Wakefield College Corporation
Board of Governors
Audit Committee
Minutes of the Meeting held on 22 November 2016
1
Present:
Andrew McConnell, Ian Parsons (Chair), Andy Wallhead,
Andrew Watts
Clerk to the Corporation
In attendance:
Deputy Principal, Head of Finance, Peter Edwards and
Chelsea Hale (Grant Thornton), Jonathan Creed (ICCA-ETS)
Apologies:
2
Appointment of Chair and Vice Chair of the Audit Committee for 2016/17
Resolved
That Ian Parsons be appointed Chair of the Audit Committee for 2016/17 and up
until the date of the first Audit Committee meeting in 2017/18.
That Andy Wallhead be appointed Vice Chair of the Audit Committee for 2016/17
and up until the date of the first Audit Committee meeting in 2017/18.
3
Closed Session with Auditors
3.1
Neither Grant Thornton nor ICCA-ETS had any issues to raise with Governors in
relation to their work in 2015/16. Matters discussed under this agenda item
included:
(i)
(ii)
(iii)
that the Finance Manager had been well prepared for the financial
statements audit and the report had been drafted to a high standard;
that the impact of the departure of the Deputy Principal, and consequent loss
of institutional knowledge, should not be underestimated;
the direction of travel in relation to the Board Assurance Framework (BAF).
Jonathan Creed indicated that the College’s BAF was significantly more
advanced than what had been developed by most colleges, but might benefit
from a greater focus required on management actions being taken to
manage the identified risks.
The Deputy Principal and Head of Finance joined the meeting at the end of this
item.
4
Declarations of Interest
4.1
Andrew Watts commented that his role was mentioned in the management
response to one of the internal control recommendations of the Audit Findings
Report (Agenda Item 14).
NE/Audit Committee/Minutes/22.11.16
1
5
Minutes of the Meeting held on 28 June 2016
Resolved
That the minutes of the meeting held on 28 June 2016 be approved.
6
Matters Arising
6.1
On minute 9(ii) (College Policies – Anti-Fraud Policy and Fraud Response Plan), the
Deputy Principal proposed that the Plan be updated at the next review date, which
would take into account the new management structure and include a process by
which investigations on senior College staff could take place. Governors were
content.
6.2
On minute 9(ii) (College Policies – Anti-Fraud Policy and Fraud Response Plan), the
Deputy Principal indicated that most colleges did not appear to have a separate
money laundering policy, possibly because the scale of operations was not as great
as some other public sector organisations. Instead the College’s Financial
Regulations would be amended to make reference to money laundering, which
seemed to reflect practice elsewhere.
7
Status of Outstanding Audit Recommendations
7.1
The Deputy Principal reported that of the 15 outstanding recommendations given a
high or medium priority, eight had been implemented, four were due and three were
not yet due.
7.2
Governors considered the following audit recommendations that were due but not
yet implemented:
(i)
(ii)
(i)
(ii)
7.3
Board Assurance Framework) (628) – the work involving linking the BAF and
Strategic plan was ongoing;
Workforce Planning (649) – significant work on the Human Resources
Strategy had been developed, which would contribute to an overarching
Organisational Development strategy, but the focus of the recommendation
had yet to be completely addressed;
Study Programme Healthcheck (653) – it was proposed that the
recommendation, to develop reports to allow management to monitor the
Personal, Employability, Enrichment and Progress (PEEP) and Higher
Education, Aspirations and Transition (HEAT) information recorded in
ProMonitor, be revisited in March 2017 when the new curriculum
management structure was in place;
Business Development Unit (654) – significant progress had been made on
addressing other recommendations from this audit. The draft strategy on
employment engagement was in development and would be handed over to
the new Executive Director Employment Engagement and Apprenticeships.
Governors considered the following issues:
(i)
the two entries where no update had been provided:
NE/Audit Committee/Minutes/22.11.16
2


Business Development Unit (655) – review and update the apprenticeship
webpage of the College website and ensure in future prospectuses that
course pages indicate where an apprenticeship route / pathway was
available. The Deputy Principal reported that the apprenticeship
webpage was currently being updated and all apprenticeship related
documents were being reviewed;
Business Development Unit (658) – review customer Relationship
Management database to ensure all corrupt / inaccurate records were
cleansed. This work had been completed with external support.
