The Corporation of the College of Haringey, Enfield and North East London

Transcription

1 The Corporation of the College of Haringey, Enfield and North East London COMMITTEE AUDIT Time and Date of meeting 6.30pm Tuesday 1 March 2016 MINUTES Tottenham Centre MEMBERS Ms A Rudkin (Chair); Ms H Wilson (Vice Chairman); Mr D Wyatt; Ms L Santry; Mr R Pickford In attendance Mr S Cross (Vice Principal Finance and Resources) Ms J Grant (Director of Finance) Mr L Newman (Mazars) Ms N Shoffman (Secretary to the Corporation) A1/0316 Apologies for Absence Apologies were received from Ms Santry and Mr Forbes. A2/0316 Urgent Business There was no urgent business. A3/0316 Declaration of Relevant Interests There were no declarations A4/0316 Minutes A218 The minutes of the meeting of the Audit Committee held on 26 November 2015 were APPROVED. A5/0316 Matters Arising from the Minutes 5.1 Update on closure of College s Subsidiary companies Ms Shoffman reported that the DSO1 forms for KIST and its group of companies have been submitted to companies house and we are just waiting for them to complete the various checks and confirm closure of the companies. The Chair asked about CIS and after some discussion the general view was that the original request to HMRC may have been missed and it was agreed to re-submit. Ms Grant agreed to progress this. 1

2 5.2 Trial balance The Chair asked if the Trial Balance (TB) which had been out by 37k is now balanced. Ms Grant responded that this had not yet been done but that it only needs to be done by the year end and that the underlying TB balances but the reporting of it is incorrect. The Committee asked that this be resolved before the next Audit meeting and asked Ms Grant to update the committee at its June meeting. 5.3 Update on Thames water leak claim Thames water leak report Mr Cross advised that he has received the leak water assessment prepared by the specialist consultant, in December which assessed the loss at 435k. However since then it has been difficult to get hold of the consultant and therefore Mr Cross was unable to confirm whether the claim has been submitted to Thames Water. It was agreed that rather than wait until we hear back from Mr Hunt we should keep the claim live by writing to and sending the assessment to Thames Water with an invoice and see what happens. Mr Cross agreed to progress this. 5.4 Fraud Mr Cross reported that a student is still being investigated by Enfield council for possible fraud against them using College documents. There is no fraud against the College but we will take any necessary action against the student once Enfield Council has completed its investigation. The Chair asked about the previous reported fraud involving a member of staff and whether this was publicised. Mr Cross said it had not due to the passing of time since the incident, but that he had undertaken to do for any future incidents. After some discussion the Committee asked Mr Cross to arrange for an be sent to all staff to remind them of action that will be taken if fraud if discovered. A6/0316 Chairs action No actions taken since last meeting A7/0316 Internal Audit Service and other Audit Reports A Audit Progress Grid The Committee received the progress grid. Ms Grant advised that there was an error in the grid in respect of Quality Management Systems follow up recommendation 6.1 as the deadline date should have been changed from November 2015 to March A couple of members said they were unable to reconcile the number of recommendations in the grid with those in the IAS progress report. It was confirmed that these numbers should match and Ms Grant said she would check them. The chair commented that she was pleased to see the antivirus on the apple platform had finally been installed. She also reminded the meeting that the Committee had asked the previous year that for completeness that all external audits recommendations are added to the grid and it was agreed that this will be done for the April meeting. The Committee AGREED to NOTE the Report 2

