Prior to the meeting, Mr Glover provided the Committee members with a training and development session on –
- the audit committee’s roles and responsibilities and how to meet them;
- the role of and relationship with auditors, and
- how to use auditors to gain assurance.
M. Munro and C. Parkes joined the meeting.
22/22. Election of Chair
Having been proposed by M. Thompson and seconded by Dr J. Barratt, it was
Resolved: That C. Sharp be appointed Chair of the Committee.
C. Sharp in the Chair.
23/22. Appointment of Vice Chair
Having been proposed by C. Sharp and seconded by M. Thompson, it was
Resolved: That Dr J. Barratt be appointed Vice Chair of the Committee.
24/22. Declarations of Interest
There were no declarations of interest.
25/22. Draft Minutes of the Meeting Held 16 June 2022 (Appendix, Agenda Item 4)
The Minutes of the meeting held on 16 June 2022, were agreed as a true record.
26/22. Declarations of Interest
There were no declarations of interest.
27/22. Draft Audit Committee Workplan 2022 - 2023 (Appendix, Agenda Item 6)
The Committee undertook a review of the key reports to be considered by the Committee for 2022 - 2023 (previously circulated).
Resolved: That the Annual Timetable of Standard Business for the Audit Committee 2022 – 2023, be approved.
28/22. Internal Audit Reports Outstanding from Former Internal Audit Service (Appendices, Agenda items 7a – 7c)
Ms Parkes presented the following reports –
Assurance Review of Bursary Awards and Accounting Processes and Controls (previously circulated)
The review assessed the arrangements for the recording the award and issue of bursaries to students in the REMS student information database, the control and procedures in place to ensure that payments instructed were accurate and sufficient information was provided to ensure that bursary funds were accounted for appropriately in the accounts and financial statements and for any returns due to the ESFA (Education & Skills Funding Agency).
The Review concluded that –
- The college had a range of policy and procedure documents which were clear, comprehensive and up to date.
- Audit work on a sample of students indicated that entitlement to bursaries was assessed correctly and relevant evidence of processes was retained.
- The need for students to report any change in circumstances was clear on manual application forms; however, this was not evident on the on-line applications.
- Good practice identified included information providing an easy-to-follow flow chart regarding bursary entitlements on the college’s website.
- With 2 routine recommendations, the Report had given Substantial Assurance.
In response to questions from committee members, Ms Parkes explained that –
- the recommendation that the need for students to report any changes in circumstances be made clear as part of the online application system, had been actioned during the audit and was now in place.
- as the audit had reviewed operating processes, an industry standard sample size of five students had been used when doing audit work; this had provided sufficient assurance.
Resolved: That the report be noted.
Assurance Review of Health & Safety (previously circulated)
The review assessed the arrangements in place for managing Health & Safety at the college, including policy, training, communication, reporting, compliance and recording.
The Review concluded that –
- The college had a Health & Safety Policy incorporating a Statement signed by the Board Chair and the Principal/CEO annually.
- Whilst performance monitoring took place, audit work indicated a lack of evidence of determination of what should be monitored and by whom.
- Standard and role-related Health & Safety training was found to take place. However, there was a lack of evidence that this was directed by policy or procedures.
- Risk assessments were found to be in place in all sampled activities and locations.
- With 3 important and 1 routine recommendations, the Report had given Reasonable Assurance.
In response to questions from committee members, Ms Parkes explained that –
- the health & safety policy was revised to ensure it included requirements regarding monitoring, reporting and training would be presented to Board at its meeting on 12 December 2022.
- Whilst some procedures were overdue for review, no procedures were out of date or not compliant with legal obligations.
Resolved: That the report be noted.
Internal Audit Service Annual Report 2021 – 2022 (previously circulated)
The annual internal audit report summarised the outcomes of the reviews conducted on the college’s framework of governance, risk management and control and to assist the Governing Body in making its annual governance statement.
The impact of Covid-19 had raised the question of whether the auditors had been able to undertake sufficient internal audit work to gain assurance for the year. Ms Parkes confirmed that there had been minimal or no impact on the delivery of the internal audit work for the year due to the Covid-19 pandemic. There had been no changes to the planned work because of Covid-19; any changes had been based on business/operational need.
The 2021 - 2022 Annual Audit Plan approved by the Committee had been for 36 days of internal audit coverage in the year; the contingency days had not been used during the year. However, one additional review of the Department for Education Funding Bursary had been conducted. During the year, the service had conducted seven reviews; four receiving Substantial Assurance, three attracting Reasonable Assurance and no reviews attracted Limited or No Assurance.
The reviews undertaken had not resulted in any urgent recommendations and there were no areas reviewed by internal audit where it was assessed that the effectiveness of some of the internal control arrangements provided ‘limited' or 'no assurance’.
As the report was designed to assist the Governing Body in making its annual governance statement and complete its Annual Report to Board, the Committee was of the view that it had received sufficient assurance on the adequacy of the college’s controls and this be reflected in the Committee’s Annual Report to Board.
Resolved: That the report be noted and the Audit Committee Annual Report to the Board be revised accordingly.
The Committee thanked Ms Parkes for the reports and for attending the meeting.
