and students and business continuity, and with reference to the Counter-Terrorism and Security Act 2015, which places a duty on the College to have due regard to the need to prevent participants in the life of the collegefrom being drawn into terrorism.
It was acknowledged that the specific aims of this plan are to:
- Create awareness of the need for planned arrangements.
- Provide a management framework for responding to a major incident.
- Establish a Recovery Management Team (RMT) that manages strategies and allocates resources to ensure a major incident has minimal impact on the operation of the College.
- To coordinate the full reinstatement of College services as soon as possible.
- Provide reassurance of the practical help available at short notice.
- Pass on advice based upon previous experiences.
- Give guidance on sources of information and help.
The committee sought assurance on how the Senior Leadership Team is to satisfy itself that i) the plan has been circulated to all staff and ii) all staff understand what to do in case of an event. Members were also mindful that as the plan now contains personal contact details for the Continuity Planning and Recovery Management Team, the Senior Leadership Team must satisfy themselves also that robust arrangements are in place for ensuring that these contact details remain correct at all times. All agreed it necessary however for a formal review of the contact list to be undertaken annually, rather than bi-annually as currently cited (section 6.2).
Members recognised that publicity is likely to be instantaneous and potentially misleading. It was noted that the plan clearly reminds staff that no-one expect the Principal or delegated alternate and Chair/Vice Chair of the Corporation are authorised to speak to the media concerning any emergency incident affecting the College. Members were of the opinion however that this reminder should also extend to all Students and Governors, rather than limiting it to staff (section 11).
Members also agreed it useful for the Disaster Recovery and Critical Incident Plan to cite a further ‘alternative control centre’ in addition to that of Greenhead College. This would be pertinent only where the threat and/or actual disaster or critical incident impacts all educational institutes within the area at the same time e.g. possible bomb threat (section A bullet point 6).
The Committee was also of the opinion that it would be helpful for an appendix to be attached to the Plan to log a summary of disasters and/or critical incidents that have enabled the college to test elements of the plan.
Mr Shaw agreed to feedback these suggestions to the Senior Leadership Team. An update shall be provided to the Committee at its next meeting.
Resolved:
- That the Disaster Recovery and Critical IncidentPlan be received
- For Mr Shaw to feedback the Committees’ comments and suggestions to the Senior Leadership Team.
9)BAF assurance review:Failure to uphold College Mission to provide the best inclusive education to enable students to achieve their best (Risk 6)
Mr Nelson explained that the Committee had been tasked by the Corporation (in February 2016) to review and reframe the title to better reflect the risk of the pressures associated with certain types of learner needs and with the growing numbers of students with identified learning support needs.
Members were of the opinion that the risk would be captured sufficiently if the title should be changed to ‘Inability to manage resources effectively to ensure that HNC remains to be a genuinely inclusive college’. It was also agreed that the individual growing pressures on resources e.g. lack of physical space, funding differentials, impact on staffing time and expertise need to be clearly cited within the BAF under ‘effects’ rather than generically referred to as ‘resource deficits’.
Mr Shaw agreed to provide feedback to the Risk Management Sub-Group; the Committee asked that the risk scores be reviewed after all effects had been considered and incorporated into the BAF.
Resolved:
- That the risk title to be changed to ‘Inability to manage resources effectively to ensure that HNC
remains to be a genuinely inclusive college’.
- For the Clerk to update the Master BAF
- For Mr Shaw to provide feedback to the Risk Management Sub-Group.
10)Risk Register & Board Assurance Framework: An Annual Review
Mr Nelson reminded Members that one of the duties of the Audit Committee as listed within the committee’s
Terms of reference is to assume overarching responsibility for reviewing and maintaining the structure of the Board Assurance Framework and to advise the Corporationaccordingly.
A robust and comprehensive review of each of the risks identified within the Board AssuranceFramework was therefore undertaken. Mr Shaw provided updates to the Committee on the current position of the most significant risks.
The Committee was satisfied that the BAF continues to identify the key risks, the likelihood of those risks occurring, their potential impact on the College and the actions beingtaken to reduce and mitigate the risks.
Members agreed that risks continue to be prioritised using a consistent scoring system and that the Board Assurance Framework continues to provide an adequate and effective framework for risk management.The Committee also asked to undertake BAF reviews every 6 months, as of the next academic year.
The Committee was also mindful that the Corporation, at its final meeting of each academic year, is to satisfy itself that the key risks to which the College is exposed; together with the operating, financial and compliance controls that have been implemented to mitigate those risks have been subject to formal reviews throughout the year.