Wilberforce Sixth Form College Corporation
AUDIT COMMITTEE
Minutes of the meeting held on 25 June 2014
Present:
Steve Cook, Sue Firth, Karen Robson
In attendance:
Susan Bailey (Clerk to the Corporation), David Cooper
(Principal) Chris Dyson (Baker Tilly Internal Audit), Bob
Overment (Assistant Principal), Richard Lewis (Baker Tilly
External Audit), Julie Wilson (College Accountant) Pat Mould
(Chair of the Corporation – observer)
Prior to the meeting a minutes silence was held in memory of David Alma Jordan, the
Corporation’s longest serving Governor who sadly passed away on 15 June 2014.
David Cooper provided the following speech paying tribute to David’s work and
loyalty to the College over the past 26 years as a foundation Governor:
‘This meeting inevitably takes place with a shadow cast over it by the sad news
received of the death of David Alma Jordan, Chairman of this Committee and Vice
Chairman of the Corporation. David was a devoted servant of students and the
wider community that the College serves, throughout his 26 years as a Governor –
indeed Foundation Governor. David has been a key member of this Committee and
his expertise and business acumen will be greatly missed. As a Manager, I always
found David ready to challenge but solid in his support for the Senior Team and
understanding of their pressure and roles. It was David’s funeral yesterday and his
eulogy described David to a T - he was a) Incisive and perceptive b) Ready to
‘move on’ and impatient at wasted time c) kind spirited and generous with a
wonderful sense of humour – a truly remarkable man.’
36
Election of Chair for the meeting
Resolved
Steve Cook was elected Chair for the meeting. Members welcomed
Sue Firth and Karen Robson to their first meeting of the Committee.
37
Apologies for absence
Resolved
Apologies were received from Chris Gurevitch.
38
Declarations of Interest
Resolved
There were no declarations of interest.
39
Minutes of the Last Meeting held on 19 March 2014
Resolved
The minutes of the meeting held on 19 March 2014 were accepted as
a correct record and signed by the Chair.
1
40
Matters arising
Resolved
There were no matters arising from the minutes
41
Engagement Letter – Baker Tilly Risk Advisory Services LLP
Resolved
The Baker Tilly Risk Advisory Services LLP Letter of Engagement was
considered and approved by the Committee.
42
Internal Audit Report 2013/14 : Safeguarding
The Internal Audit report detailing the outcome of the Audit of the College’s
Safeguarding procedures undertaken as part of RSM Tenon’s Internal Audit Plan
2013/14 was considered. The Committee were informed that the audit had been
designed to assess the controls in place for the safeguarding process. The report
included five recommendations (4 medium 1 low). Chris Dyson drew attention to the
headline findings of the review where one recommendation had been made in
relation to copies of CRB and DBS checks maintained within personnel files and
which management confirmed was now no longer the case.
The review also identified areas of the College’s safeguarding process which could be
improved upon, not formal recommendations, but suggestions that management
may wish to consider. David Cooper confirmed that management accepted and had
actioned all points raised within the report concluding that the College had found the
report very helpful in securing further improvements and enhancements to current
procedures.
Recommended
43
the Internal Audit Report 2013/14 on Safeguarding was
received.
Internal Audit Report 2013/14 : Payroll
The Internal Audit report detailing the outcome of the review undertaken in relation
to the College’s payroll system was considered. The Internal Audit Service reviewed
the design and application of the controls in place with regards to the College Payroll
System and as a result four recommendations (3 medium, 1 low) were made, all of
which had been actioned or planned to be actioned by management.
Julie Wilson
confirmed that the payroll procedures were an item for discussion at meetings of the
Financial Management Group.
Recommended
44
the Internal Audit Report 2013/14 on Payroll was received
Internal Audit Report 2013/14 : Health and Safety Governance
The Internal Audit report detailing the outcome of the Audit of the College’s Health
and Safety Governance procedures undertaken as part of RSM Tenon’s Internal Audit
Plan 2013/14 was considered. The Committee were informed that the audit had
been designed to assess the controls in place for Health & Safety within the College.
Chris Dyson drew attention to the headline findings within the report. The
Committee were informed that eight recommendations had been made as a result of
the review (4 medium and 4 low)
2
Discussion took place over the cover arrangements in place during the absence of
the College’s Estates Manager, currently responsible for day to day operation of the
College’s Health & Safety procedures. David Cooper assured the Committee that
adequate cover for the management of all Health & Safety processes was now in
place at all times, including outside College term times. David Cooper stated that the
review had been extremely helpful to the College and that as a result the College’s
management of Health & Safety was to be restructured in line with the
recommendations with the report. It was agreed that a further update report be
provided to the next meeting of the Audit Committee providing evidence of the
College’s action to restructure the College’s Health & Safety operations.
Recommended
the Internal Audit Report 2013/14 on Health and Safety
Governance was received.
