Audit committee
10/11
Minutes
The Henley College Corporation
MINUTES of the Meeting of the Audit Committee
held on Monday 6th June 2011 at 9:00am
Members present:
Ian McGaw (Chair)
John Richards – member
Charles Wiggins – external advisor
In attendance:
Tom Espley (Principal)
Sue Bishop (Director of Finance)
Richard Plumb (Director, RSM Tenon – Internal Auditors)
Zara Majeed (RSM Tenon – Internal Auditors)
Katharine Patel (Partner, Buzzacott LLP - Financial Statements and Regularity Auditor)
Margaret McGrory (Corporation Secretary)
Agenda
item
3.1 10/11
Minute
Action by:
Opening of meeting
The meeting opened at 9:10am.
3.2 10/11
Apologies for absence
Apologies for absence were received from N Barlow. All other committee
members were present. The Principal sent his apologies for being
delayed due to a staff training event.
3.3 10/11
Declaration of interests
No interests were declared.
3.4 10/11
Minutes of the meeting of 7th March 2011
The committee agreed that the minutes were an accurate record of the
meeting of 7th March 2011 and the minutes were signed by the Chair.
3.5 10/11
Matters arising
See page 1 item 2.5 which mentions item 1.6(c) from previous minutes.
Difficulties with enhancing passwork controls would hopefully be resolved
with the introduction of a new in-house intranet from September 2011.
This would be followed up in the Internal Audit report in November.
See page 2 item 2.6(b)(i) concerning a member of staff who had not
completed their induction training. Z Majeed had agreed to follow this up.
She was satisfied that the Director of HR & Professional Development
has provided appraisal guidelines and reporting processes that are clear.
The individual who did not complete their induction appeared to be an
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isolated case.
See Page 3 item 2.6(b)(i) – dates need correcting in Section 3 Findings
and Recommendations on page 8 of the Internal Audit Report on Staff
Development & Training.
Z Majeed assured the Committee that this would be followed up in the RSM Tenon
next few days.
See Page 4 item 2.6(b)(ii) re Section 5 on page 15 of the report on
Estates Strategy. Z Majeed undertook to update this section of the report
which implied that the College did not always use at least 2 tenders for
any service.
Z Majeed assured the Committee that the report would be updated.
RSM Tenon
See Page 4 item 2.6(b)(iii) re the fourth paragraph of the Executive
Summary on page 1 of the report on Key Financial Controls – Creditors.
The paragraph implied that the College used one bank account and Z
Majeed had agreed to amend the wording to refer to the main bank
account.
RSM Tenon
Z Majeed assured the Committee that the report would be updated.
See Page 7 item 2.8(a) re the Risk Register and its measurement of risk.
J Richards said he was disappointed that the Risk Management Group
had rejected the idea of adopting a traffic light system of classifying risk.
The existing system contains a great deal of figures which are difficult to
scan through. He was, however, satisfied that the matter had been
discussed.
See Page 8 item 2.8(b) regarding the Risk Management Action Plan.
The Committee asked what progress had been made by the Finance
Committee to set up a working group to look at the potential for cost
cutting and maximising income.
The Director of Finance reported that the Finance Committee had had
extra meetings recently to look at the Financial Management Control
Evaluation (FMCE) report and look at how the management accounts
could be improved to include key performance indicators as a way of
monitoring the Colleges financial performance. The Finance Committee
had also reviewed the College’s progress regarding budget cuts and
were satisfied with the progress made.
I McGaw queried why only the Finance Committee were involved in
reviewing areas with the potential for cost cutting. He would like to see
more cross-Corporation involvement in this matter.
The Corporation Secretary was asked to set up a meeting for Corporation Corporation
members to discuss ways of achieving cost savings. The Director of Secretary
Finance suggested that this should be deferred until next term when
student numbers for next year would be known.
J Richards and C Wiggin would like governors to review this area in more
detail.
J Richards went on to suggest that this working party continue to meet.
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3.6 10/11
Minutes
Internal Audit Services – RSM Tenon
3.6(a) 10/11
Internal Audit Services Progress Report
Z Majeed reported that, since the last meeting, two internal audit reports
have been produced.
