THE NORTHERN COLLEGE
THE AUDIT COMMITTEE
Minutes of the meeting of the Audit Committee held on 14 July 2014.
Present:
Mr Ian West (Chair), Mr Glen Sheppard, Mr Trevor Sargison and Ms Liz Stanley.
In attendance:
The Principal, the Acting Head of Finance, Wylie + Bisset (by telephone for Minute
A14/27 To A14/34) and the Clerk to the Governors.
Apologies:
Ms A Corrigan and Mr R Harrison.
A14/25
DECLARATIONS OF INTEREST
None declared.
A14/26
MINUTES OF THE LAST MEETING
The minutes of the meeting held on 17 February 2014 were approved (a copy is filed in the Minute
Book).
A14/27
INTERNAL AUDIT SERVICE REPORTS
(A copy of Document 4i is filed in the Minute Book)
NB: Wylie and Bisset presented the following internal audit reports by telephone.
The Committee received reports from the internal audits which had been undertaken since the last
meeting. It was noted that:
 The overall conclusion for both reports was strong.
 The implementation dates proposed by management were appropriate and timely.
A14/28
Budgetary Financial Control
This audit was to ensure that the College had appropriate budgetary and financial controls in place
and that these are embedded throughout the organisation. The overall conclusion was strong with
one low risk recommendation relating to a documented timetable/checklist of key tasks for the
monthly management accounts/budget reporting process. The recommendation was accepted by
management.
A14/29
The Committee explored whether the audit had covered forecasting and outturns and it was
confirmed that this had been included and no issues had been identified.
A14/30
Purchasing and Payments
This audit was to ensure that the arrangements the College had in place for purchasing and
payments were appropriate and operating effectively and efficiently. The overall conclusion was
strong with one low risk recommendation relating to the procedure for adding suppliers. The
recommendation was accepted by management. Two observations were made relating to the
decentralisation of the purchase ordering process and the non-reconciliation of the purchase ledger
to the nominal ledger.
A14/31
The Committee explored whether the bullet in the scope relating to procurement thresholds had
been covered in the audit as it was not mentioned in the report and whether the auditors were
content with the thresholds. It was confirmed that this had been covered and the auditors were
content with the thresholds.
A14/32
The Financial Statement Auditor reported the level of fraud which continued to occur regarding the
fraudulent changing of bank details and recommended that the College maintain their level of
vigilance in this area.
A14/33
The Committee noted that the College had lower levels of recommendations than Colleges in the
sector in these areas which was pleasing. It was also noted that the reports were readable and
easy to understand.
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A14/34
The Committee noted that two further reports were due for consideration – Follow-up and PCI Data
Security Standard Compliance – but these had not been received by the College in time for
circulation for the meeting. The Committee expressed their disappointment with this delay by the
Internal Audit Service and noted that the reports would be considered at the next meeting.
Resolved:
i
That the internal audit reports be noted.
ii
That the Follow-up and PCI Data Security Standard Compliance reports be
considered at the next meeting.
A14/35
AUDIT RECOMMENDATIONS STATUS REPORT
(A copy of Document 5i is filed in the Minute Book)
The Committee considered the regular report which outlines the status of previous audit
recommendations and enables it to ensure that recommendations are appropriately implemented in
a timely manner.
A14/36
It was noted that:
 A new section had been added to the report which outlined the recommendations from the
most recent reports which had already been completed.
 A number of recommendations remained outstanding as they were awaiting the
implementation of the new finance system as previously reported.
 That an IT back-up system was now installed at Longley Park Sixth Form College.
 The fixed asset register was now complete.
 Consideration had been taken in conjunction with the IAS of the recommendation to record
assets on the finance system and it had been agreed that a separate spreadsheet would
work better for the College.
A14/37
The Committee explored the timeframe for the recommendations relating to risk management and
urged the College to focus on training as this was a key area of potential risk.
A14/38
The Committee considered the outstanding actions in detail and were satisfied that appropriate
action was being taken.
Resolved:
i
That the progress against previous audit recommendations be noted.
A14/39
FINANCIAL STATEMENTS AUDITORS SCHEDULE AND AUDIT APPROACH MEMORANDUM
2013/14
(A copy of Document 6i is filed in the Minute Book)
The Financial Statements Auditor presented the Audit Plan for the College and reported that:
 Recent changes to the Companies Act 2006 had resulted in a new requirement to prepare a
strategic report.
 A new Accounts Direction Handbook was due for publication.
 The JACOP Part II has been published and takes effect for the year ending 31 July 2014.
 The JACOP retains the requirement for a regularity audit.
 Auditing standards ISA 700 have been revised introducing new enhanced reporting
requirements.
 Implementation of auto enrolment and compulsory employer contributions took effect from
October 2012.
 The new SORP 2015 was published in March 2014 and includes a number of changes to
financial reporting which will require some additional work by the Finance Team.
 An appropriate transition plan had already been discussed with management and key
members of the Finance Team.
A14/40
The audit is risk based and the work of the audit team is based around the key areas of biggest
risk. It was reported that the key and reasonable risks for the College had been identified as:
 Revenue cycles including fraudulent transactions.
 Management over-ride of controls.
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Revenue
Employee remuneration
Operating expenses
A14/41
It was noted that the fee for the audit was £11,500.
A14/42
The Committee were satisfied with the risks identified, the focus of the audit and the framework
proposed.
Resolved:
i
That the Financial Statements Audit Approach Memorandum be noted.
A14/43
ASSURANCE AND RISK MANAGEMENT AND DRAFT AUDIT PLAN 2014/15
(A copy of Document 7i is filed in the Minute Book)
The Committee considered the new style Risk Register and noted that:
 The register was split into four main areas and had a traffic light system to identify whether
risks were high, medium or low, after they were scored post control.
 Risks were assessed and reviewed once a month at individual management meetings with
SMT.
 New risks or actions needed were agreed and where necessary the declared post-control
impact and probability adjusted.
 The register was now reviewed and monitored by the appropriate governor committee
enabling the committee to consider each risk and add comments as to whether they were
satisfied with the level of control already in place, or they felt that additional assurance was
needed.
 The final stage was review by the Audit Committee where the information would be used to
establish the need for independent assurance and where the resource should be focused in
order to provide greatest added value.
 C1 – corporate governance – had been reduced to low as it was felt to present no
substantial risk.
 A1 and A2 should probably be reduced to low in light of the recent OfSTED inspection and
current success rates.
 The Policy and Finance Committee had asked the College to reword Risk F6 - Failure to hit
recruitment targets leading to loss of SFA funding – to reflect the real risk of declining SFA
funding rather than failure to hit targets.
A14/44
The Committee considered its Internal Audit needs for 2015/16 in light of the risk register. It was
agreed that the following amendments/additions should be made to the draft plan:
 Include follow-up testing on the arrangements to verify supplier change of bank details –
high risk area.
 Decrease the 4 days allocated to commercial/marketing activity to 2 days – as the College
doesn’t have significant activity in this area.
 Use the above 2 days to consider the risk related to loss of data (Risk C5).
 That Corporate governance be audited in 2015/16 to review the revised structure.
Resolved:
A14/45
i
That the Risk Register be noted.
ii
That with the inclusion of the above amendments the Internal Audit Plan for
2015/16 be recommended to the Board for approval.
DATE AND TIME OF THE NEXT MEETING
The date of the next meeting is Monday 17 November 2014 at 11.30am.
Signed
Position
Chair of Audit Committee
Date
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