Minutes of Proceedings
Date: Tuesday, 05 March 2013
Venue: Room 106
1.1 Apologies were received from Pat Ramsey MLA.
2. DECLARATION OF INTERESTS
2.1 In relation to agenda item 5, Trevor Reaney declared that he had once worked with one of the individuals suggested for conducting the external Quality Assurance Review.
3. MINUTES OF THE PREVIOUS MEETINGS
3.1 The minutes of the SARC meeting held on 4 December 2012 were approved without amendment.
4. MATTERS ARISING
4.1 It was noted that all actions arising from the December minutes were now complete.
4.2 SARC members considered the draft Governance Statement. It was suggested that the fact that the Corporate Risk Register is considered regularly at SARC should be added and also that consideration should be given to reflecting the one “red” risk currently listed in the Corporate Risk Register in the Statement. Louise Mason drew SARC’s attention to a short fact sheet produced by the National Audit Office following the first year of Governance Statements being completed in Great Britain.
ACTION: PAULA McCLINTOCK
5. INTERNAL AUDIT ACTIVITY / ASSURANCE
5.1 Brian Moreland reported that a total of 14 Internal Audit reports have been issued in draft or final form during the period 1 April 2012 to 22 February 2013. Of the 13 final reports, one received a substantial assurance rating, nine were assessed as being satisfactory and 3 limited:
Review of Members Expenses – Satisfactory
Review of Systems Under Development – Satisfactory
Review of Examiner of Statutory Rules – Substantial
Review of Office Resources – Limited
Review of Commission & Corporate Support Unit – Satisfactory
Review of Business Continuity Planning – Limited
Review of Research – Satisfactory
Review of Gifts & Hospitality – Satisfactory
Review of Information Security – Satisfactory
Review of Mobile Phones – Limited
Review of Assembly Members Pension Scheme – Satisfactory
Review of Use of Consultants – Satisfactory
Review of Vacancy Management Group – Satisfactory
A draft report in respect of the audit of the Committee for the Environment was issued on 20 February 2013, with a substantial level of assurance. The final report will be issued following receipt of management’s responses to the recommendations made.
5.2 In addition, the draft report on the Internal Quality Assessment of Internal Audit was issued on 30 November 2012. SARC members were content with the suggested approach in relation to the report’s recommendations.
5.3 Follow-up audits have been completed as follows:
Learning & Development – Substantial (increased from satisfactory)
Support Services – Satisfactory
Northern Ireland Assembly & Business Trust – Satisfactory (increased from limited)
Freedom of Information – Substantial (increased from satisfactory)
Events – Substantial (increased from satisfactory)
Bill Office – Substantial
Systems Under Development – Satisfactory
Managed Print Contract – Satisfactory (increased from unacceptable).
5.4 Brian Moreland advised SARC of the main issues arising from the draft reports issued since the December SARC meeting:
5.5 The final report on the audit of Mobile Phones was issued on 20 December 2012 with a total of 14 recommendations. Of these, two were risk rating 1 and 12 risk rating 2. Recommendations were made regarding the establishment and application of sanctions for breaches of policy, returns of declarations of personal usage and the exchange of information between directorates. The overall level of assurance from the audit was limited.
5.6 The final report on the Use of Consultants was issued on 11 February 2013 with a total of 11 recommendations, four of which were risk rating 2 and the remaining seven were rated 3. Internal Audit arrived at a satisfactory level of assurance with recommendations made in respect of cost overruns, the use of post-project evaluation proformas and the level of detail provided in business cases. SARC members also noted that the Assembly had voluntarily participated in relation to a recent report compiled by the Department of Finance and Personnel on the Use of Consultants.
5.7 The final report on the Internal Audit of the Vacancy Management Group was issued on 14 February 2013 with 12 recommendations, eleven of which were accepted by management. Internal Audit is continuing to discuss the relevance of the recommendation that was rejected with management. Of the recommendations that have been accepted, two were given a risk rating of 2 and the remaining nine were rated 3. Recommendations were made regarding the review of total salary costs, Terms of Reference for the Vacancy Management Group, and the future composition of the group. The overall level of assurance was satisfactory.
5.8 A draft report on the Committee for the Environment was issued on 20 February 2013 with a substantial level of assurance. A total of six minor recommendations were made, all at risk rating three. The final report will issue following receipt of management responses. Following discussion, SARC members noted Internal Audit’s intention to audit at least one Statutory Committee each year
5.9 Internal Audits are currently in progress in respect of Members Expenses, Risk Management and Legal Services.
5.10 Brian Moreland advised that, as discussed at the December meeting, work has progressed well against the audits identified on the annual plan. The contract for external support has been awarded and work has begun on the Risk Management and Legal Services audits. It is anticipated that the Internal Audit plan for 2012/13 will be completed as agreed.
5.11 An external quality assurance review is due to be completed in the 2013/14 year. Suggested options for completing this work were discussed, and, given the need for independence but having political knowledge, an approach to local government was agreed by SARC members.
