Group Director, Quality and Standards Group Director, HR and Organisational Development

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1 NCG Audit Committee Minutes of Meeting held on 23 June Present Peter Michell Alex Turner Peter Michell took the chair In Attendance Louise Dawson Lynne Griffin Dominic Palleschi Chris Payne Mark Sacco Robert Auty Caroline Mulley Ben Sirs Group Director, Quality and Standards Group Director, HR and Organisational Development Group Director, Finance and Estates Group Director, Planning and Performance Clerk to the Corporation PwC EY (by telephone conference) EY (by telephone conference) 1298 Apologies for Absence Chris Newton Joe Docherty Chief Executive 1299 Conflict of Interest 1300 Minutes of the Audit Committee Meeting held on 17 March 2015 The minutes of the meeting held on 17 March 2015 were approved as an accurate record Register of Actions Minute 1221 The issue concerning the proportion of unresolved property issues with the helpdesk had been addressed. No suitable Key Performance Indicators could be identified because matters were addressed on a case by case basis. This action was removed from the register. Minute 1251d The auditor confirmed that an internal audit opinion would be provided for and that the approach would be consistent with that for the previous year. This action was closed. Minutes 1264 and These matters would be brought to a future meeting. 1

2 Minute 1271 The review of deferred income was planned for the year end. This action was removed from the register. All other actions had been completed Other Matters Arising 1303 Newcastle College Alleged Academic Breach It had been alleged that there had been an academic breach by an employee at Newcastle College in relation to producing learner work and amending learner grades. The matter had been investigated by an independent manager and the investigation had found no conclusive evidence to support the allegations Financial Statements Audit Plan Caroline Mulley and Ben Sirs joined the meeting by telephone conference at this point. The approach proposed by EY for the 2015 audit was similar to that for previous years. The auditor would consider systems, processes and significant risks and would make appropriate use of information from other sources, where possible. The auditor described key areas of audit emphasis: income streams; Rathbone impairment review; recoverability of group balances; accounting for fixed assets; funding body grants; NCG subsidiaries and related entities; fee recoverability; payroll; expenses and cost control; taxation; pensions; preparations for the new FE SORP and FRS 102; compliance with the current SORP. The auditor would check the risk of any material misstatement associated with fraud. In response to a query concerning the identification of key processes, it was explained that the auditor had recently visited NCG to update their awareness of these. In response to a further query it was explained that EY would consider the outcome of external audit by the SFA. The Committee discussed the approach to audit of payroll. The auditor would consider this further. In response to a query concerning the application of a level of materiality, it was explained that the auditor would report items if they were material. In response to a query it was explained that the auditor had used their judgement in assessing the significance of risk. Resolved The Committee agreed to recommend the financial statements audit plan for the year ending 31 July 2015 for approval by the Corporation. 2

3 Caroline Mulley and Ben Sirs left the meeting at this point Internal Audit a) NCG Internal Audit Progress Report The report presented progress with internal audit assignment reports for the current year, highlighting that progress was on track. In response to queries it was explained that: resource use was also on track; progress was regularly monitored. b) IT Security Penetration Testing The audit report was classified as low risk overall. There had been four low risk findings and actions had been agreed with managers; two actions had already been completed. A range of good practice had also been identified. This outcome was a significant improvement on the previous year. The auditor indicated that the report was positive and compared favourably with other organisations. There was a need for minor development to improve and maintain awareness. c) Kidderminster College Integration of Policies and Procedures The audit report was classified as low risk overall. There had been one low risk finding and two advisory points; action had been agreed with managers. d) Performance Monitoring The audit had focused on planning, monitoring and reporting of funding. The audit report was classified as low risk overall. There had been one low risk finding and two advisory points; action had been agreed with managers. In response to a query it was explained that automated reports produced for internal reporting or use in bids were subject to a manual check. e) Safeguarding The audit report was classified as high risk overall. There had been two high risk findings and two low risk findings. It was explained that managers had already identified and addressed the areas of high risk through the implementation of new controls introduced in March

4 The first high risk finding related to safeguarding measures and controls during the period prior to an employee s DBS certificate being returned and cleared. The review highlighted a lack of evidence that controls were operating effectively. Managers reported that strategies were in place and adhered to. The approach to documentation had been improved. The second high risk finding related to positive disclosures; there had not been evidence of consistency in the approach across Divisions. Managers reported that HR considered each case and made a decision on the employee s suitability to continue in employment. The new process had been designed to create consistency. In response to a query it was explained that the greater speed of processing DBS checks using the on line system improved the prospect of completing checks before new staff commenced work. The first low risk finding related to the DBS reminder process. A reminder process was in place for all outstanding DBS checks and this would be enforced by Shared Services. The second low risk finding related to recording of the date of the review of Home Office evidence. It was explained that: in practice no employee would be set up on ITrent unless all home office evidence was received; in future the dates would be fully recorded on Itrent. The auditor highlighted the need for evidence of the approach to be in place; no fundamental flaws had been found in the process. f) Equality and Diversity The audit report was classified as low risk overall. There had been two low risk findings and action had been agreed with managers. A range of good practice had also been identified. The first low risk finding related to completion of mandatory training. Managers had previously identified the need to improve completion rates and a related target had been set in the NCG Equality Strategy. Reminders would be issued to staff and their line managers. The second low risk finding related to embedding of equality and diversity in the curriculum. In response to a query concerning the scope of proposed action, it was explained that managers had identified a need for a wider approach than that identified in the audit. g) Shared Services: Pensions auto-enrolment The audit report was classified as low risk overall. There had been two low risk findings and action had been agreed with managers. 4

5 The first risk related to checking of errors and warnings reports. This had been normal practice but had lapsed due to long term sickness within the department. Checking had been included as a payroll control. The second risk related to completion of non-applicable sections of payroll checklists. This had been implemented and reviewed by the Payroll Controller. h) Morrisons and Skills Support for the Workforce Contracts The audit report was classified as low risk overall. There had been one medium risk finding and action had been agreed with managers. There had also been an advisory point. The medium risk finding related to an error in claims for capacity building funds which had resulted in an over-claim. A requirement for all capacity claim forms to be reviewed and approved by senior management had been introduced. The advisory point related to the need for an attendance monitoring system should Intraining carry out group delivery; none had been undertaken to date Self-Assessment of the Committee The report proposed a self-assessment questionnaire for use by the Committee. This reflected the approach discussed at the previous meeting as well as comments made by the auditors. Resolved The Committee approved that the self-assessment questionnaire may be used for self-assessment of the Audit Committee Other Business 1308 Confidentiality of Business The following confidential papers were identified: Reports produced by the audit firms 1309 Date of Next Meeting 22 September 2015 at 5pm 5