G. Channon, C. Davies, l. Gilmour, R. Heath, D. Pulford and M. Willmot attended for the
duration of the following pre-meeting Briefing, which commended at 5.40 p.m.
Prior to the meeting, Committee members received a Briefing from the Finance Director on the management of financial risks to the College following the now resolved industrial dispute with the NEU, including –
- A summary of the main risks identified by the College; and
- How the College was managing these risks, the controls in place to manage the risk, and the activities put in place to mitigate the impact of current ongoing industrial action.
The Committee sought assurance on the pre-emptive work being undertaken to manage and minimise the risk to the College of possible reduced enrolment numbers for 2019/20. The College’s enrolment activities were being conducted in earnest and it was acknowledged that any impact on enrolment would not be fully known until October 2019. The College already had in place plans in the event of a drop in enrolments and the consequential loss of funding lagged to 2020/21, which, if required, would be put inaction during 2019/20. The College would continue to review and monitor group/class sizes, although it remained a strategic intention to provide a broad curriculum offer to the community and employers.
The Committee thanked the FD for providing the Briefing and agreed that it had provided assurance on the robustness of the College’s actions to manage the risks identified and to minimise impact on student experience.
The Committee was reminded that it had agreed that it use the November 2019 pre-meeting time slot to discuss and review the Risk Register Assurance Level grading system, quantifying impact criteria and probability assessment criteria.
10/19. Declarations of Interest
There were no declarations of interest.
The Committee Chair welcomed C. Sharp to his first meeting as the newly-appointed co-opted committee member.
11/19. Draft Minutes of the Meeting Held 20 March 2019 (Appendix No. 3)
The Minutes of the meeting held on 20 March 2019, were agreed and signed as a true record.
12/19. Financial Statement Auditors 2019 – 2020 Audit Plan and Strategy (Appendices Nos. 4)
The Engagement Lead introduced the Financial Statement Auditor Audit Plan and Report (previously circulated) for the year ended 30 July 2019.
The Plan and Strategy set out –
- Grant Thornton’s understanding of the principal business issues relating to Shrewsbury Colleges Group (SCG) and the overall impact on the audit approach – financial position and Going Concern;
- The company’s risk-based approach;
- Significant risks identified. These risks included –
- Significant risks, such as the risk of fraud; and
- Reasonably possible risks (income and expenditure);
- The Company’s approach to materiality and regularity assurance;
- The Team;
- Fees; and
- Communications of audit matters with the Committee.
The Engagement Lead referred to the report (previously circulated) that covered some important areas of the auditor risk assessment and that Grant Thornton was required to make enquiries under accounting standards. The Chair confirmed that the Committee had been adequately informed and had a good understanding of the College’s risk management processes and that the Committee had oversight of the following areas –
- Laws and regulations;
- Going concern;
- Related parties; and
- Accounting estimates.
The Committee acknowledged that the EFSA was required to treat revenue as a significant risk. It also noted that pension liabilities had an inherent elevated risk.
The Committee was advised of the planned treatment of the additional capital grant funding the College received in 2018/19, in the Financial Statements.
The FD also explained to the Committee a change in the accounting treatment of IT asset lives, which had been reviewed and extended to between 5-7 years from 3 years to reflect actual historic asset use and replacement cycles. The Committee agreed with this approach.
RECOMMENDED TO BOARD the External Audit Plan and Strategy. ACTION: ITEM TO BOARD
13/19. Internal Audit Service Reports (Appendices Nos. 5a – d)
The Finance Director provided a verbal update on the progress of the Internal Audit Plan. He had met with the Internal Audit Service to plan for 2019 - 20, including making some amendments, to reflect the College’s risk register, including the removal of some smaller, lower-risk audits from the Plan going forward, in favour of audits which would focus on higher-risk areas. The Chair commended the support of the Service to this more risk focussed approach.
Network Controls Audit – Response to Audit Plan
At the previous meeting (Audit Min. No. 03/19 refers), the Committee had noted that an audit for Network Controls had been put on hold, as the proposed scope was considered to be very close to that of the previous years’ cyber security audit and would cover elements of the College’s network access controls where the College had already taken what it considered to be a proportionate approach.
The Committee had agreed that instead it would consider a report setting out these issues so it could consider whether or not to continue with the Network Controls Internal audit and also provide relevant information for the internal auditors to enable a more focussed and value added audit, should this be required.
The Group Vice Principal, Information & Strategic Development (GVP – I&SD) presented the report (previously circulated), which set out scope actions and the College’s position with respect to network controls at the College. The Committee discussed mobile working/remote access to the College’s network and how the College was mitigating associated risks. The Clerk advised that, from September 2019, all governors would be required to use ‘college’ email addresses for all College and Board electronic communications.
Regarding end user awareness programmes, the Committee sought assurance that staff were aware of the importance of cyber security and that appropriate training was in place. Cyber awareness training was part of staff induction and available at the annual all-staff training days. The Committee agreed that the College should also provide directed training to vulnerable posts/teams.
It commended the College to undertake these actions.
Resolved: That the report and its recommendations be accepted.
