Agenda item 3a
SWAN HOUSING GROUP
AUDIT & RISK COMMITTEE
MINUTES OF THE MEETING HELD ON: 5 MARCH 2012 at 18.00
PRESENT:
Members:
Steve King (Chair); Derek Morrison; Angela Lyon; Tony
Holland; Colin Wannell and Keith Dabbs.
Officers:
Jamie Smith (Group Finance Director); Sandra Fawcett
(Regional Director Housing – London); Simon Barry
(Assistant Director Development) and Jan Collier
(Committee Secretary).
Also in
attendance:
Suzanne Lane – Nominated Senior Manager – RSM Tenon
(part)
Mark Jones – Director – RSM Tenon (part)
Lee Cartwright – Mazars (part)
Paul Naylor – Grant Thornton (part)
Simon Brown – BDO LLP (part)
26/11/12
APOLOGIES FOR ABSENCE
Apologies received from George Kieffer.
27/11/12
DECLARATIONS OF INTEREST
No declarations of interest made.
28/11/12
A)
MINUTES
AGREED that the minutes of the meeting of the Audit & Risk Committee held
on 14 November 2011 be confirmed and signed as a correct record.
B)
MATTERS ARISING
Minute number 19/11/12 – Risk Management Update – paragraph 6. The
Group Finance Director confirmed that the political risk around rent increases
was included within the risk register.
Minute number 17/11/12 – Internal Audit Tracker – the GFD confirmed that
the procurement audit would be completed by 1 April 2012.
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29/11/12
INTERNAL AUDIT TENDER
RECEIVED a report from the Group Finance Director seeking authorisation for
the appointment of RSM Tenon as internal auditors.
NOTED:
1.
following a tender process, two companies were invited to present to
an internal audit tender review panel consisting of members of the
Executive Team; the two companies in question were RSM Tenon
Group and Mazars;
2.
the GFD gave some brief background information on the two
companies who had been invited to attend the meeting tonight to give
a presentation to Members of the Audit & Risk Committee.
Suzanne Lane and Mark Jones from RSM Tenon Group joined the meeting at
6.05 pm, and circulated a hard copy of their presentation
3.
following the verbal presentation, the Chair asked for any questions
from Members;
4.
Tony Holland asked how they would work with the External Auditors.
Suzanne Lane explained that a good working relationship would be
formed from the beginning by setting out the audit plan and making
sure that they were working together to minimise duplication and
maximise the benefits of joint working;
5.
Derek Morrison referred to the nugget training and asked how that
would be delivered. Suzanne Lane said that it would be delivered in
15/30 minute ‘slots’ prior to an Audit & Risk Committee meeting.
There would be no charge for the training as it had already been
prepared for others and the auditors were attending the meeting
anyway, so there would be no charge for attendance;
Colin Wannell joined the meeting at 6.20 pm
6.
pursuant to the Chair’s question around how they would find out what
areas were appropriate to be audited, Suzanne Lane said that they
would look through Swan’s corporate documents and discuss what was
of concern and what needed to be covered in the Internal Audit plan,
along with any issues that had previously been identified. They would
also carry out a risk refresher exercise as well as meet with Members
to understand the needs. Suzanne Lane said that RSM Tenon had a
technical team that looked at the big issues within the sector (i.e.
changes in regulation, value for money, funding, and for Swan HA, the
change in approach with regard to the maintenance contract);
7.
Tony Holland asked about the size of the other organisations that RSM
Tenon work with as they were smaller than Swan. Suzanne Lane said
that issues within the sector were quite generic despite size.
Suzanne Lane and Mark Jones left the meeting at 6.25pm
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Lee Cartwright from Mazars joined the meeting at 6.26pm
8.
9.
10.
Lee Cartwright gave a verbal presentation and introduced Mazars;
the Chair asked how Mazars would get to know Swan HA in order to
recommend to Members how to tailor audits. Lee Cartwright said that
there would be a lot of work carried out in the early days in order to
produce the audit plan and would meet with the Senior Management
team and Executive Team in order to understand the organisation.
