AUDIT COMMITTEE. Revised. the COURT

Transcription

1 the COURT Revised AUDIT COMMITTEE MINUTES of the second meeting of the 2014/2015 academic year held on Monday, 10 th November, 2014, in Room 084, Queen Anne Court, Greenwich Campus, Park Row, Greenwich SE10 9LS, commencing at 5.00 pm. Present: Mr S Davie (Chairman) Mr I Harwood (Independent Member) Mrs D Khanna Ms E Passey Mr J Stoker In attendance: Mrs T A Brighton (Minutes Clerk) Mr R Daly (Director of Finance) Mr L Devlin (Head of Campus Services) Ms L Nadal (University Secretary) Mr J C Wallace (Administrative Secretary) Mr D Barnes (External Auditor) Mr M Cheetham (Internal Auditor) AUD 14/16 PRIVATE MEETING The meeting was preceded by: (i) (ii) (iii) a private meeting of Committee Members a private meeting of Committee Members and the Internal Auditor a private meeting of Committee Members and the External Auditor. The Chair stated that this pattern of private meetings would continue in the future (ie Committee Members would convene at 4.15 pm and invite the Internal and External Auditor to have private discussions prior to the meeting of the Committee at 5 pm). AUD 14/17 DECLARATION OF CONFLICTS OF INTERESTS There were no declarations of conflict of interests. AUD 14/18 MINUTES OF PREVIOUS MEETING (AUD 14/P24) The minutes of the meeting held on 6 th October 2014 were agreed and signed as a true record. AUD 14 M-2 10 November 2014 page 1

2 AUD 14/19 MATTERS ARISING FROM THE MINUTES 19.1 Finance Office Staffing The Director of Finance reported that interviews for the new position of Assistant Director of Finance had now been held but at present an appointment had not been made. The Committee recognised that this was a key senior post in the Finance Office and it was important to appoint the right person. If recruitment proved to be difficult, it might be necessary to revisit the particulars of the job Policy on Business Continuity The University Secretary reported that work was continuing on the development of a business continuity policy and a draft would be presented for consideration at the next meeting Appointment of External Auditors The External Auditor left the meeting. At its previous meeting the Committee had agreed in principle to the re-appointment of Grant Thornton PLC for a further two years subject to the satisfactory outcome of a comparative desk review of providers of external audit services. The Director of Finance briefed the Committee on the findings. The review had not identified any substantive grounds for changing auditors and with the pending implementation of a new financial Statement of Recommended Practice (SORP), the Committee believed that this was not an appropriate time to engage new auditors. The External Auditor was invited back into the meeting and, at the request of the Chair, outlined the pricing structure adopted by Grant Thornton. On the basis of the information provided, the Committee agreed to recommend to Court that: Grant Thornton PLC be re-appointed for a further two years wef 1 December 2014 and covering the 2014/15 and 2015/16 financial audits. After this period, a full market testing and tendering exercise would be undertaken Internal Audit Report on Network / Data Security and Cybercrime Control The Committee noted that the acquisition of a spam filtering system had now been approved and would be funded from the Development Fund. The system was due to be implemented early in AUD 14 M-2 10 November 2014 page 2

3 AUD 14/20 REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014 (AUD 14/P25) The Committee considered the draft annual report and financial statements for the University and its subsidiaries, the draft External Auditor s Audit Findings Report, the draft Letter of Representation and a letter of assurance from the Vice-Chancellor to the Court. The Director of Finance reported that the financial audit was substantially complete although some minor textual changes were still under review. The only major outstanding issue related to the provisional outcome of the 2013/14 HEFCE teaching contract. Taking into account the uncertainties surrounding reconciliation, he had decided to take a cautious view and the accounts now carried a small provision. He further reported that a year-end surplus of 12.7m had been reported to the November Finance Committee meeting. Release of the holdback provision would lead to a final outturn of 13.1m. This figure was close to the year-end projection provided in June and the Chair was pleased to note this improvement in the forecasting process. The Director of Finance outlined the main financial highlights for the year. Despite a higher level of teaching revenue, student numbers had fallen. This was principally the result of the strategic decision to improve the quality of the student intake, but also a reflection of the reduction in the Partner College provision now that these institutions could recruit to their own student contract. The Director of Finance was asked to ensure that the table on student numbers in the Operating and Financial Review adequately indicated this change in trends in student numbers. It was also reported that there had been currency losses of 500k on Euro and $US denominated research grants and contracts. There was some discussion on the future management of currency transactions and the Director of Finance agreed to give some consideration to formulating a formal policy. The Committee noted with some concern that the Natural Resources Institute (NRI) had posted a larger than budgeted loss for the year. Much of the loss was attributable to currency losses but the use of specialist, but expensive, staff on contracts with moderate margins was also a factor. The Committee acknowledged the contribution that NRI delivered to the research agenda. Contract tendering was suggested as an area of future internal audit review. The External Auditor presented the Audit Findings arising from the audit of the financial statements. He reported that there were a few outstanding areas but none of them would require modification of their audit opinion. He highlighted a number of issues which had arisen during the course of the audit including the following: i) the interface between the University and the Student Loan Company needed to be kept under review to ensure that all funding due to the University was received; AUD 14 M-2 10 November 2014 page 3