45
Internal Audit Report 2013/14: Follow up of previous Internal Audit
Recommendations
The Internal Audit report on Follow ups, a review undertaken to follow up the
progress made by the College to implement previous internal audit
recommendations, was considered. The report concluded that the College had
demonstrated adequate progress in implementing actions agreed to address the
recommendations, with 56% of the recommendations reviewed having been
implemented and the remaining 44% being partially implemented or not yet due for
implementation.
Recommended
46
the Internal Audit Report 2013/14 on Follow ups was received.
Internal Audit Progress Report 2013/14
Baker Tilly Risk Advisory Services LLP Internal Audit progress report 2013/14
detailing progress against the 2013/14 Audit Plan was considered. Chris Dyson
confirmed that the Audit plan for this year had now been completed and that the
College’s External Audit Service had confirmed that they were comfortable with the
scope of the Internal Audit work.
Resolved
47
the report was noted.
Rolling Implementation plan of Audit Recommendations
Recommended
was noted.
48
the Rolling Implementation plan of Audit Recommendations
Board Assurance Framework proposal 2014/15
David Cooper and Bob Overment submitted a Board Assurance Framework proposal
for 2014/15 which the Committee considered in depth. David Cooper reported that
the Board (Corporation) Assurance Framework would provide Governors, College
Managers and the Principal with confidence and evidence that controls applied in the
mitigation of the College’s exposure to risk operated effectively in relation to
strategic objectives and the day to day activities of the College.
The Committee were reminded that the terms of JACOP 1 and 2 now enabled
Colleges to determine a Board Assurance Framework which best covers all risks
relating to College operations whilst ensuring the College fulfils its legal obligations
which to date has primarily been provided through External and Internal Audit.
3
The report included an explanation of the process the College currently used to gain
assurance (primarily through management of the risk register) and details of the
proposed revised framework which would enable the College to refine its definition of
risk by identifying significant risks that threaten the viability of the institution. This
would in turn allow the College to focus more accurately on key strategic and
operational risks. Governors considered the proposal and agreed these made a
suitable board assurance framework from which the Corporation could gain
assurance that the College had covered all risks and included:




Set of likelihood values that are used in assessing risk
Impact values
RAG rating matrix
Risk Register 2014-15 constructed according to the revised principles.
Following scrutiny and challenge it was agreed that the Risk Register should include
reference to the audit of risk undertaken by Governors at Corporation and Committee
meetings. It was also agreed that the Audit Committee should focus attention upon
high rated net risks and determine the most appropriate source from which to seek
assurances on each of these risks, alongside a calendar of reporting and monitoring.
It was agreed that the risk associated with the Safeguarding and Litigation against
the College should be reduced from category 6 to 4
Recommended
that the Board Assurance Framework 2014/15 proposal be
approved and adopted by the Corporation
49
Proposed Terms of Reference of the Audit Committee
The Clerk submitted a report outlining the background to the proposed revised
Terms of Reference of the Audit Committee. In devising the Terms of Reference the
Clerk reported that the existing terms of reference had been reviewed and compared
to incorporate the requirements of the new Joint Audit Code of Practice (paragraph
25-26.) The Clerk reported that there was currently no official guidance on a
recommended/ preferred version of Audit Committee terms of reference and
suggested that the proposed terms of reference be reviewed regularly to ensure
compliance with any emerging guidance and relevant legislation. The Clerk
concluded that the Committee could be assured that the proposed terms of reference
ensured the Audit Committee was compliant with the requirements of the Joint Audit
Code of Practice.
In discussion it was suggested that the quorum for the Committee could be reduced
from three to two. It was agreed that this should be put forward for discussion at
the Governance Committee meeting scheduled to take place in September 2014.
Recommended
that the Proposed Terms of Reference of the Audit Committee
be approved and adopted by the Corporation
50
Risk Management Annual Report 2013/14 and Risk Register
2014/15
Bob Overment submitted the College’s Risk Management Annual Report 2013/14 and
Risk Register 2013/14 which, on approval by the Corporation, would ensure the
4
College was compliant with appropriate legislation and fulfil requirements of the EFA.
It was confirmed that the proposed Board Assurance Framework, following
Corporation approval, would replace the College’s Risk Register for 2014/15
Recommended
that the Risk Management Annual Report 2013/14 and Risk
Register 2013/14 be approved.
51
Audit Strategy for the year ended 31 July 2014
Richard Lewis submitted Baker Tilly’s College Audit Strategy for the year ended 31
July 2014 and took members through the report which included details of the scope
and proposed audit approach and the key risks highlighted – these were as follows:





Income recognition
College Estate
Pension Scheme liabilities
The College’s financial health/going concern
Regularity Review
Members noted Baker Tilly’s proposed fees (excluding VAT) as follows:
2014
Audit
Financial Statements Audit
Regularity audit
TPS audit
Total
2013
Audit
8,000
8,150
2,950
2,950
1,000
1,100
11,950 12,200
Richard Lewis drew attention to key emerging issues and informed the Committee of
the following:





Forthcoming changes to the Regularity Audit would be communicated to the
Committee accordingly.
An updated letter of engagement would be issued to the College following receipt
of further guidance from the funding bodies and in order to reflect the
requirements of the new JACOP. It was agreed that the updated letter could be
signed by the Chair of the Corporation prior to any meeting of the Audit
Committee.