3 A Internal Audit Service Progress Report The Committee received the progress report. The Chair asked about the delay in turning around some of the reports. Mr Newman explained the reason for lateness but acknowledged this needs to be worked on and improved. A member expressed concern about the disparity in the grading which seems inconsistent. Mr Newman explained the IAS s rationale for grading the audit reports. There are no hard and fast rules but considerations include elements of professional judgement, the wider context of the area under review as well as the number and level of recommendations. For instance where a report is borderline, such as with Core Financial Systems Cash & Banking it tipped into adequate because of the nature of the recommendations. Management did not necessarily concur, but accepted the right of the auditors to determine their overall grading and would only challenge it if it seemed clearly wrong. The Committee AGREED to NOTE the Report A Internal Audit Reports 1. Health & Safety The Committee received the report. The audit findings gave substantial assurance on the effectiveness of internal controls and made two priority 2 (significant) recommendations regarding the need to report near misses and timely return of departmental risk assessments and one priority 3 (housekeeping) recommendation to add health and safety update as a standing item to all team meeting agendas. 2. Subcontracting controls The Committee received the report. The audit was the second in this area within the past year and was only undertaken because it was made mandatory by the SFA, who prescribed how it was done. That s the reason why it has a satisfactory grade in other words it s a pass or fail. The auditors were also required to sign a certificate confirming the audit grade which has been submitted to the SFA. The Chair said the figures on paragraph 1 on page 2 - value of the contract did not make sense. Mr Cross agreed the figures were incorrect and was not sure what they related to. He confirmed that the College currently has four subcontractors with a total net value of 522,251 for Mr Newman agreed to update the report accordingly. 3. Core Financial Systems Cash & Banking The Committee received the report. The audit findings gave Adequate assurance on the effectiveness of internal controls and made one priority 2 (significant) recommendation regarding the need to log the contents of the safes and six priority 3 (housekeeping) recommendations regarding staff access to cash and banking procedures, safe content log for all safes, need for additional safes, recording of petty cash withdrawals, signature register and petty cash reconciliation. 3

4 4. Awarding bodies The Committee received the report. The audit findings gave Adequate assurance on the effectiveness of internal controls and made one priority 2 (significant) recommendation regarding setting up Access Arrangements and five priority 3 (housekeeping) recommendations regarding presentation of EV reports, inconsistent registration processes, lack of monitoring of costs associated with and incorrect registration fees and the need for a formal procedures and policy re student entitlement for exam concessions/access arrangements. A member asked how much is spent on penalties and incorrect registration fees Mr Cross said he was not sure exactly of the scale of it but given the total spend is around 1m it will probably be in the tens of thousands; it is planned to bring this into the purchase order scheme so there will be a budget for it. The Committee noted management had not accepted the recommendation in respect of how EV action points should be followed up. After some discussion the Committee was satisfied with Mr Cross s explanation of and assurance that there are proper controls in place. The Committee AGREED to NOTE the Internal Audit Reports. A Purchase orders register accruals The Committee received the report. The Chair said she would like to unpack what happened at year end and where there may be problems. The Committee also noted that although the explanations related to the 2015 year end the purchase order register had been a growing problem for 3 years and should have been picked up by both the College and the auditors in 2014.The committee went through and discussed the various issues highlighted, what had caused them and the measures put in place which the management are confident will address them and prevent any re-occurrence. There followed a discussion around how a large number of long-outstanding purchase orders can mean the purchase order ledger becomes meaningless and how to ensure this would be picked up going forward. A member asked whether the accounts prior year adjustment would present an issue for the SFA and Mr Cross said that it wouldn t and that the SFA have specifically stated in their financial health letter received today that they have no significant concerns with regard to the college s financial control arrangements. In response to a member s question Mr Cross confirmed that balance sheet reviews are being carried out on a monthly basis. The initial part of the work is done by the financial accountant and Ms Grant then takes to Mr Cross. It was suggested and agreed it may be a useful learning and development opportunity for the financial accountant to pitch it directly to Mr Cross. The Committee AGREED to NOTE the Report. 4

