Minutes of the meeting held on 8 June Lisa Greenhalgh Independent member Committee Chair

Transcription

1 PUBLIC BOARD OF GOVERNORS AUDIT COMMITTEE Minutes of the meeting held on 8 June 2015 Present Lisa Greenhalgh Independent member Committee Chair Lesley Munro Clerk to the Board Clive Edwards Stephen Hesford Simon Pope Independent member Independent member Independent member Jane Forbes PwC Internal Audit representative Trevor Rees KPMG External Audit representative David Tomlinson PwC Internal Audit representative Officers in attendance John Cater Carl Gibson Craig Hutchinson-Howorth Steve Igoe Vice-Chancellor Director of Finance Director of Strategic Planning Deputy Vice-Chancellor Apologies There were no apologies. AC In-camera meeting Prior to the commencement of scheduled business, Independent members held a private meeting with the Internal and External Auditors. The Internal Audit representative (JF) reported that the draft Audit Plan for 15/16, agreed with management, incorporated more days than the current year reflecting issues that had come to light 1

2 during the year. She indicated that the total number of days was still low in comparison to other similar institutions and suggested that members might wish to consider including some additional work from the options identified in the plan. No other matters were raised. AC Declarations of Interest There were no Declarations of Interest specific to the meeting. AC Chair s Announcements There were no Chair s Announcements. AC Chair s Action There was no Chair s Action to report. AC Minutes of the previous meeting Document AC/029/14 With respect to minute AC it was noted that the terminology used by PwC in relation to internal audit outcomes was expressed in terms of level of risk rather than the level of assurance provided as minuted. It was agreed that the minutes should reflect both aspects in future. The minutes of the meeting held on 9 March 2015 were then agreed and signed by the Chair as a correct record. AC Action Log Document AC/030/14 Members received the Action Log noting all actions as complete. AC Matters Arising There were no matters arising. 2

3 SECTION A ITEMS AC Higher Education Financial Statements Benchmarking 2013/14 Document AC/031/14 The External Audit representative (TR) introduced the benchmarking report which was provided for information. He noted that Edge Hill performed well in comparison to others in the sector confirming the sound footing of the University. In discussion, it was noted that the University was in the third tier in relation to overall size having grown at a faster rate than other post institutions. Whilst recognising the value of the report, the Vice- Chancellor noted that removal of the pre and post-92 divide in the analysis would provide a different, but equally valuable perspective. The Higher Education Financial Statements Benchmarking report 2013/14 was received. AC Education Sector Profile Document AC/032/14 The Internal Audit representative (JF) introduced the report which was provided for information and gave an overview of risk in the sector based on an analysis of higher education client risk registers. She highlighted the University s alignment with the top five risks. She also noted the relatively small percentage of institutions which linked risks to strategic objectives. [Clerk s Note: This is represented in the risk report presented to each meeting of the Audit Committee.] In discussion, it was noted that there was little apparent difference in the significance of the risk areas identified although that could be a function of the scale used. It was also noted that not all risk areas were relevant to this University. The Vice-Chancellor indicated that areas of lower-level risk not showing on the chart could also be of interest indicating fields for relatively risk-free development. The Education Sector Risk Profile report was received. 3

4 SECTION B ITEMS AC Scheme of Delegation Document AC/033/14 The Clerk introduced the Scheme of Delegation which represented a comprehensive picture of all the major responsibilities of the Board and the Vice-Chancellor, noting where authority to act had been delegated. The Scheme had been compiled from the responsibilities outlined in the Instrument and Articles of Government, the CUC Code of Governance and the HEFCE Memorandum of Assurance and Accountability and had been referenced to the Board s Statement of Primary Responsibilities, Committee Terms of Reference and the Financial Regulations. It was noted that the purpose of the Scheme was to allow for the regular review of delegated powers to ensure that these remained appropriate and effective. The document as presented represented the current position. The Clerk drew attention to areas highlighted in the document where new responsibilities had been identified from the new CUC Code of Governance and areas where amendments were required to Committee Terms of Reference. There were also two proposals for amendment to current practice. Members went through each of the highlighted areas and, after discussion, the following arrangements were agreed:.01 An Ethical Framework for the University and new policy on Donations, Bequests and Sponsorship to be developed;.02 New governance procedures to be developed by the Clerk for consideration by Nominations Committee as identified in the document;.03 Minor changes to Committee Terms of Reference to be incorporated by the Clerk at the annual review point;.04 Increase in the limit at which Vice-Chancellor s approval is required for expenses claims from 1,000 to 5,000 recognising the costs of travel abroad;.05 Delegation of the approval of Student Disciplinary regulations to Academic Board but with the Board receiving an annual report analysing the outcomes of student disciplinary cases, appeals and complaints. 4