The GVP-I&SD and the Technical Services Manager left the meeting at this point.
Ms Parkes presented the following reports –
Internal Audits Conducted as at end of May 2019 (previously circulated)
The Committee reviewed the internal audits conducted as at May 2019.
Assurance Review of Student Support (previously circulated)
The review had considered the processes in place for providing financial support to students including Advanced Learner Loans (ALLs), bursaries, career development loans, higher education student loans, learner support funds and free College meals. The Review had also considered opportunities to improve processes in line with best practice.
The Review concluded that –
- Appropriate policies and procedures are in place for the Student Bursary and Hardship Fund; however, these require updating;
- Adequate arrangements are in place for promoting the financial assistance available;
- Testing confirmed that the eligibility of students to financial assistance had been checked;
- A review of the guaranteed bursaries’ allocation of payments and deductions for meals needs to be undertaken to ensure that students are receiving correct bursary due;
- The award following assessment needs to be clearly recorded on the Assessment Form and signed by the Assessor; and
- And thus had Reasonable Assurance.
All recommendations and management comments had been accepted. Ms Parkes referred to the recommendations and explained the requirements. The College and Radbrook Foundation were advertising to students the range of student support available.
Resolved: That the report be noted.
14/19. Audit Recommendation Tracking Report (Appendix No. 6)
The Committee reviewed and noted the Audit Recommendation Tracking Report (previously circulated).
The Finance Director updated on the management actions that were overdue.
The Committee also supported the removal from the Tracking Report of those actions either completed since the last report or no longer considered relevant or where no further action was considered appropriate by management.
Resolved: That the report be noted.
15/19. Risk Register and Board Assurance Framework (Appendix No. 7)
The Committee reviewed (previously circulated) the Risk Register and Board Assurance Framework (BAF) – June 2019 Update. In updating the Risk Register a number of risks previously tracked had been reviewed and removed as no longer appropriate or requiring monitoring.
The Finance Director referred the Committee to identified risks regarding Apprenticeship Standards and that the risk rating reflected the unresolved issues of End Point Assessment routes, which could affect College apprentices’ timely completion and achievement.
The Committee noted that RAG-rated assurance levels after existing controls were in place, and expected assurance levels after proposed Action Plans had been completed were also recorded.
The Finance Director explained the risks identified and mitigating actions being undertaken. The Committee concluded that it considered the risks to have been appropriately identified and the management actions reported were effectively mitigating these risks. The Health & Safety Lead Governor asked referred to his recent Lead Governor meeting with the College’s Health & Safety Officer. The Committee requested the FD to consider how to record members’ and the Health & Safety Lead Governor concerns.
Resolved: RECOMMENDED TO BOARD that the Risk Register and Board Assurance Framework (BAF) – June 2019 Update, be approved. ACTION: REPORT TO BOARD
16/19. Irregularity and Fraud
17/19. Audit Assurance Report – Compliance with the Audit and Accountability Annexe to the Foundation Code of Government (Appendix No. 9 a)
The Committee noted an assurance report on compliance with the Audit Accountability Annexe of the Foundation Code (previously circulated). The Board was fully compliant for 2018 – 19.
The Committee acknowledged that this was the last meeting for Mr I. Gilmour, as his Final Term would end in October 2019 and therefore, Committee membership for 2019 -20, would need to be revised. The Clerk advised that the latest ACOP Guidelines now included provision for appropriate staff governors to be appointed to audit committees. The Committee welcomed this change.
18/19. Committee Self-Assessment 2018 - 2019 (Appendix No. 9 b)
At the end of the 2017 – 2018 governance cycle, the Board and each committee completed an evaluation exercise and governors were requested to undertake an individual self- assessment in July 2017. These informed the Board’s self-assessment return and improvement action plan 2018 – 2019. All actions are either on track or completed.
The Committee undertook a committee evaluation (previously circulated), based on individual returns and evidence collated.
The Committee discussed how to further improve the Committee’s effectiveness and provide robust evidence of its independence. It agreed that, from 2019 – 20, the College’s auditing services would have the opportunity to meet the Committee without the presence of College officers, should it be required.
As part of the discussions on the College’s Risk Register and Board Assurance Framework agreed by Board (Board Min No. 67/17 refers), the Committee examined those risks within its remit to ensure that they have either been identified or adequately discussed at the meeting.
The Committee concluded that the risks connected with the Committee had been identified and would be covered, due to the planned work schedule.
The Internal Audit Service and Financial Statement auditors left the meeting. The Committee thanked them for their work for the College.
20/19. Performance Indicators for Internal Auditor Service (Confidential Appendix No. 12)
The Committee considered a confidential report setting out the results of the performance monitoring of the Internal Audit Service auditors during 2018 - 2019 (previously circulated). It did observe that, ideally, the IAS could be more pro-active in sharing good practice observed elsewhere as part of the audit process and feedback. Notwithstanding this, the Committee agreed that, on the basis of the evidence presented, the Service had provided value to the College.
21/19. 2019 – 2020 Schedule of Meetings.
It was currently proposed that the Committee meetings for 2019 – 2020 be held as follows. However, this is subject to Board approval, following consultation.