8
2015 Funding Audit – Progress Report
8.1
The Deputy Principal reported that all but one recommendation had been
implemented and it was proposed to add this to the Status of Outstanding Audit
Recommendations report for future reporting until closure. The outstanding action
itself related to developing a process for confirming the start date for workplace
delivery from information recorded on ProMonitor.
8.2
Governors were content with the report and proposal. Governors asked when the
recommendation was likely to be implemented and noted that this was ongoing but
that it should be reviewed over the next 12 months.
9
Risk Management, Control and Governance
(i)
9.1
The Deputy Principal identified three risks for particular mention:
(i)
(ii)
(iii)
9.2
Risk Register
development of a learning culture (Ref. 1), which was crucial to a good
Ofsted outcome;
disposal of the Thornes Park Campus (Ref. 4), where consultation meetings
highlighted the strength of feeling around development on the already
developed campus footprint;
income and cost pressures (Ref. 6), where learner number shortfalls for 1618 activity would impact on 2017/18 funding and income shortfalls would
have to be managed in year;
Issues discussed by Governors included:
(i)
the disposal of the Thornes Park Campus. It was noted that there was a
strong public lobby against the redevelopment of the Thornes Park Campus.
Governors enquired whether the College relied on the development of this
site for its other property development activity. It was noted that this was not
the case in respect of the Advanced Skills and Innovation Centre (ASIC) and
the purchase of the Archive of Deeds building and its first phase of its redevelopment. It was noted that an estimate for the value of F-Block upon
disposal was likely to be more reliable at this stage as this previously had
gained planning permission for housing. Governors also enquired as to the
alternative options for the Thornes Park Campus site. One option was to put
the site up for sale without planning permission and accept whatever price it
might attract;
NE/Audit Committee/Minutes/22.11.16
3
(ii)
the income and cost pressures. It was noted that an under recruitment of
about 200 16-18 learners in 2016/17 would result in a funding shortfall in
2017/18 of about £625k. Salary increments and pension costs would add to
the cost pressure, but it was anticipated that the College would be able to
manage any budget shortfall.
(ii)
Board Assurance Framework
9.3
The Deputy Principal reported that the Board Assurance Framework (BAF)
development session held in March helped inform its subsequent development to its
current state, which now saw the framework slimmer and more graphical.
9.4
Governors considered the methodology behind how the gap(s) had been identified
to be satisfied that it was comprehensive. It was agreed that the Performance
Dashboard should address all key risks and that a task and finish group (of
Governors) should be convened to consider further development of the
Performance Dashboard.
10
Internal Audit Reports
(i)
Learner Destinations
10.1 ICCA-ETS reported the following points:
(i)
(ii)
(iii)
the audit was designed to provide advice and guidance on establishing
robust systems and controls to accurately capture and report on learner
destination data;
the audit was advisory and so no opinion was offered;
two ‘advisory’ recommendations were made to review destination data as
part of curriculum planning to: (i) consider business development
opportunities in higher education provision (progression pathway) so to avoid
losing students to other institutions; and, (ii) understand the extent to which a
student’s study programme at College was of use in their subsequent
employment. This recommendation was linked to Ofsted’s interest in
destination data as a value for money indicator
10.2 Governors considered how the quality of destination data might be improved to
address the second recommendation, e.g. understanding why students made
certain decisions in relation to their destinations. It was also noted, however, that
there would be a number of factors involved. An example given was that the state
of the economy was responsible for there being very few construction jobs for
students leaving the College in 2008, while three years later there was a significant
demand. It was noted that Information Advice and Guidance should help provide
students with an understanding of the likelihood of them being able to pursue their
chosen career at the end of their study.
