Audit Minutes 2010-01-18

Audit Minutes 2010-01-18

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Doncaster College Minutes of the Meeting of the Audit Committee held on 18 January 2010 Present Robert Allen Governor Karen Finlayson (Chair) Ken Hays Governor Gillian Knight Governor John Toon (Vice Chair) Governor The quorum for the meeting was three Members. In attendance Ron Hill Clerk to the Corporation Ann Treacy Acting Director of Finance John Taylor Interim Principal Ian Falconer Grant Thornton (internal audit service) Will Simpson Grant on (internal audit service) Alistair Hunt RSM Tenon (financial statements auditors) The meeting started at 5.27pm. Ron Hill was welcomed to his first meeting as Clerk to the Corporation. Apologies 1. 1.1 There were no apologies presented to the Committee. Declarations of Interest 2. 2.1 The Chair reminded Members to declare their interests as and when necessary on the agenda. 2.2 Robert Allen declared his membership of the Board of the St Leger Housing Association. Minutes of the Meeting of the Audit Committee held on 9 November 2009 and any 3. matters arising 3.1 The minutes were agreed as a true and correct record and were signed by the Chair. 3.2 As matters arising (not otherwise on the agenda) (i) It was confirmed that the actions recorded arising from the Management Letter for the year ended 31 July 2009 had been addressed; (ii) The Chair of the Audit Committee would meet with the partner from RSM Tenon outside the meeting to discuss ...

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Doncaster College Minutes of the Meeting of the Audit Committee held on 18 January 2010 Present Robert AllenGovernor Karen Finlayson (Chair)Governor Ken HaysGovernor Gillian KnightGovernor John Toon (Vice Chair)Governor The quorum for the meeting was three Members. In attendance Ron Hill Clerkto the Corporation Ann TreacyActing Director of Finance John TaylorInterim Principal Ian FalconerGrant Thornton (internal audit service) Will SimpsonGrant Thornton (internal audit service) Alistair HuntRSM Tenon (financial statements auditors) The meeting started at 5.27pm. Ron Hill was welcomed to his first meeting as Clerk to the Corporation. 1.Apologies 1.1 Therewere no apologies presented to the Committee. 2.Declarations of Interest 2.1 TheChair reminded Members to declare their interests as and when necessary on the agenda. 2.2 RobertAllen declared his membership of the Board of the St Leger Housing Association. 3.Minutes of the Meeting of the Audit Committee held on 9 November 2009 and any matters arising 3.1 Theminutes were agreed as a true and correct record and were signed by the Chair. 3.2 Asmatters arising (not otherwise on the agenda) (i) Itwas confirmed that the actions recorded arising from the Management Letter for the year ended 31 July 2009 had been addressed; (ii) TheChair of the Audit Committee would meet with the partner from RSM Tenon outside the meeting to discuss the process of addressing the action relating to the Management Letter for the year ended 31 July 2009. 4.Determination of Any Other Business 4.1
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a.) The Acting Director of Finance informed that the College had received an Employer Responsiveness (Apprenticeships) Audit Report on 14 January 2010 which had been undertaken by Baker Tilly on behalf of the LSC. b.)The Acting Director of Finance alerted the Audit Committee to the possibility of a clawback of funds relating to 2008/09. The amount of funding clawback could be circa £60k. 4.2 Therewere no other items of ‘Any Other Business’. Internal Audit Service Annual Report 2008/09 5.1 IanFalconer (Grant Thornton) presented the revised version of the Internal Audit Service Annual Report 2008/09. 5.2 Theopinion expressed in the Annual Report stated, In our opinion Doncaster College had not operated adequate and effective management, control and governance processes to manage its achievement of the College’s objectives throughout the academic year. 5.3 TheAnnual Report included update statements referring to progress since 2008/09. 5.4 TheClerk to the Corporation would ensure the full Internal Audit Service Annual Report 2008/09 was distributed to Members of the Committee. RESOLVED (AC 01/10) The Audit Committee resolved to recommend the revised Internal Audit Service Annual Report 2008/09 to the Board for approval. (John Toon joined the meeting at 5.40pm) Audit Committee Annual Report 2008/09 6.1 TheClerk to the Corporation presented the written report which included the draft Audit Committee Annual Report 2008/09. He reminded Members that this report would usually be considered by the Board prior to the approval of financial statements and letter of representation for the year under consideration. 6.2 Onthe basis of the evidence of the reports submitted to the Audit Committee and the recorded meetings of the Audit Committee during 2008/09 the Clerk to the Corporation suggested the conclusion of the Annual Report should be (in relation to 2008/09) as follows:-(i) theCollege’s systems of internal control areinadequate and ineffective; (ii) theCollege’s arrangements for risk management, control and governance processes, securing economy, efficiency and effectiveness (value for money) areinadequate and ineffective. 6.3 TheClerk to the Corporation corrected the overall judgement of the Financial Management and Control Evaluation for 2008/09 to read as ‘inadequate’. 6.4 Othermatters arising were:- Theperiod of membership of the Audit Committee for Christopher Smith of the impression that the Audit Committee had met in camera with Correction the Board’s auditors at every Audit Committee meeting; 6.5 TheClerk to the Corporation suggested that the Audit Committee may wish to add