3.6(b) 10/11
Internal Audit Reports 2010/11
(i) Learner Number Systems
This report has been given an Amber/Green opinion. There are no high
level recommendations. There are 2 medium level recommendations the
forms used to assess student eligibility and record keeping issues.
J Richards asked where one would identify where an implementation
date was given but had slipped. Z Majeed explained that this would be
clear within the Internal Audit Progress Report.
(ii) Follow Up Report
This report showed good progress on the part of the College. 2 low level
and 1 medium recommendation were still outstanding.
The first was regarding IT controls and which was due to be resolved in
September 2011.
The second is in progress.
For the third, the College need to seek advice from RSM Tenon.
J Richards requested that colour reports be produced in colour.
(iii) Organisational Performance Management in Education –
National Thematic Review 2009/10
Z Majeed (of RSM Tenon) presented their report entitled Organisational
Performance Management in Education – National Thematic Review
2009/10. Sections 5 and 6 on pages 8 and 9 are of particular relevance
to the College. Section 5 on Page 8 identifies Good Practice and
Effective Performance Management. The first 4 points concerning Good
Practice are all currently adopted by the College. However, the auditors
cannot assess the final item regarding the “Robust challenge of data at
Board/Council level...” without seeing the Corporation Board in practice.
The auditors asked to attend a Corporation Meeting on the day that the
Thematic Review was carried out but permission was denied.
It was agreed that the Audit Committee would like this situation to be
reviewed and would add this request to the agenda for the next
Corporation Meeting.
Corporation
Secretary
With regard to the Effective Performance Management section on page
9, all items are already normal practice at the College.
3.6(c) 10/11
Draft Internal Audit Annual Report 2010/11
This report is still a draft as there are still a couple of months to go before
it is due to be completed. There are 3 areas where an opinion was
required – all of which have been given a “Green” assurance level, the
basis of which is shown on page 2 of the report. All items have been
accepted by the management of the College with the exception of the
water management issue on page 3 where they hold an alternative view
on the action to be taken.
Appendix A and B provide a summary of the opinions given over the last
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year and the corresponding recommendations made. The overall opinion
is positive.
The Director of Finance asked for references to “Henley-on-Thames
College” to be changed to “The Henley College”.
J Richards would like the College IT department to treat IT change
control as a high priority and that all recommendations be fully
implemented.
3.6(d) 10/11
Action Report on Audit Recommendations
The Director of Finance would like to see older items on this report
completed in the near future. The long term maintenance plan has been
delayed recently due to the increased focus on the Sports Hall
Refurbishment project.
J Richards pointed out that this report needs to be looked at more
attentively as items should not be brought forward from year to year.
Although he is impressed with the efficiency of the College overall, he
suggested that more staff resources were needed.
The Principal suggested that the solution to this would be to split the
Director of Finance’s role in two i.e. one to focus on property and the
other on finance. In view of the current spending cuts this was not viable.
J Richards stressed that he commended individual efforts but, if the
number of unresolved items continued to grow, the auditors may not be
able to sign off their assurance.
3.6(e) 10/11
Internal Audit Feedback
The Director of Finance reported that this had been a good year for .
internal audit with all audits performed when planned and within the time
specified. The Internal Audit Annual report had already been drafted.
She had no hesitation in recommending that the College continue to use
RSM Tenon. The only issue is one of fees. Buzzacott have reduced
their fees by 4%. RSM Tenon, on the other hand, have proposed an
increase of 4% which the College have told them is unacceptable. The
current proposal keeps the fees at the same level as this year, but with a
slightly reduced number of days audit. This is the main point of
discussion.
A recent benchmarking exercise shows their fees to be in line with other
providers. The College could agree to accept less days for the same
price but this is effectively still an increase.
The College has a budget of £12K and the RSM Tenon proposed fee is
£11,698. To look for alternatives may cost more time and money than it
would save.
I McGaw asked the Director of Finance if the audits could be carried out
in the lesser number of days. The Director of Finance confirmed that she
was confident that they could as they search for areas to be included in
the audit. She advised that the plan put forward by the auditors looks
sensible and achievable.
C Wiggin gave the opinion that the internal auditors’ performance has
improved considerably over the last few years and that they are providing
good value for money in terms of the price per day. The external audit
fee is higher per days given. He would be satisfied with continuing with
RSM Tenon as internal auditor but questioned the value for money
provided by Buzzacott LLP as external auditor.