(ii)
Corporate Governance – Post Area Review
10.3 ICCA-ETS reported the following points:
(i)
the audit was designed to review the suitability and effectiveness of the
existing model of governance and membership composition in ensuring
NE/Audit Committee/Minutes/22.11.16
4
(ii)
(iii)
(iv)
(v)
10.4
Issues considered by Governors included:
(i)
(ii)
10.5
effective decision making is undertaken by the Board in pursuit of achieving
the College’s strategic direction post area review;
the design controls were considered ‘good’, their application ‘adequate’,
which combined to give an overall assurance of ‘substantial’;
four recommendations were made; two medium priority and two low priority;
the two medium priority recommendation were to: (i) provide training to the
Board on child protection (safeguarding); the statutory requirements of the
Prevent Duty, the revisions to the Common Inspection Framework and the
Apprenticeship Levy; and, (ii) complete the self-assessment against the
Code of Good Governance for English Colleges in advance of the December
2016 Board meeting to demonstrate compliance and then report that
compliance in the Report and Financial Statements;
both recommendations had been accepted. However, it had been
determined that the College would not meet the December 2016 timeframe
with respect to adopting the Code of Good Governance but seek to adopt for
the 2016/17 academic year.
the low priority recommendation that the Search Committee identify
successors to the long serving Chair and Vice Chair. It was suggested that
the recommendation, as worded, implied that the Board had not given the
matter any thought whereas in reality it had been pursuing this matter for
over a year;
the medium recommendation on Governor training suggested that the
College had unknowingly neglected Governor training, whereas this had not
been the case, with the introduction of the Governor Development Sessions.
It was also noted that safeguarding training had been given in November
2016.
It was agreed that the Corporate Governance – Post Area Review report should be
reviewed, redrafted and resubmitted to the next meeting of the Audit Committee.
(iii)
Capital Project (Advanced Skills and Innovation Centre)
10.6 ICCA-ETS reported the following points:
(i)
(ii)
(iii)
(iv)
(v)
the audit was designed to test whether the College had adequate and
effective governance arrangements established for the planning,
management, financial control, and delivery of the ASIC capital project;
the design controls were considered ‘good’, their application ‘adequate’,
which combined to give an overall assurance of ‘reasonable’;
two recommendations were made; one medium priority and one low priority;
the medium priority recommendation was that the College should ensure that
its contractors could provide evidence that value for money had been
secured when appointing subcontractors. This had been agreed;
the low priority recommendation regarding the transparency of deviations to
the planned procurement approach of future capital projects. It was
acknowledged that the College had a very short timeframe between the
confirmation of funding and the start of the ASIC project but opined that the
audit trail was not as good as it might have been. The management
response indicated that the procurement process had been communicated to
NE/Audit Committee/Minutes/22.11.16
5
the West Yorkshire Combined Authority and the appointment of Bardsley had
been approved by the Board of Governors.
10.7
Governors asked whether value for money had been an issue in the ASIC project
and noted that no issues had been identified.
11
Management Assurance 2015/16
11.1
The Deputy Principal reported the following points:
(i)
(ii)
(iii)
that the Management Assurance 2015/16 was part of the year-end
assurance to the Board that key controls were in place during the year;
that the report was prepared on behalf of the Principalship;
that the Management Assurance 2015/16 included an opinion from the
Principalship that “…the processes in place during the year were adequate in
identifying, evaluating and managing the College’s significant risk for the
period ending 31 July 2016 and up to the date of approval of the annual
report and accounts.”
11.2 Governors were content with report as drafted.
Resolved
That the Management Assurance 2015/16 be approved.
12
Internal Audit Annual Report 2015/16
12.1
ICCA-ETS reported the following:
(i)
(ii)
(iii)
that the Internal Audit Annual Report 2015/16 provided management and the
Corporation with “reasonable assurance that Wakefield College’s
governance, risk management, and systems of internal control were
operating adequately and effectively, and that there were no instances where
any breakdown of control resulted in material discrepancy”. It also provided
an opinion that the College has “adequate and effective management, control
and governance processes in place to manage the achievement of its
objectives and securing economy, efficiency and effectiveness”;
that of the seven reviews undertaken during the year, three had resulted in
“substantial” assurance opinions, three with “reasonable” assurance opinions
and one which was advisory, whereby an opinion was not applicable;
that in a follow up of recommendations agreed in 2014/15, of the 23
recommendations made, 21 had been fully implemented, one had not been
implemented (in progress) and one was no longer considered relevant.
Resolved
That the Internal Audit Annual Report 2015/16 be recommended to the Board of
Governors for approval.