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an interpretative comment to complement the conclusion (see 6.1 above). Members suggested that the following points be made within the concluding statement of the Annual Report 2008/09 the Audit Committee acted positively to address During emerging issues and achieve robust assurance on behalf of the Board. Audit Committee wished to commend the improved College The management response to audit recommendations evident by January 2010. was recognition by the financial auditors in the production of the There financial statements for the year ended 31 July 2009 that the information provided by the College had been of a high standard and had been a significant improvement on 2007/08. 6.6 Membersnoted that the performance of the internal audit service and the financial statements auditors had not been judged during 2008/09. The Clerk to the Corporation was asked to include this matter as an item for the next meeting of the Audit Committee. RESOLVED (AC 02/10) The Audit Committee resolved, upon the inclusion of the amendments requested, to recommend the Audit Committee Annual Report 2008/09 to the Board for approval. Risk Management and Risk Reporting 7.1 TheActing Director of Finance presented the written report which included a proposed risk management policy, the definition of roles of the Board (and Audit Committee) and the Executive Team, the internal audit service, financial statements auditors, and third party audit reviews. The report outlined the control environment operating within the College. Risk definitions were provided together with ‘likelihood’ and ‘impact’ descriptors. The report included the Corporate Objectives which would guide the strategic risk register formation for 2009/10. 7.2 TheActing Director of Finance explained that the Executive Team would be defining and regularly reviewing the top ten strategic risks. Arrangements were in place to ensure operational risk registers were formed and reviewed throughout the College. 7.3 Itwas suggested that reputational risk be included within the strategic risk register. 7.4 Memberswere advised to expect key controls to be included within the Strategic Risk Register to enable judgements to formed about the suitability and application of the controls listed. 7.5 TheChair of the Audit Committee requested clarity in reporting and the inclusion of direction of travel within the risk register format. 7.6 TheInterim Principal explained the evolution from the risk management of the Recovery Plan (as a focused project) towards the risk management of the College’s strategic plan. 7.7 Anemphasis on ‘impact’ would be included within the Strategic Risk Register i.e. impact of the risk on College core business (funding, learner performance, reputation). 7.8 Membersrequested an appreciation of the process of forming and reviewing the Strategic Risk Register. The process was outlined as follows:-(i) Workedup Strategic Risk Register to the next meeting of the Audit Committee (prepared by the Executive Team using advice from the Audit Committee and
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the internal audit service) (ii) Considerationof Strategic Risk Register at the Board (iii) Useof a corporate report (standing item) at Board meetings which included risk ratings (iv) Boardengagement with and, if necessary, refinement of the Strategic Risk Register through a development event: (v) Regularreview of the Strategic Risk Register at Audit Committee meetings with recommended amendment according to perceived risk 7.9 TheExecutive Team was encouraged to think about what it was doing which hadn’t featured on the Strategic Risk Register – a reality check that the relevant and necessary risks were being accounted for within the Strategic Risk Register. RESOLVED (AC 03/10) The Audit Committee resolved (a) torecommend the Risk Management Policy and framework to the Board for approval; (b) torequest the advice presented at the meeting be adopted in the formation of the Strategic Risk Register; (c) torequest that the Board be able to engage with and influence the Strategic Risk Register (d) torequest a worked up version of the Strategic Risk Register be presented to the next meeting of the Audit Committee. Internal Audit Service : Reports (a) ProgressReport 8.1 Theinternal audit service presented the Progress Report to the Audit Committee. The report informed that four internal audit service reports had been finalised and three reports were currently with College management. 8.2 Considerationwas given to remaining activity for 2009/10.It was appreciated that the emphasis of remaining internal audit service work should be guided by the Strategic Risk Register. RESOLVED (AC 04/10) The Audit Committee resolved (a) to request that the internal audit service review the design and adequacy of the Strategic Risk Register (assumed to be March 2010 with a further review in June 2010) and (b) to give further consideration to the assumed presentation by the internal audit service to the Board regarding the role and function of the Board in the light of the forthcoming Governor Development Programme (Board meeting 3 February 2010). (b) Reviewof Controls at High Melton 8.3 Thereported opinion of the audit review was given as :-risk management activities and controls are ‘Thesuitably designedto achieve the risk management objectives required by management;  Theactivities and controls wereoperating with sufficient effectivenessto provide reasonable but not absolute assurance that the related risk management objectives were achieved during the period under review’. 8.4 Therewere6 high priority, 6 medium priority and 2 low priority recommendations. 8.5 Therewas general discussion of the role, operation and contribution of the three College subsidiaries. Two key issues were identified – the current governance