The Business Plan would be looked at with regards to key priorities
going forward as well as the risk register;
Derek Morrison noticed that the Lee Cartwright’s job specification
covered a large geographical area and asked how the audit work for
Swan HA would be resourced. Members were informed that Lee
Cartwright would lead on the work with the support of his colleagues,
and would attend most of the meetings.
Lee Cartwright left the meeting at 6.46 pm
11.
12.
13.
the GFD gave his views on the two companies;
the two were price comparable; the review panel felt that with RSM
Tenon the service received would be more flexible and would be able
to be moulded to Swan’s requirements, whereas they did not feel that
the same level of service would be received from Mazars (just a
standard service). The GFD had sought references from companies
that had used RSM Tenon and their experiences were generally very
good and had found them positive and helped give added value to
their businesses. The GFD added that he felt they would be capable of
challenging management on audit findings;
as Dan Harris, RSM Tenon’s Nominated Head of Internal Audit, was not
available to attend the meeting tonight the Chair wanted the
opportunity to meet with him to enable him to stress the points about
being challenging and the responses required at the Audit & Risk
Committee meetings.
AGREED:
to appoint RSM Tenon as internal auditors of Swan
Housing Association for a period of three years, subject to a meeting
with Dan Harris.
The Chair agreed to take agenda item 11 next
Paul Naylor from Grant Thornton joined the meeting at 7pm
3
30/11/12
AUDIT APPROACH MEMORANDUM
RECEIVED the Audit Approach Memorandum from Paul Naylor, Grant
Thornton
NOTED:
1.
the contents of the report;
2.
the key audit issues and financial reporting matters (section 2) was
discussed;
3.
component accounting was the most important part of SORP 10.
Grant Thornton had been fully involved with the finance team on the
process and continued to work through the model.
Paul Naylor
confirmed that progress was good and there were no issues raised;
4.
there continued to be impairment risks in the sector, particularly
around shared ownership properties not being sold. The planned
changes to the rent regime and grant funding allocations could also
impact on the impairment reviews. This would be reported back at the
June meeting;
5.
a review of the work carried out by Savills on valuations was also
being undertaken;
6.
a review of forecasts, headroom and covenants would be undertaken;
7.
accounting for Newham PFI contracts – would be reviewed to ensure
that accounting entries were correct and still accounted for as agreed,
and assumptions were still valid. There were no issues from the
interim audit to draw Members’ attention to;
8.
rent arrears – the review included service charges;
9.
Paul Naylor added two more issues that were not on the report:
1.
SSEG, Vivo and Hera had not been included in the audit;
2.
HCA/TSA investigation:
Paul Naylor confirmed that there were no material issues raised
from an accounting perspective for the March 2012 Financial
Statements, but would keep the Chair informed if any did arise.
Paul Naylor left the meeting at 7.10 pm
Simon Brown from BDO LLP joined the meeting at 7.12 pm
31/11/12
INTERNAL AUDIT REPORTS
Internal Audit Reports
RECEIVED the internal audit reports from Simon Brown – BDO LLP.
The Chair asked for the IT Infrastructure audit to be discussed first.
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IT Infrastructure
NOTED:
1.
the contents of the report;
2.
Derek Morrison felt that the recommendations raised were not difficult
to implement and felt disappointed that they had not been fixed before
the audit. Simon Brown felt confident that, following discussion with
management, the issues would be completed quickly, and would have
been completed by now. Derek Morrison asked whether processes
were now in place to sustain the situation. The GFD said that these
issues related to log in details not being deleted on Soprano when staff
left Swan. A process was now in place where monthly emails were
being sent identifying leavers. This would be looked at again when the
new Internal Audit Plan was produced;
3.
Tony Holland referred to page 16 – unauthorised access attempts –
which had originally been raised in June 2009, and was concerned that
the tracker system had not ensured that this had been resolved. The
GFD said that he would follow this up with a more detailed report.
Corporate Governance
NOTED:
1.
the contents of the report.