The forthcoming reform of the EFA/SFA and the impact for College Governance
would be reported to the committee accordingly.
The college must continue to meet the terms of the BCIF received for works to
be undertaken April 2014 to March 2015.
Further details of emerging issues relevant to the College were included in the
report as follows:
o
o
o
o
o
o
o
o
the introduction of the FE Commissioner post
potential impact of SFA software operational delays
Performance and capability of the EFA and increased emphasis placed on
SFC Governance and Board Assurance frameworks.
Reorganisation of SFA and requirement for Governors to ensure
assurance arrangements remain robust
Increased deficits in Local Government Pension Schemes (LGPS)
Teachers’ Pension Scheme
VAT ruling
Corporate Identity Fraud – protecting your organization
5
o
o
o
Revised Regularity Audit approach
Impact of the revised FE HE SORP and bank covenants
Charity reporting changes (unlikely to impact on many colleges)
In conclusion it was confirmed to Richard Lewis, Baker Tilly as the College’s External
Audit Service that there had been no instances of fraud at the College reported to
members of the Committee.
Recommended
52
Baker Tilly’s proposed College Audit Strategy for the year
ended 31 July 2014 was received.
Review of performance of Internal and External Audit Services
2013/14
Julie Wilson submitted the completed Audit performance indicator questionnaire
included within the Interim Audit Code of Practice guidance document for the
College’s Internal and External Audit Services. Julie Wilson reported that the results
of the questionnaire were satisfactory and that there were no problems to report
regarding the working arrangements with both the College’s Internal and External
Auditors.
Recommended
53
the report was approved.
Re-appointment of Auditors 2014-15
The Committee was reminded that Baker Tilly UK Audit LLP had been appointed as
the Colleges External Auditors for Financial Statements and Regularity Audit for a
one year contract as from 1 August 2013 to 31 July 2014. David Cooper stated that
the College was satisfied with the work of Baker Tilly and would be pleased to reappoint as the College’s External Auditors for a further year from 1 August 2014 to
31 July 2015.
David Cooper stated that the College was satisfied with the work of Baker Tilly Risk
Advisory Services LLP and would be pleased to re-appoint as the College’s Internal
Auditors for a further year from 1 August 2014 to 31 July 2015 but for a reduced
number of Audit days. Following discussion the Committee agreed that the number
of Audit days should be reduced from 23 to 16. Governors were mindful of the
increasing emphasis on the Corporation’s responsibility to ensure assurance
arrangements were strong and robust and that the cost of gaining assurance was not
the key issue but that the quality of sound assurance was imperative. It was agreed
that assurances relating to Teaching Learning and Assessment should be gained via
alternative sources/providers for assurance.
Recommended
a) that Baker Tilly UK LLP be re-appointed as the College’s External Auditors for
Financial Statements as from 1 August 2014 to 31 July 2015.
b) that Baker Tilly Risk Advisory Services LLP be re-appointed as the College’s
Internal Auditors as from 1 August 2014 to 31 July 2015 for 16 days work.
54
Internal Audit Strategy 2014-15
In view of the recommendation to reduce the number of Internal Audit days from 23
to 16 it was agreed that consideration of the Internal Audit Strategy 2014-15 report
be deferred for discussion between the Internal Audit Service and SMT at a mutual
date and time.
6
Resolved
55
the report was deferred
Annual review of the role and effectiveness of the Audit Committee
2013/14
The Clerk submitted a report which included a self-assessment questionnaire for
members of the committee to complete and discuss in order to monitor the role and
effectiveness of the Audit Committee. Members completed the questionnaire at the
meeting. The outcome of the annual review of the role and effectiveness of the
Audit Committee was positive with all members in agreement that the committee
operated effectively.
Resolved
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the self-assessment process for the Audit Committee was noted.
Learner Impact
Each decision made at the meeting was considered and the following was agreed:
The Committee agreed a wider Board Assurance Framework extending the remit of
the Audit Committee in order to place greater emphasis on the Corporation’s
increased responsibility for oversight of risk and therefore improving the quality of
the student experience.
57
Any other business
Resolved
58
Review of Confidential items
Resolved
59
there was no other business raised at the meeting
no items were classified as confidential
Date of next meeting
Resolved:
noon
Minute no
43
Date of the next meeting – Wednesday 26 November 2014 – 12
ACTION SCHEDULE
Title
Internal Audit Report 2013/14 Health and
Safety Governance
Board Assurance Framework proposal
2014/15
Action by
DJC
48
Proposed Terms of Reference
Clerk
53
Internal Audit Strategy 2014/15
DJC / IAS
47
7
DJC / RO
Action by
Update report to the next
meeting
Submit for Corporation
approval
Amend Risk Register to
include Corporation
scrutiny of risk / reduce
RAG of Safeguarding &
Litigation 6-4
Amend TOR, submit for
Corp approval, amend
SOs for Governance
Committee
Meeting to discuss
Strategy before next
Audit Committee meeting