Minutes of the Meeting of the Audit Committee - 16 March 2022
|Group||Minutes of the Audit Committee|
|Location||HELD BY REMOTE ACCESS THROUGH MICROSOFT TEAMS|
|Date||16th March 22|
|Minutes Membership|| In attendance by electronic device and contributing towards the meeting quorum, in accordance with Instrument 12. (Members may count towards the quorum if they are able to be present by electronic or digital communication (including attendance by video conferencing or telephone conferencing). |
Dr J. Barratt, C. Sharp and M. Thompson.
|In Attendance|| In attendance by electronic device |
Members of the Senior Leadership Team:
P. Partridge, Finance Director (FD)
J. Staniforth, Principal/CEO
Clerk to the Board:
In attendance by electronic device
C. Parkes, TIAA, College Internal Audit Service (IAS)
In attendance for pre-briefing:
A Benghiat, Dr J. Barratt, B. Greenaway, G. Mills, D. Pulford, R. Sartain, P. Tucker, C. Sharp, J. Staniforth, M. Thompson, R. Wilson and L. Wright.
Members of the Senior Leadership Team:
C. Armstrong – Group Vice Principal, Curriculum Support & Business Development (GVP – CS&BD)
P. Partridge - Finance Director (FD).
|Apologies||N. Coombe, Senior Audit Manager, Grant Thornton, Financial Statement Auditors (FSA), W. Devitt, Engagement Lead, Grant Thornton, Financial Statement Auditors (FSA) and R. Sartain|
Prior to the meeting of the Audit Committee, the GVP, CS&BD gave a presentation to the Audit Committee members and other invited governors on the latest position regarding enrolments to the college for the 2022 – 2023 year and how the emerging associated risks were being mitigated.
- Analysis indicated that the college had received less applications from Year 11 students at this point in the year, than at the same point in 2021, reversing a three year trend of growth.
- Should this continue, the college would not enrol in September 2022, the planned number of Year 11 students, crystalising the emerging risk that under-recruitment in the planned number of Year 1,16-18 funded students in September 2022, would lead to fall in lagged funding in 2023-24, as funding for 16 18 students made up 70% of the college’s income.
- The context of this risk included -
- Due to the size of the current Year 11 cohort, the number of students available to progress to further education in September 2023, had reduced.
- Pupils in Years 9 - 10 had, from March 2020 until September 2021, due to the Covid pandemic, been unable to access work experience, employer visits and talks, opportunities to visit colleges or attend taster events. In addition, for the same reason, many schools had either prevented or reduced the opportunity for any visits into school until March 2022, affecting the college’s enrolment activities.
- Application numbers for 2021/22 had been exceptionally high; in addition, virtual enrolment had made it easy to apply without visiting the college.
- Some schools, in response to losing larger numbers of Year 11 students to the college and other further education providers, were now providing vocational provision after 16, presenting further competition.
- Actions being taken to mitigate this risk were explained. In addition, all outreach and marketing activities focussed on offering quality advice tailored to each potential applicant; this personalised approach provided a market advantage.
- The impact of the broader financial risk was also mitigated by
- a larger number of Year 2 students from September 2022,
- greater internal progression,
- a growth in apprenticeships;
- the potential for improved retention as a consequence of new and additional student engagement activity;
- significant demographic growth from 2023-2026; and
- ongoing targeted marketing activity.
In response to a question on whether the current situation presented a lag in enrolments such that this was mainly a timing issue, the P/CEO explained that the Covid pandemic might have affected schools’ careers programmes, which were only just catching up and the college was putting effort into maintaining its relationships with schools. The college might also receive some applications later, as schools confirmed their post-16 offers and these did not meet students’ needs. However, it was still likely that the college would not enrol year 1s at the same level as in the previous year.
At this point, the presentation concluded and C. Armstrong, A Benghiat, B. Greenaway, G. Mills, D. Pulford, P. Tucker, R. Wilson and L. Wright left the meeting.