Responsive Repairs
NOTED:
1.
the contents of the report;
2.
the Chair felt that it would be helpful if the Regional Committees were
also presented with the report as there were no residents Members on
the Audit & Risk Committee. The Regional Director Housing (London)
RDH(L) informed Members that the Terms of Reference for the
Regional Committees do not give responsibility for overseeing audits
and added that they do receive regular information on repairs etc, and
care had to be taken not to duplicate reports too much; however she
agreed to present it to the Regional Committees for information only
and to ask them to note the items that had been completed;
3.
Tony Holland referred to page 8 – variation orders – and the
management response that did not cover the issue. The RDH(L) said
that she would ask the Director of Asset Management to review the
response.
Anti-Fraud and Corruption
NOTED:
1.
the contents of the report;
2.
Tony Holland asked if Swan’s Whistleblowing Policy reflected the issues
concerned. The GFD said that the current policy was out of date and
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the version being presented to the Finance & Personnel Committee
was a first draft and an improvement of what Swan had. It would be
presented again reflecting the comments raised in the internal audit.
Recommendation Follow-Up
NOTED:
1.
the contents of the report.
32/11/12
INTERNAL AUDIT ANNUAL REPORT 2011-12
RECEIVED the Internal Audit Annual Report 2011-12 from Simon Brown.
NOTED:
1.
the contents of the report.
Simon Brown left the meeting at 7.40 pm
33/11/12
INTERNAL AUDIT TRACKER
RECEIVED the internal audit tracker from the Group Finance Director.
NOTED:
1.
the contents of the report;
2.
the report would be updated to reflect the recently received internal
audit reports.
34/11/12
RISK MANAGEMENT UPDATE
RECEIVED a report from the Group Finance Director providing an update on
the risk management process.
NOTED:
1.
the contents of the report;
2
the Chair suggested that the risk around the compliance audit
investigation be discussed at the next meeting, dependant on the
progress of the working party;
3.
the GFD informed the Committee that the compliance audit gave rise
to issues in the following areas:
1.
governance
2.
internal controls
3.
repayment of grant
4.
amount of disruption to the business
4.
Tony Holland referred to paragraph 2.6.4.1 relating to the four red
risks being improved to amber risks and felt that they should not have
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been moved without prior agreement from the Audit & Risk
Committee. The GFD confirmed that they were part of the action plan
presented at the last meeting provided by the Health & Safety
Consultant which included details of the audits that had taken place
and the proposed changes in risk status, but agreed that this should
have been highlighted within the report.
35/11/12
BRIBERY ACT 2011
RECEIVED a report from the Group Finance Director giving Members an
update on progress with regards to the Bribery Act.
NOTED:
1.
the contents of the report;
2.
the Chair was pleased with the level of detail contained within the risk
assessment which would help Swan to comply with the Act.
36/11/12
HEALTH & SAFETY UPDATE
RECEIVED a report from the Group Finance Director on behalf of Jody
Kennedy (Consultant – Swansafe), giving an analysis of Health & Safety risk.
NOTED:
1.
the contents of the report;
2.
the GFD informed Members that Swan were shortly to be tendering for
the provision of Health & Safety services with a view to appointing in
June/July.
37/11/12
REVIEW OF FRAUD REGISTER
RECEIVED AND NOTED.
38/11/12
ANY OTHER BUSINESS
AGREED that the minutes of the meeting of the Special Audit & Risk
Committee held on 20 February 2012 be confirmed and signed as a correct
record.
Terms of Reference for the working group. Members asked for the words ‘as
representative of the Audit & Risk Committee’ to be included after George
Kieffer’s name.
AGREED:
the Terms of Reference for the working group subject to
approval from the TSA at the meeting on 6 March 2012.
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39/11/12
DATE & TIME OF NEXT MEETING
AGREED that the next meeting of the Audit & Risk Committee would take
place on Tuesday 12 June 2012 @ 18.00 hours.
The Chair closed the meeting at 18.40 hours
……………………………………………Chair
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