MINUTES
HMIE Audit and Risk Committee
Wednesday 23 February 2011 at 10am
Boardroom, Denholm House, Livingston
Present:
Committee members
Sir Andrew Cubie (AC), Chair of Audit and Risk Committee
Charles Lovatt (CL) Non-Executive member
David Morrison (DM), Non-Executive member
Shirley Young (SY), Non-Executive member
Also in attendance
Bill Maxwell (WSM), HMIE
Gill Robinson (GNR), HMIE
Stuart Robinson (SAR), HMIE
Phil Denning (PD), HMIE
Gillian Howells (GH), HMIE
Laura Burman (LB), HMIE
Pearl Marshall (PM), SG Internal Audit
Alistair May (AM), SG Internal Audit
Ruth Brown (RB), Audit Scotland
Geoff Lees (GL), Audit Scotland
Eileen Quigley, HMIE (minutes)
Apologies for absence:
Douglas Falconer (DF), SG Internal Audit
Welcome and Introductions
AC welcomed everyone to the meeting noting that Alistair May was attending
from SG Internal Audit.
1.0
Minutes of the meeting held on 22 December 2010
1.1
The minutes of the meeting were accepted as being accurate.
2.0
Matters arising and Action Log
2.1
All action points have been met.
2.2
WSM gave the committee an update on the work being carried out to
create the new agency. He explained that January was a month where there
was a lot of discussion on the aims, vision and remit of the new agency.
HMIE staff engaged extensively on the document which is currently with the
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Trade Unions for comment, before it is issued to all staff. The Project Teams
are taking forward the practical aspects of the project.
3.0
Audit Scotland Annual Audit Plan 2010/11 and interim annual
report
3.1
AC introduced the paper noting that it was comprehensive and that the
Committee welcomed the fee reduction. RB gave an overview of the plan
highlighting key areas. Business continuity will be HMIE’s main risk area this
year, due to the creation of SEQIA. RB is in discussion with Terry Holmes, of
Accountancy Services Unit, regarding final accounts for HMIE as the new
agency is established and will update GH when she has more information.
CL suggested there would be merit in contacting Creative Scotland to share
their recent experience in setting up a new agency. DM asked how Audit
Scotland assess the business continuity risk, RB explained that they review
Board minutes, Project Team minutes and take assurance from internal audit
work and from the work of the Audit and Risk Committee. There was some
discussion about SG plans for shared services. WSM indicated that he would
need strong assurances over centralisation of aspects of finance as
accountable officer.
GL gave a brief overview of the interim audit work. No significant issues have
arisen. AC commended the effective working relationship between HMIE and
Audit Scotland.
Action 3.1 RB to contact GH with further information on accounting
arrangements in the lead up to the creation of new agency.
4.
Internal audit report
4.1
AM confirmed that the internal audit work is almost complete. DF, who
is currently absent, had advised he was intending to give substantial
assurance. AM volunteered to meet with some representatives of HMIE to
discuss how to finalise the internal audit work for 2010-11. DM asked if
internal audit have the resource to cover HMIE and the new agency in future
years. AM confirmed that based on his current knowledge, resources would
be available. PM advised that Internal Audit are currently forward planning
and are contacting agencies asking about high risk to enable them to target
resources. SAR advised that they welcomed this contact from Internal Audit.
Action 4.1 SAR and AM to meet to finalise the internal audit report.
5.
Risk Management Policy and Strategy
5.1
LB advised that the policy and strategy were updated versions of the
existing policies so that they are in line with the policy and strategy
framework. New directorate owned corporate level risks have been added to
more accurately reflect the corporate wide impact of additional work that
HMIE is undertaking, for example: Schools Consultation and additional
support for Curriculum for Excellence. WSM advised that this is an
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improvement, particularly the consolidation of corporate level risks gives him
more assurance as accountable officer. GNR added that she was happy with
the connection between directorate and corporate level risks as it creates a
mechanism to raise and address risks corporately. CL queried the reference
to quality assurance in the policy. LB referred to section 8 of the policy and
sections 7-10 of the strategy. Identifying and managing risks is an important
part of the business planning process. They are discussed with business
managers at the time of creating the task. Directorate Executive Groups
discuss tasks and risks regularly, looking across the piece to ensure
consistency and review the management of the risk. By exception, risks are
reported to the HMSCI through regular meetings with CIs. As part of the Risk
Management Group, a sample of risks are reviewed across directorates to
ensure consistency and appropriateness. The features of risk quality
assurance are very much built into the business planning and management of
tasks. CL thanked LB and SAR for their explanations and suggested that they
be included in the policy and strategy. AC indicated that this explanation be
noted in the minute thereby obviating the need to alter the policy and strategy
papers.
6.
Risk Management update
6.1
LB brought the consolidated corporate level risks, which will be in place
from 1 April 2011, to the attention of the Committee. She highlighted several
points from her paper which included training for new task managers which
will take place on 1 March 2011; the security policy framework was
completed for 1 October 2010; the effects of adverse weather on the
inspection schedule; the re-visited Business Continuity Plan and that 7
members of HMIE staff volunteered for the Scottish Government Resilience
Room during the adverse weather.
7.
Finance report
7.1
AC highlighted that the paper shows a range of underspends. SAR
advised that savings were made mainly due to the suspension of inspections
in block 3. HMIE made the Scottish Government (SG) aware that there were
funds to be re-deployed. Since then SG has announced an additional
voluntary exit scheme which has attracted a lot of interest from staff. HMIE is
now in discussion with SG to use the declared money to fund the early exit
scheme.
8.
Statement of internal control
8.1
AC asked if WSM was content with the revised internal control system
which provides a single consolidated return from all directors, WSM advised
that he was content, so long as the system ensured that each director
individually signed the return and took full responsibility that their
responsibilities were represented appropriately in it.
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Action 8.1 AC requested that the Non-Executives receive confirmation when
WSM signs the Statement of Internal Control and sends it to the Permanent
Secretary.
9.
Audit Scotland - Role of Boards - appendix 3: questions
9.1
AC asked the Non-Executives if they had identified any issues
highlighted by their consideration of the questions in the appendix. CL asked
if there was a skills matrix and if so, is it controlled and updated. AC
confirmed the answer was yes to both of these questions. There was some
general discussion around the questions in the appendix and how they fitted
with the annual review of the Audit and Risk Committee’s performance. DM
felt that it would be helpful if each Non-Executive were to complete the
questions individually.
Action 9.1 A statement on required skills of Non-Executives should be
included in the annual Audit and Risk Report to Management Board.
10.
Any other business
Action 10.1 The summary HMIE performs report to be circulated to
Committee members.
Next meeting: 26 May 2011
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