C. Parkes, College Internal Audit Service (IAS), joined the meeting.
01/22. Declarations of Interest
There were no declarations of interest.
02/22. Draft Minutes of the Meeting Held 24 November 2021 (Appendix Agenda Item 3)
The Minutes of the meeting held on 24 November 2021, were agreed as a true record.
03/22. Internal Audit Reports (Appendices Agenda items 5a – 5d)
Ms Parkes presented the following reports –
Assurance Review of Student Voice (previously circulated)
The Review had considered the ways in which students could influence the college to improve its offering, and the extent to which the college listened to students and implemented change where feasible as a result.
The Review had concluded that –
- Good practice in the college included a process to follow up on “not safe” responses in the college’s student satisfaction surveys on the day that they were recorded and an Enrichment E-Prospectus had been created in 2020/21, to show students the range of activities they could participate in either independently or as part of a group.
- Whilst the college had embedded a culture of encouraging the student voice across all aspects of the college, there was no formally documented statement which demonstrated the ways in which students could be involved. The college had agreed to document in a Student Voice Statement guidance regarding student voice, including key principles, structures and monitoring arrangements. The Statement would also include processes for engaging with students and how the college would act on student feedback to improve the overall college experience.
- The “You said, We did” posters produced by the college to demonstrate to students how their comments had been acknowledged and actioned, which had not been produced during the Covid-19 pandemic, would be reintroduced.
With 3 routine and 3 operational recommendations, the Report had given Substantial Assurance.
In response to questions, the P/CEO explained that the enrichment prospectus had been shared with parents as part of email communications and there was no specific budget for student voice, it being embedded throughout a range of budget lines relating to different activities.
Resolved: That the report be noted.
Assurance Review of Sub-Contractor Controls (previously circulated)
The Review provided a report and certificate in accordance with the funding requirements of the Education & Skills Funding Agency (ESFA) that the college had satisfactory assurance arrangements in place to manage and control its subcontractors.
The Review had concluded that the college had good arrangements in place to manage and monitor its subcontracted provision. The college undertook regular risk management profiles for each provider and had a comprehensive Subcontractor Management Retained Funding Policy in place, which was reviewed and approved annually by the Board.
With no routine or operational recommendations, the Report had given Substantial Assurance.
The Finance Director explained that, in line with the college’s strategic objective to reduce the number of subcontractors, it now worked with two primary contractors; both of whom had a track record of high quality work and compliance with funding requirements.
The Committee expressed its pleasure at receiving sound assurance on the quality of the college’s subcontractor controls.
Assurance Review of Key Financial Controls - Payments (previously circulated)
The Review had considered the arrangements for authorising and paying costs incurred by the college and the arrangement for control of the organisation’s cheques and automated payments. The scope did not include providing an assurance that the expenditure was necessary or that value for money was achieved from the expenditure committed.
There was no segregation of duties between staff setting up suppliers and making payments, however, this was mitigated to the satisfaction of the IAS by the Finance Manager checking a report of all new suppliers and amendments to supplier details which was produced with each payment run.
With 2 important and 2 routine recommendations, the Report had given Reasonable Assurance.
In response to a question on the number of credit card holders in the college, the FD explained that he was assured that the number of cards in circulation was appropriate and that there were appropriate safeguards in place to mitigate the potential for fraud and misuse; however, a review of credit cards would be carried out to ensure that all cardholders still required a card and that there was a signed declaration form evidenced for all cardholders. The authorised signatory list and authorisation levels would also be reviewed.
Assurance Review of Cashless Payments System – Process and Controls (previously circulated)
The Review had considered the arrangements for receiving cashless payments across the college campuses, including how cashless payment cards were topped up, transactions recorded and accounted for in the finance system.
The Review had concluded that –
- Information on the college campuses becoming cashless as it embraced digital payments for students had been issued and was available on the college’s website with guidance and frequently asked questions. In response to a question, the FD explained that the college had accelerated the installation of the system as a response to Covid and, now that it was successfully embedded, formal procedures would be produced, as per the report’s recommendation.