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arrangements for College subsidiaries and the longer term role and performance of College subsidiaries. Members may wish to consider the various ways they may be able to contribute to the review and development of the college subsidiaries, in light of the review of subsidiaries being concluded by the Interim Principal. RESOLVED (AC 05/10) The Audit Committee resolved to request that the strategic review of College subsidiaries be considered by the Board at its next meeting. (c) CashHandling 8.6 Thereported opinion of the audit review was given  as:- ‘Therisk management activities that we examined weresuitably designedto achieve the objectives required by management; activities and controls were operating with Thosesufficient effectivenessto provide reasonable, but not absolute, assurance that the related risk management objectives were achieved during the period under review’. 8.7 Therewere 3 medium priority recommendations and 2 low priority recommendations. (d) BudgetaryControl 8.8 Thereported opinion of the audit review was given as :- ‘Therisk management activities and controls that we examined weresuitably designedto achieve the objectives required by management;  Thoseactivities and controls were operating withsufficient effectivenessto provide reasonable, but not absolute, assurance that the related risk management objectives were achieved during the period under review’. 8.9 Therewere 4 medium priority and 4 low priority recommendations. 8.10 TheActing Director of Finance reported that the motivation of the Finance Team had improved with more guidance, support and direction. 8.11 TheActing Director of Finance clarified that monthly re-forecasting of the estimates of income and expenditure was undertaken within the Management Accounts only. She explained that financial reporting at any time included reference to the estimates of income and expenditure approved by the Board. A full forecast outturn for the year ending 31 July 2010 would be carried out mid-year in line with sector norms. 8.12 TheActing Director was commended for the improvements in financial management within the College. (e) Payroll 8.13 Thereported opinion of the audit review was given as :- ‘Inthe areas examined, the risk management activities and controls aresuitably designedto achieve the risk management objectives required by management  Thoseactivities and controls were operating withsufficient effectivenessto provide reasonable but not absolute assurance that the related risk management objectives were achieved during the review’ 8.14 Therewere 5 medium priority and 1 low priority recommendations.
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8.15 Itwas noted that the following reports were currently being considered by College management  Cateringcontrols  ITReview  RecoveryPlan RESOLVED (AC 06/10) The Audit Committee resolved (a) to note the internal audit service reports and (b) to commend the Executive Team for the improving opinions within internal audit service reports Recommendations Report 9.1 TheActing Director of Finance presented the written report which informed that there were 24 recommendations which required management action. Of these 24 recommendations there were 8 high priority recommendations. It was noted that 3 of these recommendations were related to risk management and the formation of a Strategic Risk Register. Recommendations related employer engagement would be addressed by the new Vice Principal who would be joining the College shortly. RESOLVED (AC 07/10) The Audit Committee resolved to note the progress in addressing audit recommendations. Clerk to the Corporation : Advice to the Audit Committee 10.1 TheClerk to the Corporation raised the following points i. Thenecessity to determine performance indicators and evaluate the performance of the Board’s internal audit service and financial statements auditors ii. Thepossible benefit of an External Co-opted Member to strengthen the Committee (conditional upon complementing the skills/expertise set of the Audit Committee) iii. Regularstrategic risk register reporting and reviewing iv. Theuse of a workplan for the Board and its committees to plan corporate business throughout the year v. Thelack of reported audit review opinions in the minutes of the Audit Committee 10.2 TheClerk to the Corporation encouraged the Audit Committee to consider its expectations for 31 July 2010. Members suggested the following points and use of a Strategic Risk Register Production  Cleanaudit review opinions on internal controls  Increasingconfidence in management action and performance management culture to achieve compliance with systems and controls Positive and constructive dialogue in governance meetings Openness  Clarityregarding College subsidiaries RESOLVED (AC 08/10) The Audit Committee resolved to support the advice to the Audit Committee and use the Audit Committee’s expectations to monitor improvement. (The Interim Principal and Acting Director of Finance left the meeting at 7.10pm).
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11Standing Item : Confidential Meeting of the Audit Committee with the Board’s auditors. The notes of this part of the meeting are recorded separately. 12Date and Time of Next Meeting The next meeting of the Audit Committee will be held on 8 March 2010 (starting at 5.30pm).The meeting closed at 7.20pm. Ron Hill Clerk to the Corporation
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