5 A Report on implementation of HR workflow reminders The Committee received the report. The Chair said that although the report answers part of the problem she had also wanted details of the process regarding response to a whole range of things such as probation periods, increments and how the list of prompts is signed off and dealt with. Mr Cross said he will follow up with this in a report to the April meeting which will provide details of the processes, how they re checked and who is accountable for signing off. Mr Cross said that in respect of the report at this meeting there is still more work being done to control payments to individual HPLs. At present they are paid on planned rather than claimed work and these need to be addressed to account for any changes. The Committee AGREED to NOTE the Report. A8/0316 Risk Management A224 Review Risk Register The Committee received the risk register which had been updated for the spring term following a review by the senior management group. Mr Cross highlighted the following changes: A new risk for area reviews has been introduced -1.3 Area Review outcome leading to adverse impact on College itself or the FE landscape in London generally. The gross risk has been assessed as 10. The net risk is assessed as 5. The College believes that this is a low risk as we have sufficient influence over the process to mitigate that risk. One risk has been amended to add the word punctuality Failure to improve learners attendance and punctuality at lessons through rigorous and consistent implementation of College-wide procedures by all teachers. One risk has been reduced Change in SFA/EFA/LA policy and/or funding, resulting in loss of significant FE funding which is not responded to in a timely manner (also a Financial Risk). The gross risk has been reduced from 20 to 16. The net risk has also been reduced from 20 to 16. The college believes the risk of losing more SFA funding has reduced, however next year s allocation is expected this month and if it s not as predicted we will increase the risk again. Mr Cross said the he will bring to the next meeting, when the annual risk management framework is undertaken a further proposal for risk management strategy and policy. As previously agreed the Committee presentations will be made at this meeting on the process for assessing the risk around the following two areas: Risks 5.4/5.5 - financial systems and controls and Risk 3.2 failure to achieve learner targets for apprenticeships provision The Committee AGREED to NOTE the Risk register 5

6 A9/0316 Financial Regulations and associated Reports A Annual Review of Financial Regulations The Committee received the report. Ms Grant advised that the revisions were mainly to tidy up the document, include revised Terms of Reference job titles, implementation of their procurement system and the correction of typos etc. Ms Grant went on to say that since this document was dispatched it has been agreed, in addition to the two credit cards held by finance and principalship respectively, to issue another credit card for use by Marketing as they have to make a lot of online payments. This will be added to the version that goes to Corporation. Mr Cross then highlighted 10.5 in respect of large capital projects over 500k to follow protocols in Appendix F. There was some discussion around the quantum of this figure and what is in place for significant projects under 500k. One member suggested that this should be split between what is in the budget and what is additional; Mr Cross explained that anything under 500k is covered by other protocols. It was agreed that for completeness that details of the other controls in place should be included in appendix F. The Committee AGREED to recommend to the Corporation approval of the changes to the Financial Regulation subject to the above additions. A Annual Review of Treasury Management Policy The Committee received the report. Ms Grant advised that the revisions were mainly to tidy up the document and there were no material changes. The Committee AGREED to recommend to the Corporation approval of changes to the Treasury Management Policy A Skills Funding Agency, (SFA) Accountability reviews - report on College s Position The Committee received the report. Mr Cross said that, this reports on College s position and there are no issues. Based on the fact that no one has mentioned this subject for some time he recommends dropping it and the Committee agreed. Mr Cross, with the Committee s permission, then tabled and spoke to the letter from the SFA, received that day, which sets out the financial health of the College based on the audited financial statements. The letter confirms the assessment as OUTSTANDING. The Financial Plan in September 2015 had previously forecast the outturn to be GOOD. The underlying financial health for the College financial plan for to is confirmed as GOOD. 6

7 A Debtors and Provisions report The Committee received the report. The Chair said she had asked for an aged debtors report and had expected a small spreadsheet with the aged debt at year end compared to the previous year end. Ms Grant said this is readily available and will circulate it to all the members. A discussion ensued around the student debt and why it is difficult to reconcile the figures - which is due to the fees being paid in instalments. The Chair then asked how the 119k duplicate figure went unnoticed and Ms Grant explained how this was mainly due to it being part of the 24+ loans debt and not within the normal debt system The Chair commented that this was not helpful for our budget as it would have inflated income by 10%. Ms Grant said that this was sorted out at year end but we need to learn from that. Members expressed surprised that the auditors allowed this to be included on the debtor list and asked why a credit note wasn t raised. Ms Grant explained that it wasn t a bad debt but this was the only way the system would allow it to be processed. There are processes in place now to ensure this doesn t happen again. A member said that if we do forward cashflows that should pick this up but Mr Cross explained that although we do cashflow forecasts, they would not highlight such relatively small amounts. A External Verification report The Committee received the report. There have been no adverse External Verifier reports so far in A10/0316 Committee Business A230 Progress against current year s Committee work plan and Terms of Reference The Committee received the report. A11/0316 Date of Next Meeting 6.30pm Tuesday 26 April 2016 Tottenham Centre Signed A Rudkin.. Date: 26 April 2016 (Chair) 7