3.6(f) 10/11
Re-appointment of Internal Auditors
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Following the discussion under 3.6(e) above and 3.6(g) below, the Corporation
Committee agreed unanimously to recommend the re-appointment of Secretary
RSM Tenon as internal auditors to the College.
3.6(g) 10/11
3.7 10/11
3.7(a) 10/11
3.8 10/11
Internal Audit Plan 2011/12
Richard Plumb of RSM Tenon explained that the report assumed that
their fee was frozen but reduced by 1 day. The number of days is set
according to the plan of work to be undertaken. Page 3 of the report
asks the Audit Committee to consider whether the plan meets their
needs. Appendix B of the report outlines the audit reviews to be
undertaken. If the work can be carried out in fewer days, the fee may be
reduced.
Financial Statements Auditor – Buzzacott
Planning Letter and Audit Strategy Document including Auditor’s
Remuneration
Katharine Patel, a partner at Buzzacott LLP, the Financial Statements
Auditors, has held a planning meeting with the Director of Finance and
drafted a letter of engagement. She explained that there is a new Audit
Code of Practice due to be released in the near future and this contains a
model letter of engagement. Their letter to us will be updated when this
new model version is available.
The accounts prepared by the College will be in a similar format to last
year. New International Audit Standards mean that work will need to be
done to update the format of some documentation.
The regularity audit will follow the same format as last year but the fee
has been reduced to the 2008 level. A timetable for the audit has been
provided.
K Patel explained that the aim of audit standards is to look carefully at
estimates to ensure there is clarity of information and reasoning behind
them.
The Committee unanimously agreed to the audit plan provided by Corporation
Buzzacott LLP and the accompanying fee and agreed to recommend Secretary
their approval by the Corporation.
Risk Management
3.8(a) 10/11
Risk Register Update (to include Sports Hall and IT Risk Register)
The Risk Register has remained fairly static over the last 4 months.
With respect to the Sports Hall, the main risk is that the work is not
completed in time for exams next summer. The Director of Finance
explained that, due to recent and rapid changes in the nature of the
project, this section of the Risk Register is a 1st draft. WS Atkins, as
project managers, will be producing a more detailed project risk register.
3.8(b) 10/11
Risk Management Action Plan
This was accepted.
3.8(c) 10/11
Risk Management Group Annual Report
The Risk Management Group’s Annual Report was presented for
comment and approval. J Richards felt more information should have
been provided in the report as to why a traffic light system was rejected in
favour of the existing system for classifying risk. The Principal argued
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that the current system provides more detail. C Wiggin agreed that a
traffic light system would be useful.
It was agreed that the Risk Management Group should be asked to Risk
reconsider the matter.
Management
Group
3.9 10/11
3.10 10/11
Review of Committee Terms of Reference & Standing Agenda
The Corporation Secretary asked the Committee to review the Terms of
Reference. It was agreed that paragraph (h) be amended to replace
“Learning & Skills Council or its successor” with “relevant funding
bodies”. The membership is to be changed to require a minimum of four
members. The quorum is to be changed to require a minimum of three
members or 40% of the membership, whichever is the greater.
The Standing Agenda was reviewed and it was agreed that no changes
were necessary to this.
Corporation Secretary to forward both documents for approval by Corporation
Secretary
Corporation.
Any other business
There was no other business to discuss.
3.11 10/11
Items to Take to Next Corporation Meeting
Corporation
 Request for Auditors to be invited to Corporation Meeting
Secretary
 Recommend to Corporation the appointment of Internal Auditors
and fee
 List Internal Audit review titles
 Outline Internal Audit Plan for 2011/12
 Outline Financial Statements and Regularity Auditor Plan 2011/12
 Risk Register – Action Plan and Annual Report
 Terms of Reference and Standing Agenda
3.12 10/11
Date and Time of Next Meeting
The next scheduled meeting is on Monday 14th November at 9:00am to
be held in the Deanfield Meetings Room.
3.13 10/11
Meeting closure
The Chair thanked the internal and external auditors for their input and
expertise. He then thanked everyone for attending the meeting which
closed at 11:14am.
MINUTES of the meeting held on 6th June 2011 were agreed and accepted as a true and accurate
record and signed by the Chair
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on ………………………………………….
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