5 In discussion, it was agreed that further work was required on the suggested delegations for contract signatories and students general welfare. Subject to these comments, the Scheme of Delegation was recommended to the Board for approval. Action: Clerk AC Current Questions for Higher Education Audit Committees Document AC/034/14 The Internal Audit representative (JF) introduced the paper which was provided for information. The document suggested a number of focus areas for Audit Committees. In response to a question from the Chair, JF indicated that it was for the Committee to decide where to focus activity through consideration of the Internal Audit Plan. Members received the paper on Current Questions for HE Audit Committees. AC Internal Audit Reports Document AC/035/14.01 Corporate Governance The Internal Audit representative (DT) introduced this report which assessed the effectiveness of the governance structure and processes in place at the University. He highlighted the generally positive findings of the report especially in relation to structure, succession planning, committee reports and information and committee responsibilities and effectiveness. Overall, the Audit was classified as low risk, providing substantial assurance with three low level recommendations related to the need for a Scheme of Delegation and subsequent analysis of decisionmaking and the absence of version control evidence on the published Committee Terms of Reference. All recommendations were either in hand or had been implemented. 5

6 .02 Work Placements The Internal Audit representative (DT) introduced this report which assessed the University s arrangements for providing appropriate placements, which adhere to the relevant requirements, in the Faculty of Health and Social Care. He highlighted the generally positive findings of the report especially in relation to relationships with placement providers, compliance with professional body requirements, student support and data quality. Overall, the Audit was classified as low risk, providing substantial assurance with three low level recommendations related to placement feedback (Social Work), formal placement sign-off (Social Work) and better ways of sharing best practice (Social Work and Nursing). All recommendations had been agreed and were either in hand or had been implemented. The Vice-Chancellor reported that a cross-faculty group had been established to ensure best practice was disseminated..03 Budgetary Control The Internal Audit representative (DT) introduced this report which assessed the process of budget setting, monitoring and management information forecasting with particular attention to the Faculty of Education and Information Technology Services. He highlighted the positive findings of the report especially in relation to budget holder support, alignment to strategic objectives, challenge in the budget setting process, in-depth monitoring, budget-holder engagement and informed reforecasting. Overall, the Audit was classified as low risk, providing substantial assurance with no recommendations. The Deputy Vice-Chancellor highlighted the attendance of the auditor as an observer at the Faculty of Education budget setting meeting as part of the audit process..04 Follow-Up The Internal Audit representative (DT) introduced this report which validated the implementation of agreed actions from the 2013/14 audit reviews including the Veristat report on Highly Trusted Status (HTS) compliance. He confirmed that the majority of recommendations had been implemented with reasons given where there had been delays. In these instances, new target 6

7 dates had been set and progress would be monitored at the next Follow-Up review..05 Cash Handling The Internal Audit representative (DT) introduced this report which assessed the cash handling procedures and controls in the various catering outlets in the University. He noted that the Audit had been instituted at the request of management following the identification of fraudulent activity concerning the excessive use of the void functionality on the tills. Although the report identified a number of processes that were working satisfactorily, overall the Audit was classified as high risk and could not be said to provide adequate assurance to the Board with eight recommendations for action. These covered a range of areas including monitoring till activity, access privileges, till session checks, the voucher system, cash handling and till training and cash security. Of the eight recommendations, one was classified as high risk, four were medium risk and three were low risk. In discussion, it was noted that the University had acted promptly in instigating an investigation when alerted to a potential issue and the employee identified with the fraud had been summarily dismissed with the file of evidence passed to the police. A report had also been made to HEFCE. Weekly meetings were being held to evaluate progress in implementing the Audit recommendations and training provision for all staff was being reviewed. A member suggested that till activity could be videoed. PwC confirmed they were comfortable with the University s response to the recommendations. The Internal Audit reports were received. AC Internal Audit Strategy 15/16 Document AC/036/14 The Internal Audit representative (JF) introduced the Internal Audit Strategic Plan for 2015/16 noting the proposed increase in the number of days from the previous year in order to extend the scope of activity in the light of recent events. In particular, she drew attention to the six 7

