Shrewsbury Colleges Group
Group Minutes of the Audit Committee
Location HELD BY REMOTE ACCESS THROUGH MICROSOFT TEAMS
Date 24th November 21
Time 5.33 p.m.
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, R. Sartain, C. Sharp and M. Thompson.
In Attendance In attendance by electronic device
Member of the Senior Leadership Team: P. Partridge, Finance Director (FD)
Clerk to the Board, T. Cottee

By invitation:
In attendance by electronic device
N. Coombe, Senior Audit Manager, Grant Thornton, Financial Statement Auditors (FSA)
W. Devitt, Engagement Lead, Grant Thornton, Financial Statement Auditors (FSA)
D. Robinson, College Internal Audit Service (IAS)
Apologies C. Parkes, TIAA, College Internal Audit Service (IAS) J. Staniforth, Principal/CEO

24/21.  Election of Chair

Having been proposed by M. Thompson and seconded by J. Barratt, it was

Resolved:  That C. Sharp be appointed Chair of the Committee.

C. Sharp in the Chair.

25/21.  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.

26/21.  Declarations of Interest

There were no declarations of interest.

27/21.  Draft Minutes of the Meeting Held 16 June 2021 (Appendix Agenda Item 4)

The Minutes of the meeting held on 16 June 2021, were agreed as a true record. 

28/21.  Draft Audit Committee Workplan 2021 - 2022 (Appendix Agenda Item 5)

The Committee undertook a review of the key reports to be considered by the Committee for 2021 - 2022 (previously circulated). 

Resolved:  That the Annual Timetable of Standard Business for the Audit Committee 2021 – 2022, be approved.

29/21.  Internal Audit Reports (Appendices Nos. 6a – 6dii)

Mr Robinson presented the following reports –

Follow-Up Review (2020 - 2021) (previously circulated). 

The follow up review considered whether the management actions taken in respect of priority 1 and 2 recommendations arising from the internal audit reviews conducted had been implemented. 

At the time of the review,

    • 9 recommendations were implemented
    • 1 action was outstanding
    • 1 action had been considered but not implemented
    • 4 not implemented.

In response to a question from the Committee, the FD explained that a number of procurement, training and policy review recommendations had not been implemented due to the disruption caused by the Covid-19 pandemic; staff not being on site and working from home had resulted in delays.  The payments recommendation from 2017/18, was still outstanding due to the IR35 element.  However, this was a reduced risk, due to the small number of people affected and the FD was confident that the College had in place sufficient robust mitigations. 

In response to a question from the Committee Vice Chair, the FD confirmed that the EU procurement thresholds were, for now, part of UK legislation and the Government would continue to apply them. 

Internal Audit Service Annual Report 2020 – 2021 (previously circulated). 

The annual internal audit report summarised the outcomes of the reviews carried out on the college’s framework of governance, risk management and control and was designed 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.  Mr Robinson reported that there had been minimal or no impact on the delivery of the internal audit work for the year as a result of the Covid-19 pandemic.  There had been no changes to the planned work as a result of Covd-19; any changes had been based on business/operational need. 

The 2020 - 2021 Annual Audit Plan approved by the Committee had been for 36 days of internal audit coverage in the year and 31 days had been used.  During the year, the service had conducted seven reviews; five receiving Substantial Assurance, two attracting Reasonable Assurance and no reviews attracted Limited or No Assurance.  One Review (Accommodation Strategy and Management) had been cancelled.

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.

30/21.  External Audit Reports (Appendices No. 7)

Mr Devitt presented the following reports –

Financial Statements for the Year Ended 31 July 2021

The external auditors from Grant Thornton (GT) presented the Financial Statements for the Year Ended 31 July 2021 (previously circulated).  The Draft Financial Statements for the year ended 31 July 2021, had been audited by the Financial Statements auditors who indicated a ‘clean’ unqualified audit opinion in terms of both truth and fairness and regularity, although several minor amendments were still required.  He thanked the FD, Finance Team and the MIS Manager, who had all supplied the additional samples required due to the increased assurance work required and had provided high quality information, resulting in no adjustments being required.

The FD explained that some minor adjustments and reclassifications had been made with respect to the furlough scheme funding received by the College during 2019 – 2020. 

In presenting the Draft Financial Statements, Ms Coombe explained that no adjustments had been identified that impacted the outturn other than minor disclosure arrangements agreed with management.  Additionally, the only substantive work outstanding was expected to be completed by the end of the week.

In response to a question, Ms Coombes explained that the regulatory and sampling work had been conducted remotely through the auditor’s software platform that allowed for data to be exchanged securely.

Going Concern Assessment

The FD 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, 2021-22 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, 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 report of the Finance Director and Financial Statements auditors and the reports on going concern, the Committee RECOMMENDED TO BOARD that

      1. the Committee considered the Shrewsbury Colleges Group to be a going concern; and
      2. the audit findings and draft year-end financial statements 31 July 2021 be recommended to the Board for approval.

                                                                                                            ACTION:  REPORT TO BOARD

The Audit Findings for Shrewsbury Colleges Group

Mr Devitt advised that there was nothing adverse in the findings report (previously circulated).  He explained the report’s contents, as follows –

      • The work was substantially complete and there were currently no matters of which Grant Thornton were aware of that would require modification of the audit opinion, subject to minor outstanding matters;
      • Audit findings – significant risks – the commentary was explained to the Committee’s satisfaction;
      • Audit findings against other risks;
      • Going Concern – Grant Thornton considered that the Board’s Going Concern assessment was reasonable and therefore the accounts had been appropriately prepared on the going concern basis;
      • No matters in relation to fraud or breaches in relation to laws and regulations had been identified;
      • The Letter of Representation (previously circulated) was brought to the Committee’s attention, which would be signed at the Board meeting in December 2021;
      • Regarding fees and non-audit services, the Committee noted the Statement to the effect that Grant Thornton was independent of the college and provided no other services.