NE/Audit Committee/Minutes/22.11.16
6
13
Audit Committee Annual Report to the Board of Governors and Principal
2015/16
13.1
The Clerk to the Corporation reported the following points:
(i)
(ii)
that the format of the Audit Committee Annual Report was similar to that
presented the previous year;
that the proposed overall opinion of the Audit Committee was that “…the
College’s systems of internal control and its arrangements for risk
management, control and governance processes, and securing economy,
efficiency and effectiveness (value for money) are both adequate and
effective”.
13.2 Governors noted that the confirmation of the performance of the financial
statements auditors would be finalised pending their presentation later in the
meeting. (N.B. No changes were subsequently made.)
Resolved
That the Audit Committee Annual Report to the Board of Governors and Principal
2015/16 be recommended to the Board of Governors for approval.
That the performance of the internal audit service and financial statements and
regularity auditors in 2015/16 be noted.
That the performance indicators for the audit providers in 2015/16 be used in
2016/17.
14
Report and Financial Statements for the year Ended 31 July 2016
(i)
14.1
The Audit Findings for Wakefield College
Grant Thornton reported that their audit went well. Key issues reported included:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
that they anticipated giving a clean audit opinion, with the only outstanding
items being the usual confirmations from the Skills Funding Agency;
that they were content with the College’s transition to FRS102 (the Financial
Reporting Standard applicable in the UK and Republic of Ireland) and no
issues had been identified;
there were no significant audit findings;
other findings included one on going concern, where no issues were
identified that would threaten the College’s going concern position: “The
College’s performance during the year and the prospects for the future
remain very strong”;
the regularity audit had concluded that there were no material findings and
that an unqualified regularity opinion would be issued within the financial
statements;
there were no adjusted misstatements and no unadjusted misstatements;
three internal control deficiencies were identified:
 that journals should be authorised by a separate individual before being
posted;
NE/Audit Committee/Minutes/22.11.16
7


14.2
that a signed contract be maintained for all employees, with signatures
from both the individual and a member of the Corporation;
that payees were notified of cash not yet banked that was due to them.
Issues discussed by Governors included the internal control deficiency on the
authorisation of journals before they were posted. It was noted that there were
several thousand journals posted each month and so no meaningful review and
authorisation process was feasible.
14.3 The Deputy Principal acknowledged the work of the Head of Finance and her team
for the work done on the outstanding achievement of securing a clean audit with no
significant audit findings.
Resolved
That the Audit Findings for Wakefield College be recommended to the Board of
Governors for acceptance.
(ii)
Letter of Representation
14.4 Grant Thornton indicated that the Letter of Representation that the College was
being asked to sign was its generic letter.
Resolved
That the Letter of Representation be recommended to the Board of Governors for
signing by the Chair.
(iii)
14.5
Governors considered the following issues:
(i)
(ii)
14.6
Draft Report and Financial Statements
that there would be no consequence for the College not meeting its target for
payments to suppliers of 95% within 30 days (actual was 94.3%);
the loan of £500k with Crofton Academy in relation to the development of the
Sixth Form Centre. The Deputy Principal indicated that the College would
repay this loan in the New Year as this was permitted by the Partnership
Agreement.
Other than the page break issue identified by the Deputy Principal, Governors were
content with the report as drafted and congratulated the Deputy Principal and Head
of Finance for their excellent work in this respect.
Resolved
That the Report and Financial Statements, together with the accounting policies
underpinning the accounts, be recommended to the Board of Governors for
approval.
NE/Audit Committee/Minutes/22.11.16
8
(iv)
Regularity Self-Assessment Questionnaire
14.7
The Deputy Principal indicated that the Regularity Self-Assessment Questionnaire
would be submitted to the Skills Funding Agency and contained nothing
contentious.
14.8
Governors were content with the report as drafted.
Resolved
To recommend the signing of the Regularity Self-Assessment Questionnaire by the
Chair of Governors and Accounting Officer (Principal).
15
Review of Effectiveness of Meeting and Identification of Emerging Risks
15.1 It was suggested that the Autumn Statement to be the following day could be
considered an emerging risk.
15.2 It was agreed that the development session on the role of the Audit Committee be
included as a substantive part of the Audit Committee meeting on 14 March 2017.
16
Date of Next Meeting
The date of the next scheduled meeting is Tuesday 14 March 2017 at 4.15pm.
Signed……………………………….…………… Date………………..…
NE/Audit Committee/Minutes/22.11.16
9