Audit Committee Meeting Minutes of the Meeting held on Monday 12th June 2023 via Microsoft Teams

Prior to the meeting the committee held a private meeting with the audit teams.

1.0 Apologies 

078 Apologies were received from Janet Smith. It was noted that Simon Bedford would join the meeting at 6.15.

2.0 Declarations of Interest 

079 No declarations of interest were received. 

3.0 Minutes of the Previous Meeting

080 The committee resolved that the minutes of the meeting held on 13th March 2023 (distributed as AUDIT.120623.002) be approved as a true record.

4.0 Actions and Matters Arising 

4.1 Action Tracker

081 The committee reviewed the open action tracker (distributed as AUDIT.120623.003): 
20.09.21 Action 1: Environment and Sustainability included in the 23/24 internal audit plan. Action complete. 
29.11.21 Action 3: Board Policy Framework to be brought to Board in summer term. Action ongoing. 
14.03.22 Action 5: Presentation of sustainability strategy to Board in 2023. Action ongoing. 
29.11.22 Action 1: All governors signed up to MFA. Action complete. 
13.03.23 Action 1: Recruitment of co-opted member. Action ongoing 
13.03.23 Action 2: Vice Chair attended the IA planning meeting. Action complete. 
13.03.23 Action 3 Governors were emailed re deep dive considerations. Action complete. 

4.2 Matters Arising 

082 There were no matters arising.

5.0 Internal Audit

5.1 OFS 

083 The committee received the IA report on Processes for OfS Returns (distributed as AUDIT.120623.005). LS confirmed that the report provided reasonable assurance with 2 medium recommendations and 1 low recommendation identified. She noted that the actions were common in similar audits across the sector 

5.2 Provider data Self-assessment Toolkit (PDSAT) 

084 The committee received the IA report on PDSAT (distributed as AUDIT.120623.006). LM took governors through the report, she highlighted that this was an advisory piece of work with no opinion and had identified 2 management actions. She explained the nature of the work undertaken and the findings. A governors asked how the outcome compared to other colleges. LM advised that the outcome was very similar to others.

5.3 Key Financial Controls – Income and Debtors 

085 The committee received the IA report on key financial controls; income and debtors (distributed as AUDIT.120623.007). LM highlighted that the report provided atrial assurance with 7 recommendations identified. She provided some context to the outcome of the report noting significant staff turnover in the college team and a legacy system that did not function as required. The impact of these issues was considered. A governor queried the potential impact of the write offs identified on the end of year accounts. DN confirmed that the college had not expected a positive outcome, hence the ask for the internal audit, he confirmed that anew manager had now started work and that the legacy system was being changed at the start of August. Discussion took place on the levels of unallocated cash and write offs. DN confirmed that the new system would enable automated chasing of outstanding commercial invoices. It will also be joined to the EBS system to enable additional consistency. A governor sought confirmation that processes were in place to confirm that write-offs would not exceed the thresholds permitted by Managing Public Money regulations. DN confirmed that this was limited via the provisions of updated Financial Regulations. A governor asked for a breakdown of aged debtors/reconciliation report to be brought to the next meeting (Action DN). AC confirmed that the position was clearly identified in the management accounts shared with governors. A governor queried if this was usual situation for the college. AC noted the impact of staff changes and the legacy system, with a previous postholder having undertaken manual reconciliations. The new staff and new system should alleviate the issues identified. Governors considered how they would track monitor this issue. It was noted that this would be part of RSM’s follow up work. The committee would consider further at the December meeting and decide if this needs to be added to the risk register. (Action – Audit Committee). LS noted that similar staffing issues are being identified across the sector. She suggested that her team would follow up on this report in December/January to hopefully provide assurance to the committee. (Action RSM) 086 In addition to the above the committee reviewed the Progress Report.

086 In addition to the above the committee reviewed the Progress Report. 

5.4 IA Plan 23/24 

087 The committee reviewed the IA Plan for 23/24 (distributed as AUDIT.120623.008). ST thanked HS for attending the planning meeting in her role as committee vice chair. AC outlined the planning process noting that this had been based on the strategic plan and the risk profile. He confirmed that other factors including external issues were also considered. The plan follows the IA Audit Strategy 2022-26 previously agreed by the Board. AC noted that as RSM are looking to undertake a piece of work with several colleges on course viability and contribution analysis the college will be involved with that piece of work rather than take a course viability IA. LS confirmed that this project was currently being planned and would take place in 23/24.

088 Governors considered the proposed reviews. A governor noted the issues identified on the risk register around staff recruitment and retention and questioned whether that audit should be brought forward. AC suggested that as the implementation of the People Strategy action plan is still in progress the plan to take this in 24/25 remained appropriate. A governor questioned whether, in light of the issues raised by the report considered at 5.3, the key financial controls: purchasing and creditors report should be brought forward. It was agreed to move this from 25/26 to 24/25. In all other respects the committee resolved to recommend the plan to the Board for approval. 