Mr Devitt explained the two key areas that had concerned the auditors in the sector for the period.  Going Concern had been a challenge for many colleges in recent years, exacerbated by the uncertainty and additional unexpected costs falling to the sector because of the Covid-19 pandemic.  However, 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. 

Since the introduction of significant additional regularity requirements for the auditors, there had been a concern amongst sector providers over the amount of work now required to satisfactorily complete an audit.  Mr Devitt explained that the college had turned around the additional sample work very quickly; this was reassuring and suggested that there were no material issues arising.

Mr Devitt explained that, based on the work done to date, Grant Thornton was proposing an unmodified opinion.  The anticipated regularity assurance opinion would also be unmodified.

In conclusion, Grant Thornton anticipated that it would provide the college with an unmodified audit report.

Resolved:  That the Audit Findings for Shrewsbury Colleges Group for the year Ending 31 July 2021, be accepted.

31/21.  Audit Committee Draft Annual Report 2020 - 2021 (Appendix No. 8)

The Clerk 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.  She invited comments on the report.

The purpose of the Annual Report was to submit to Board a précis of the activities of the Audit Committee in an annual report for the Year 1 August 2020 to 31 July 2021 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 complaint with Code of Practice requirements.

The Annual Report to the Board provided -

      • a summary of the work of the Committee during the financial year under review, 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, having reviewed the Draft Report, AGREED that the section on the Internal Audit Service be supplemented to reflect the updates to the IAS Annual Report (Min. No. 29/21) and that this had provided 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 amendment requested, be RECOMMENDED TO BOARD for approval.                

ACTION:  REPORT TO BOARD

 

32/21.  Whistleblowing, Irregularity & Fraud – Annual Statement of Declaration of Incidents 2020 – 2021 and Policy Review (Appendices No. 9)

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 2020 – 2021, in accordance with Financial Procedures.

The Committee also reviewed the college’s Whistleblowing Policy (previously circulated).  The FD explained that the proposed changes provided clarification on the role of the P/CEO, where appropriate and to ensure the Policy was accessible, clear and robust.  The Committee concluded that it remained relevant and appropriate to the college’s needs. 

In response to a question from the Committee Vice Chair, the FD explained that, currently, the review of the Policy fell within the remit of the Committee.  Going forward, there was an opportunity to work with the Staff Forum on a review of how to ensure staff were aware of and had access to the Policy. 

Resolved:  That the Committee RECEIVED the Statement of the Clerk regarding Incidents of Whistleblowing and Fraud 2020 – 2021 and the revised Whistleblowing Policy and AGREED that the annual reminder regarding the College’s Anti-Bribery arrangements be sent to all staff.

33/21.  Risk Register and Board Assurance Framework (Appendix Agenda Item 10)

The Committee reviewed the 2020 – 2021 Risk Register and Board Assurance Framework (previously circulated).

The FD explained that some structural changes had been made to the Register since the last review in July 2021.  The FE Commissioner had included in his recently published Final Report a suggestion in relation to the Board’s approach to risk and it was considered that the 2020 – 2021 Register met this recommendation. 

The FD explained the risks identified and mitigating actions being undertaken.  The Committee concluded that the risks have been appropriately identified and the management actions reported were effectively mitigating these risks.

The FD took the opportunity at this point to advise the Committee that the college had been invited to apply for registration to the Register of Approved Training Providers (RoATP) in December 2021 and the Risk Register reflected that there was a potential significant risk whilst the college awaited the outcome, which would be known in February/March 2021.  The FD explained that the college was currently working on the registration.  In response to a question, the FD explained that the ESFA was refreshing the RoATP and all colleges and private providers were being required to apply for registration. 

The Committee requested that, as an ability to meet anticipated 16 – 19 growth and the challenge to the estate had been identified as a strategic issue, then the risk should be added to the Register.  This was agreed.

Resolved:  That it be RECOMMENDED TO BOARD that the Risk Register, as amended, be approved.

ACTION:  REPORT TO BOARD

34/21.  Audit Recommendation Tracking Report (Appendix Agenda Item 10)

The Committee received the Audit Recommendation Tracking Report (previously circulated).

35/21.  Irregularity and Fraud

None reported. 

36/21.  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.

37/21.  Date of Next Meeting – Wednesday, 16 March 2022 at 5.30 p.m.  Venue – tbc.

38/21.  Additional Item – Tender for Internal Audit Service and Financial Statement Audit Service

The FD updated the Committee on the proposed timetable for the letting of tenders for the Internal Audit Service and Financial Statements Audit Service and explained that he would work with the Committee Chair on whether deliberation of the submitted tenders would be considered at the scheduled meeting in March 2022, or at a Special Committee at a date to be agreed.

39/21.  Governor Development & Training – Inclusion of Statement in 2021 – 2022 Financial Statements

 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.

The Clerk had this year, in addition to the purchase of the Sixth Form College’s Association’s webinar programme, purchased the Education and Training Foundation Governor Development Programme and would be working with the staff governors on a more structured governor development programme going forward.

Ms Coombes, Mr Devitt and Mr Robinson left the meeting at this point.  The Committee took the opportunity to thank them for their work.

37/21.  Performance Indicators for Internal Audit Service and Financial Statements Auditors (Confidential Appendices No. 15)

The Committee reviewed and completed a confidential report with respect to the performance monitoring of the Internal Audit Service and Financial Statements auditors during 2020 - 2021 (previously circulated).  They agreed that the Indicator Reports be sent to the Internal Audit and Financial Statements auditors. 

 

The meeting concluded at 7.00 p.m.