Ms Parkes left the meeting.
29/22. Report from Internal Audit Service – Internal Audit Plan 2022 – 2023 (Appendix, Agenda item 8a)
Mr Glover presented the draft Internal Audit Service Annual Plan 2022 – 2023 (previously circulated).
The report set out –
- The key findings of the Audit Needs Assessment (ANA), following discussions with key college personnel and the Audit Committee Chair
- The Service’s approach to the development of the Strategy
- The Internal Audit Strategy
The audit reviews of IT Cyber Security and Information Governance were scheduled for 2023 – 24. A Committee member observed that there had been an increase in data breaches reported in the year and questioned the scheduling of the reviews. The EDF explained that the breaches had been due to human error; all been low level and of minimal risk. The college encouraged a culture of reporting breaches, which was reassuring. Additionally, the IT Cyber Security Audit had been conducted in 2020 – 21, with a Substantial Assurance level, therefore, it was considered appropriate to schedule a further review in 2023 – 24.
Having reviewed the Draft Strategy, the Committee:
Resolved: RECOMMENDED TO BOARD that the Internal Audit Strategy be recommended for approval.
ACTION: REPORT TO BOARD
30/22. Financial Statement Auditors (FSA) Report – Draft Financial Statements for Year Ended 31 July 2022 (Appendices Agenda Items 9)
Mr Munro presented the following reports –
Financial Statements for the Year Ended 31 July 2022
Mr Munro presented the Draft Financial Statements for the Year Ended 31 July 2022 (previously circulated) which, having been substantially audited, indicated a ‘clean’ unqualified audit opinion in terms of both truth and fairness and regularity. He thanked the EDF, Finance Team and the MIS Manager for their co-operation and for providing high quality information despite the college being subject to a full audit funding audit by the ESFA at the same time.
Mr Munro explained that no adjustments had been identified that impacted the outturn other than minor disclosure arrangements agreed with management, which should provide a high degree of assurance to the Committee. Additionally, the only substantive work outstanding was expected to be completed by the end of the month. Mr Munro explained that, based on the work done to date, the auditors were proposing an unmodified opinion. The anticipated regularity assurance opinion would also be unmodified.
Key Issues For Discussion
The Committee commended the presentation style of the document, which set out clearly the key issues that affected the audit and the preparation of the Financial Statements.
Mr Munro advised that there was nothing adverse in the discussion report (previously circulated). He explained the report’s contents, as follows –
- The work was substantially complete and there were currently no matters of which the auditors were aware of that would require modification of the audit opinion, subject to minor outstanding matters;
- Audit findings – the commentary was explained to the Committee’s satisfaction;
- Audit findings against other risks;
- Going Concern – The auditors considered that the Board’s Going Concern assessment was reasonable and therefore the accounts had been appropriately prepared on the going concern basis. The college had evidenced it had sufficient mechanisms in place to effectively manage cash flow. In addition, the college had not breached any covenants, which provided additional assurance to the Committee;
- No matters in relation to fraud or breaches in relation to laws and regulations had been identified;
- The Letter of Representation and final version of the Financial Statements would be signed at the Board meeting in December 2022;
- Regarding fees and non-audit services, the Committee noted the Statement to the effect that the auditors were independent of the college and provided no other services.
Resolved: That the Audit Findings for Shrewsbury Colleges Group for the year Ending 31 July 2022, be accepted.
Going Concern Assessment
The EDF presented a report (previously circulated) providing the Committee with assurance regarding the status of the college as a going concern. The draft year end accounts, 2022 - 2023 financial plan and year to date operating outcomes demonstrated continuing good financial health.
The predictable nature of the timing of the Education & Skills Funding (ESFA) funding payments meant that the college could anticipate and plan for when the Cash position was lowest (in March and early April of each year). Having received this report and the assurances of the Financial Statement auditors, the committee was of the view that the college had in place adequate mitigating actions in place to ensure cash fluidity at this time during 2023.
Resolved: That, having considered the draft Financial Statements, the reports of the Executive Director of Finance and Financial Statements auditors, the Committee thanked Mr Munro and his Team for producing a comprehensive report and
Resolved: RECOMMENDED TO BOARD that
- the Committee considered the Shrewsbury Colleges Group to be a going concern; and
- the audit findings and draft year-end financial statements 31 July 2022 be recommended to the Board for approval.
ACTION: REPORT TO BOARD
31/22. Audit Committee Draft Annual Report 2021 - 2022 (Appendix, Agenda Item 10)
The Committee Chair submitted the Audit Committee Draft Annual Report and advised that the report would be referred to the Board for approval prior to submission to the ESFA.
The purpose of the Annual Report was to submit to Board a précis of the activities of the Audit Committee for the Year 1 August 2021 to 31 July 2022 and had been produced in accordance with the model as set out in the guidance on the latest edition of the Joint Audit Code of Practice. The Committee’s Terms of Reference (previously circulated) remained compliant with Code of Practice requirements.