- A review of users with administrative rights would be carried out to restrict access and increase controls. In response to a question, the FD explained that the college was working with the software provider to best adapt changes to the authorisation hierarchy to better restrict access.
- A report should be generated to detail any top ups applied each day and be reconciled to actual income received.
- In response to a question, the FD explained that tills in the college had the facility to ensure that the cashless payment card was being used by the right student at all times to mitigate the risk of fraud. The software provider had agreed the formats required to enable the photograph facility.
- Good practice included a cashless system process in place, cash receipting restricted to Main Reception and a reconciliation process in place within the Finance Team.
With 5 important and 6 routine recommendations, the Report had given Reasonable Assurance.
The Committee and P/CEO thanked the IAS for conducting a valuable piece of assurance work, to ensure that the cashless system was responsive and secure. It was noted that the review of a new system was particularly valuable and welcomed by SLT.
Ms Parkes left the meeting at this point. The Committee took the opportunity to thank her for her work.
04/22. Risk Register and Board Assurance Framework (Appendix Agenda Item 6)
The Committee reviewed the 2021 – 2022 Risk Register and Board Assurance Framework (previously circulated).
The FD explained the risks identified and mitigating actions being undertaken –
- The college was awaiting the outcome of its application to the Register of Accredited Training Providers (ROATP) in 2022. Whilst the college had submitted a strong application, the risk was significant, should the application be not successful.
- Regarding the risk of significant under recruitment of planned 16-18 learner numbers in 2022-23, the Register would be updated to include the risk mitigation actions reported to governors prior to the meeting.
- Regarding the risk of failure to deliver planned Adult Education Budget (AEB) allocation resulting in clawback of funding &/or material financial underperformance against budget, the FD explained that the financial forecast had anticipated clawback, which was reported in the Management Accounts commentary sent to all governors.
In response to a question, the FD explained that the college continued to monitor closely the impact of growing inflation on the budget and that the impact of upcoming pay awards was being modelled.
The FD reported that the college was in consultation with the local authority pension fund manager, challenging a recent request to put in place a Bond to secure liability, which could potentially increase the college’s contribution rate.
The Committee concluded that the risks had been appropriately identified and the management actions reported were effectively mitigating these risks.
Resolved: That it be RECOMMENDED TO BOARD that the Risk Register, as amended, be approved.
ACTION: REPORT TO BOARD
05/22. Audit Recommendation Tracking Report (Appendix Agenda Item 7)
The Committee received the Audit Recommendation Tracking Report (previously circulated).
The FD explained that the recommendations arising from the most recent IAS reports would be included in future reports.
06/22. Audit Code of Practice – Governor Development Update
The Clerk reported that the Governance Statement in the Financial Statements would, going forward, require a description of the training and development undertaken by the Clerk and governors. The Audit Code of Practice also required Audit Committee members to assess their own development. Currently, the planning and monitoring of governors’ training and development was undertaken by the Search & Governance Committee, which received an assurance report at every meeting.
The Committee Governance Pack included development resources for the Committee Chair and the role and issues for 2022 for the Audit Committee (previously circulated).
07/22. Irregularity and Fraud
The Committee agreed that the risks relevant to the Committee have been appropriately identified and the management actions reported were effectively mitigating these risks.
09/22. Date of Next Meeting – Wednesday, 15 June 2022 at 5.30 p.m. Venue – tbc
Governors agreed to consider the following item as a confidential under Instrument 16(2) (d) and Standing Order 11
10/22. Tender for Internal Audit Service and Financial Statement Audit Service (Confidential Appendix, Agenda Item 4)
The Committee received a report of the Committee Chair and, in accordance with Committee Term of Reference 3.1, made a recommendation to the Board on the appointment of an Internal Audit Service (IAS) from 2022 – 23 and Financial Statements (FS) auditors from 2022 – 2023, including the undertaking of the 2021 – 22 audit, as set out in a Confidential Minute.
The meeting concluded at 6.23 p.m.