ACTION: BRIAN MORELAND
5.12 Brian Moreland reported that the overall level of assurance for the period 1 April 2012 to 26 February 2013 is satisfactory. As for previous years, this assessment is based on the levels of assurance arising from the individual Internal Audit assignments, the action taken by management to implement recommendations and the results of follow-up audits. The emphasis of Internal Audit’s approach remains one of business improvement, coupled with a comprehensive coverage of the Secretariat in order to provide as accurate an assessment as possible on the system of risk management, control and governance. This approach has resulted in a more positive reaction to Internal Audit reports and an increase in the number of requests for advice from management. Some 77% of the audits completed resulted in either substantial or satisfactory assurance, with the remaining 23% being limited. Internal Audit continues to be encouraged by the positive approach taken to reports where a limited level of assurance has been recorded and the early implementation of recommendations has helped to improve these ratings at follow-upstage. SARC members undertook an in-depth analysis of “in progress” audit recommendations and encouraged Directors to action recommendations expeditiously. The SARC Chairperson commented on the positive journey over recent years in relation assurance.
5.13 The overall level of assurance for the complete financial year 1 April 2012 to 31 March 2013 will be presented at the next meeting of SARC.
5.14 Brian Moreland informed SARC that the next meeting of the Inter-Parliamentary Head of Internal Audit Group is due to be held in June 2013. The venue for this meeting is yet to be confirmed and an agenda will be agreed nearer to the meeting; however, it is anticipated that Governance Statements will be discussed.
5.15 In relation to any future fraud investigations, SARC members considered a draft Memorandum of Understanding with the Department of Agriculture and Rural Development. It was noted that the provision of this service would depend on resources being available in DARD. SARC members requested that DARD be approached in relation to minor drafting changes and that subsequently the agreement be put in place.
ACTION: BRIAN MORELAND
5.16 In addition, the Head of Internal Audit has held informal discussions with external providers that have specialist fraud investigation resources to determine the likely cost and availability of this type of service. As a result, a business case has been drafted with a recommendation to go to tender for investigative services which would include fraud investigation, forensic data analysis etc. SARC members agreed this course of action.
5.17 It is anticipated that any minor investigations, such as that performed in 2012 on petty cash, will continue to be performed by Internal Audit. The Fraud and Bribery response plan will require some amendment in respect of the revised arrangements.
5.18 Brian Moreland reported that in the period 1 April 2012 to 22 February 2013 Internal Audit had been asked to investigate one whistleblowing case, and no evidence was found to support the allegation.
5.19 Brian Moreland informed SARC that work is progressing on the review and update of the working papers used during Internal Audit assignments. This is being supported by the IS Office and is intended to reduce duplication, facilitate time recording per assignment and streamline the production of Internal Audit reports.
5.20 Brian Moreland updated SARC members on the Internal Audit staffing position. He informed SARC that all members of the unit continue to identify relevant generic and specialist training. Catherine Dornan-Weir has commenced the IT Auditing Certificate course with the Institute of Internal Auditors, which will bring valuable additional skills to the unit.
5.21 On 31 January and 1 February 2013, the unit assisted in the preparation of delivery of fraud, bribery and risk management awareness training for senior Secretariat staff. All in attendance were advised that they should cascade the training within their business units.
6. OUTSTANDING AUDIT RECOMMENDATIONS SCHEDULE
6.1 SARC members discussed an outstanding recommendation in relation to Procurement and Outreach. Trevor Reaney advised that circumstances had changed since the recommendation had originally been made, and he undertook to provide an updated position for the next full SARC meeting.
ACTION: TREVOR REANEY
7. NIAO Update on Audit of 2012-13 Financial Statements
7.1 Louise Mason advised SARC that interim testing was almost complete and that, at this stage, there appeared to be no issues likely to affect opinion on the accounts.
8. DRAFT INTERNAL AUDIT PLAN 2013-14
8.1 SARC members considered the draft Internal Audit plan for 2013/14. The annual programme is based on the 3 - 4 year programme submitted to SARC in 2012. Some adjustment has been made to take account of the temporary reduction in Internal Audit Resources. Eddie Kelly is due to return to the unit in July 2013. Initial feedback from the Head of Internal Audit at BSO suggests that while a short secondment to the Assembly would be beneficial, resource limitations make this unlikely to go ahead. As always, the focus for Internal Audit remains at the higher risk areas, with consideration given to new/emerging issues, time elapsed from previous audit, etc. SARC members requested that the finalised plan be sent to them for clearance by correspondence.
ACTION: BRIAN MORELAND
9. CORPORATE RISK REGISTER
9.1 SARC members noted that an audit of Risk Management was under way and that aspects of the Corporate Risk Register may be subject to change when the recommendations are known. SARC members discussed risk content. SARC members requested that a “tracked changes” version of the Register be presented at the next full SARC meeting.
ACTION: DAVID JOHNSTON
10. MANAGEMENT ACCOUNTS
10.1 SARC members queried areas of over and underspend and noted the financial position at end January 2013
11. SARC ANNUAL REPORT AND SELF ASSESSMENT
11.1 SARC members were broadly content with the Annual Report and self-assessment and agreed to some additional wording being included. The report will be finalised and sent to SARC members for clearance, prior to submission to the Assembly Commission.
ACTION: DAVID JOHNSTON
12.1 Paula McClintock provided SARC with an update on the National Fraud Initiative and advised members and the Accounting Officer that no issues of concern had arisen.
12.2 It was agreed that officials would consider the recently circulated HM Treasury Assurance Framework and report back to the next full meeting of SARC.
ACTION: HUGH WIDDIS
13. DATE OF NEXT MEETING
13.1 It was agreed that SARC would meet on Tuesday 21 May 2013 at 2.00pm in Room 106, Parliament Buildings to consider the draft Annual Accounts 2012-13.