4 ii) iii) a sample of commercial debtors had revealed a low percentage of recoverability. Further support to manage the recoverability of debts was being sought by the Finance Office; during testing, the Auditors had noted that supplier statement reconciliations were not being performed. The audit risk was mitigated by undertaking direct supplier confirmation of balances. This highlighted a small number of unrecorded liabilities that were immaterial and therefore recorded on the unadjusted misstatements schedule. It was noted that since the testing, the level of liabilities had fallen and the External Auditor agreed to update the schedule prior to submission of the report to the Court. Subject to modifications requested in discussion, the Committee agreed to recommend to Court for approval: i the report by the Director of Finance on the financial statements ii the draft Report and Financial Statements for the year ended 31 July 2014 a b c for the University of Greenwich for Greenwich University Enterprises Limited for Greenwich Property Limited iii iv v the draft External Auditor s Audit Findings Report and response from the Director of Finance the draft Directors Letter of Representation to the External Auditors for signature by the Vice-Chancellor and Chair of Court the letter of assurance from the Vice-Chancellor to the Court. AUD 14/21 VALUE FOR MONEY (VfM) 21.1 Value for Money Study on Opportunities for Outsourcing (AUD 14/P26(i)) The Committee considered the report of a value for money study undertaken by University officers on the opportunities for outsourcing. The Administrative Secretary, who had coordinated the review, explained that the scope of the study covered the concept of shared services as well as other forms of non-direct delivery of services. The University currently had a number of shared services in place (for example, Drill Hall Library, the JANET network, etc) and out-sourced many of its core functions (such as cleaning, waste management and catering) and the aim of the study had been to examine the potential for further outsourcing. To this end, the study had examined the extent and cost of outsourcing or shared service provision in a wide range of other universities. In compiling the report, the review group had referenced reports by the UUK (Efficiency in Higher Education) and a report commissioned by HEFCE entitled Shared Services in the Higher Education Sector. AUD 14 M-2 10 November 2014 page 4

5 Committee Members found the report to be interesting and informative. They were satisfied to note that the benchmarking data indicated that the University s extent of outsourcing was in line with, or exceeded, the sector norm. The study had concluded overall that value for money was demonstrated to have been achieved in the provision of services through the activities of outsourcing or sharing services. Furthermore, there were no major areas of day-to-day operations which would be appropriate for out-sourcing which were not already subject to outsourced contractual arrangements. The Committee were reassured by the findings of the report and endorsed the series of recommendations aimed at enhancing value for money in this area through the regular monitoring of services delivered in-house in order to explore the feasibility of provision via outsourcing. The Chair stated that the report s findings were pertinent to the Committee s opinion on value for money and asked the Committee Clerk to ensure that the Audit Committee Annual Report made appropriate reference to the study Value for Money Annual Report (AUD 14/P26(ii)) The Committee received the revised Value for Money Annual Report which had been updated to reflect discussion at the last meeting and to include the findings of the VfM Study on Opportunities for Outsourcing. In reviewing the VfM arrangements relating to staffing resources, the Committee noted progressive increases in recent years in the completion of staff appraisal rates but believed that the 2013/14 rate of c74% could be improved further. It was reported that a new HR Strategy was in development and that the key performance indicators attached to the Strategy were likely to include staff appraisal rates. The Chair asked that the report be further revised to address the Internal Auditor s conclusion on economy, efficiency and effectiveness prior to presentation to Court. AUD 14/23 NATIONAL COLLEGE FOR TEACHING AND LEADERSHIP: FINANCIAL MANAGEMENT AND GOVERNANCE SELF-ASSESSMENT (AUD 14/P28) The Committee received a copy of a completed Financial Management and Governance Self-Assessment return which had been submitted to the National College for Teaching and Leadership (NCTL). It was noted that completion of the return was a stipulation of the NCTL to ensure that all providers of Initial Teacher Training conformed to the requirements of the Grant Funding Agreement that applied upon receiving funds. Following submission, the return would be reviewed by the NCTL and the grading provided by the University would be assessed. When known, the NCTL assessment would be communicated to the Committee at a future meeting. AUD 14 M-2 10 November 2014 page 5

6 AUD 14/24 INTERNAL AUDIT 24.1 Internal Audit Reports The Committee considered the findings and recommendations of internal audit report Follow-Up of Previous Internal Audit Recommendations - Part 3 (AUD 14/P29). The Committee noted adequate progress in implementing agreed actions to address recommendations arising from seven reviews undertaken in The Internal Auditor reported that this was the final follow-up review and based upon the results of all three follow-up audits, the overall opinion was that the University had demonstrated adequate progress in implementing their recommendations. 62% of all recommendations had either been implemented or superseded. The Internal Auditor reported that some of the on-going recommendations were several years old. The University Secretary would be taking the lead on progressing these and she would be providing a summary of all outstanding recommendations. The Chair hoped to see an improvement in the completion rate at the next meeting Internal Audit Progress Report The Internal Auditor reported verbally on progress with implementation of the internal audit programme. Of the six audits scheduled for this term, two were under way, two were due to start in December and two had been deferred to 2015 at the request of management. The University Secretary agreed to pursue a possible start date for the research integrity review Internal Audit Annual Report (AUD 14/P31) The Committee considered the revised version of the Internal Auditors annual report for The wording of the section on economy, efficiency and effectiveness had been amended and the results of the follow-up audits had been incorporated. In reviewing the updated report, the Internal Auditor was asked to make some additional minor modifications. Subject to incorporation of these, the Committee agreed to recommend the report to Court for approval. AUD 14/25 MATTERS FOR REPORT (AUD 14/P32) 25.1 External Audit Approval of non-audit Services The Committee received a schedule of non-audit work carried out by Grant Thornton during the current financial year to date. The meeting ended at 7.30 pm. T.A.Brighton (revised ) U:/VCO/AuditCtte/Minutes/Audit/10 November 2014 AUD 14 M-2 10 November 2014 page 6