5.5 Sector Update 

089 The committee received the sector update (AUDIT.120623.009).

6.0 Recommendation Tracking

090 AC presented the recommendation tracker (distributed as AUDIT.120623.010). It was noted that one action was brought forward from the last meeting and that had been closed following the Board meeting on 27th March. 12 recommendations have been identified in the reports shared at this meeting and will now been carried forward for review at the next meeting.

7.0 Subcontracting

091 AC explained the changes brought about by the introduction of the new Subcontracting Standard by the ESFA (report distributed as AUDIT.120623.011). The requirement of the Audit Committee to consider the assurance report, being undertaken by RSM, and for that consideration to be minuted was noted. This will be undertaken at the September meeting, the guidance does not say that this has to be ahead of submission. The college is required to submit the report to the ESFA by 31st July. Within 12 weeks of submission the ESFA should then send a report to the college to confirm whether, in their view, the college has met the required standard. The potential outcomes and impacts were reviewed.

8.0 Risk Management

092 The committee reviewed the risk management report (distributed as AUDIT.120623.012). AC confirmed that this report included the risk register that the committee usually received. No new risks have been identified by the Risk Management Group. The overall risk score has reduced. 

093 AC presented the proposed strategic risk register (distributed as AUDIT.120623.013), he highlighted that as this was the first time that the college had used a strategic risk register a period of refinement over the coming months would be needed. Governors noted the potential need to revisit the risk appetite level assigned to each risk as the process evolves. AC confirmed that the operational risks reviewed in the previous paper would now be reviewed and aligned to the strategic risks. Mitigation of the identified risks should support the implementation of the strategic plan. A governor queried how active the document would be in terms of its use. AC confirmed that at future Board meetings from 23/24 the strategic risk register will be considered immediately after progress reports on the strategic plan. It will also be considered monthly by the Executive Leadership Team and by the College Management Team. 

The committee resolved to recommend the strategic risk register to the Board for approval.

9.0 Fraud, Bribery, Irregularities and Legal Claims Report

094 The committee reviewed the report (distributed as AUDIT.120623.014). AC explained the potential issue that had arisen externally through a payment process. As a result he advised that internal processes have been strengthened. Governors asked if the information had been received from a known source and if the police had been alerted. AC confirmed that the information had come through a known source, and that it had been reported to the company concerned and the police.

10.0 Post 16 ACOP 

095 The committee received the report confirming the changes made to the ACOP (distributed as AUDIT.120623.015). It was noted that most of the updates made related to the ONS reclassification and the requirements relating to managing public money (MPM).

11.0 Financial Statements and Regularity Audit 

096 DH presented the Audit Strategy Memorandum to the committee (distributed as AUDIT.120623.016). He highlighted the required changes to the ESFA Accounts Direction in response to the ONS reclassification, as a result the Audit SAQ is more involved than in previous years. The fraud item highlighted under the previous item may be a reportable issue, Mazars will work with management on that point. The impact of refinancing on the going concern point was discussed in the panning meeting. Ac confirmed that he was in conversation with the ESFA on how comfort on the going concern point can be achieved. AC confirmed that Mazars had responded positively to a request to look at the fees. 

The committee resolved to recommend the audit strategy memorandum to the Board for approval and to approve the audit and regularity engagement letters. 

Action – RR to share links to the bitesize guides re reclassification

12.0 Committee Members 

097 The committee reviewed the terms of reference, business schedule and self-assessment questionnaire (distributed as AUDIT.120623.017). The committee resolved to recommend the terms of reference and business schedule to the Board for approval and to approve the self-assessment questionnaire. 

098 Governors considered the deep dives that the committee should consider at the meetings in September and November. It was agreed to take business continuity (strategic risk 4) in September and compliance (strategic risk 12) in November. 

HS left the meeting

13.0 Policy Review 

099 The committee reviewed the Whistleblowing Policy as this had reached its review date (distributed as AUDIT.120623.018). Minor updates were noted. A governor suggested that the contact details for the postholders referred to should be included in the policy. A governor queried whether there should be greater clarity to direct colleagues to the whistleblowing policy of grievance procedure as appropriate. JW noted that it was not possible to be more explicit within the document but that colleagues would be redirected to the process most appropriate for them should the need arise. 

The committee resolved to recommend the updated policy to the Board for approval subject to the point raised.

14.0 AOB

100 None

15.0 Date of the Next Meeting 

101 The next scheduled meeting of the committee will take place on Monday 18th September 2023.