8 days set aside for countering fraud and the eight days for a review of Faculty key activities and processes commencing with the Faculty of Health. It was noted that it was planned to hold a fraud risk workshop as part of the Audit process for countering fraud with a view to producing a Fraud Risk Register. In response to a member s question, it was noted that it was planned to institute the Faculty review process across all Faculties over successive years thus providing learning opportunities between each review. Following discussion, it was agreed that it would be possible to undertake two Faculty reviews in 2015/16 and still retain the learning opportunity potential if care was taken with the timing of the reviews. The Committee approved the Internal Audit Strategic Plan for 2015/16 with the addition of a further eight days to cover a Faculty review in the Faculty of Arts and Sciences liaising with management in relation to timing. Action: Internal Audit/Deputy Vice-Chancellor AG External Audit Strategy for Audit of Accounts to 31 July 2015 Document AC/037/14 The External Audit representative (TR) introduced the External Audit strategy for the 14/15 accounts noting that this followed a similar approach to previous years. The timeline provided for completion in time to meet the HEFCE submission deadline. He drew attention to the materiality limit for the consolidated accounts which had been set at 2 million (1.7% of total revenue). He explained that, in the context of the University s consolidated financial statements it was proposed to consider an individual difference of less than 0.1 million as clearly trivial and that therefore all unadjusted differences greater than 100,000 would be reported to the Committee. In relation to the audit focus, TR indicated that account would be taken of significant risk areas including the potential risk from fraud as well as the overall financial position/going concern basis and the Fixed Asset Development Programme. Given the reliance on elements of internal audit work, the external audit would also include an evaluation of the internal audit process. In conclusion, TR drew attention to Appendix 3 of the document which provided an update on current HE issues relevant to the Audit process and particularly highlighted amendments to the HEFCE Accounts 8

9 Direction for 2014/15 and the new Statement of Recommended Practice (SORP) for reporting financial performance and the transition arrangements outlined in the Financial Reporting Standard (FRS) 102. The Committee approved the External Audit Strategy proposed for the 2014/15 accounts. Action: External Audit AG Risk Management Report Document AC/038/14 (including summarised Risk Register) The Director of Strategic Planning introduced the report noting that whilst there were no changes in the risk profile, there was increased concern associated with government policy in relation to the provision of teacher training and the likelihood of austerity cuts to the remaining HEFCE funding for Universities. It was noted that this was likely to lead to a reduction or withdrawal of the Student Opportunity Fund and changes to the operation of the student loan system. The restructuring of level 3 qualifications was a source of continued unease in terms of the potential impact on recruitment and increased competition. Although no details were yet available on the new Teaching Quality Framework outlined in the Conservative manifesto, it was reported that teaching qualification data would be published this year. There had been sector-wide concerns about the validity of this indicator but the University was satisfied with the accuracy of the return made. Preparations for the QAA Institutional Review were underway with any areas of risk identified through the process subject to internal review. The Vice-Chancellor reported that a Project Group had been established to consider the implications of Level 3 curriculum review. In relation to full Departmental Risk Register, the Director of Strategic Planning highlighted a number of changes to the Student Services entry reflecting a review undertaken by the new Director of Service. In considering the Departmental Risk Register a member noted the absence of any reference to research in the entry from the Faculty of Health and it was suggested that this should be followed up. The Risk Management report was received. Action: Director of Strategic Planning 9

10 AC Fraud & Irregularity/Serious Incident Statement The Deputy Vice-Chancellor gave a full verbal report to the Committee on the ongoing police investigation concerning the suspected fraudulent activity of two past employees of the University. It was noted that the police had submitted files to the Crown Prosecution Service but that it would be some weeks before the outcome was known. All other proceedings were stayed pending the CPS decision. The University s insurers were fully involved. There were no other issues to report. The Fraud and Irregularity/Serious Incident Statement was received. SECTION C AC Any other Business There was no other business. AC Date and time of next meeting The next meeting of the Committee is scheduled for 14 September