The Annual Report to the Board provided -
- a summary of the work of the Committee during 2021 - 2022, including any significant issues arising up to the date of preparation of the Report;
- any significant matters of internal control included in the management letters and reports from auditors or other assurance providers;
- the Committee’s view on its own effectiveness and how it had fulfilled its terms of reference; and
- the Committee’s opinion on the adequacy and effectiveness of the college’s audit arrangements, its framework of governance, risk management and control and its processes for securing economy, efficiency and effectiveness.
The Committee noted that the Report had been produced in accordance with the new reporting requirements and included a section on governors’ development. The Committee also acknowledged that it had, as a result of self-assessment, increased its membership to five.
The Committee, having reviewed the Draft Report, asked for the following revisions -
- the Draft Report include an Introduction and Report Precis;
- the sections on the Internal Audit Service and Financial Statements Audit be supplemented to reflect the updates to the IAS Annual Report (Min. No. 29/22) and the Draft Financial Statements 2021 – 2022 (Min. No. 30/22) as these reports had provided further assurance to the Committee on the integrity of the college’s control systems.
Resolved: That the Draft Annual Audit Report for Audit be agreed and, subject to the further amendments requested, be RECOMMENDED TO BOARD for approval.
ACTION: REPORT TO BOARD
32/22. Whistleblowing, Irregularity & Fraud – Annual Statement of Declaration of Incidents 2021 – 2022 and Policy Review (Appendices, Agenda Item 11)
The Committee considered a report from the Clerk (previously circulated) presenting a Declaration that no incidents of Fraud, Corruption or Whistleblowing had been reported to the Clerk’s Office during 2021 – 2022, in accordance with Financial Procedures.
The Committee also reviewed the college’s Whistleblowing Policy (previously circulated). The EDF explained that the Policy had been amended slightly to reflect changes in job titles. Following a request that the contact details of the independent charity, ‘Protect’ be updated, the Committee concluded that the Policy remained relevant and appropriate to the college’s needs.
An appropriate reminder of the college’s expectations of staff and the policies and procedures in place to protect the college regarding bribery and corruption and support whistleblowing would be placed in the college internal newsletter ‘In The Loop‘.
Resolved: That the Committee RECEIVE the Statement of the Clerk regarding Incidents of Whistleblowing and Fraud 2021 – 2022 and the revised Whistleblowing Policy and AGREED that the annual reminder regarding the College’s Anti-Bribery arrangements be sent to all staff.
33/22. Risk Register and Board Assurance Framework (Appendix, Agenda Item 11)
The Committee reviewed the 2022 – 2023 Risk Register and Board Assurance Framework (previously circulated).
The EDF explained the risks identified and mitigating actions being undertaken. He considered the most significant risk at this point to be the threat of rolling power cuts and power outages during the winter months. He was meeting key staff on 01 December, to discuss a risk mitigation plan and would update Board at its meeting in December. In addition, two governors were meeting the Vice Principal, Quality, Apprenticeships & Information and the Technical Services Manager, to seek assurance on the college’s Business Continuity and I.T. Disaster Recovery arrangements.
The Committee Chair reported that he had recently attended, together with the Chair of the Finance & Business Operations Committee, the Association of College’s joint Finance/Audit Committee Chairs’ Forum. There had been a discussion about the impact on students and staff of the current cost of living crisis and whether this should be included as a strategic risk. In response to a question, the EDF explained the programmes of support the college had introduced to support students and staff.
The Committee observed that the college was operating in an environment of change and uncertainty. It was suggested that, to assist governors, the college produce a one-page summary of the recent changes affecting the sector.
The Committee concluded that the risks have been appropriately identified and the management actions reported were effectively mitigating these risks.
Resolved: RECOMMENDED TO BOARD that the Risk Register be approved.
ACTION: REPORT TO BOARD
34/22. Audit Recommendation Tracking Report (Appendix Agenda Item 13)
The Committee reviewed the Audit Recommendation Tracking Report (previously circulated).
35/22. Irregularity and Fraud
None reported.
36/22. Risk
The Committee agreed that the risks relevant to the Committee have been appropriately identified and the management actions reported were effectively mitigating these risks.
37/22. Date of Next Meeting – Wednesday, 15 March 2023 from 5.30 p.m.
38/22. Additional Item – ESFA Funding Audit
The EDF explained that, as referred to in the Financial Statement’s auditor’s report, the college had been the subject of a full Funding Audit; the second in two years. Whilst the final report was awaited, the ESFA had indicated that the audit had not found any significant issues.
Mr Glover and Mr Munro left the meeting at this point.
The Committee took the opportunity to thank them for their work.
39/22. Performance Indicators for Financial Statements Auditors (Confidential Appendix, Agenda Item 17)
The Committee reviewed and confirmed the conclusions of a confidential report with respect to the performance monitoring of the Financial Statements auditors during 2021 - 2022(previously circulated).
40/22. Governance Pack – ESFA Guidance: The Scope of Work of Audit Committees and Internal Auditors in College Corporations
Published in January 2022, the document provided guidance is respect of expectations of internal audit within the sector. Whilst not currently mandated by the ESFA Post-16 Audit Code of Practice, the Clerk had undertaken a compliance audit against the Guidance and the college and Committee arrangements were in full compliance.
The meeting concluded at 7.48 p.m.