Minutes of Proceedings

1. APOLOGIES

1.1 No apologies were received.

2. DECLARATION OF INTERESTS

2.1 There were no declarations of interests.

3. MINUTES OF THE PREVIOUS MEETINGS

3.1 The minutes of the SARC meeting held on 12 January 2011 were approved without amendment.

4. MATTERS ARISING

4.1 Paragraph 6.2

SARC members requested that the 3 outstanding issues relating to the pre 2009 period be clarified or resolved by the end of June SARC meeting. They also requested a report on the 26 issues which are up to one year old, by the late June SARC meeting.

ACTION: BRIAN MORELAND

5. INTERNAL AUDIT ACTIVITY / ASSURANCE

5.1 Brian Moreland advised that a total of 11 Internal Audit reports were issued in final form in the year April 2010 to March 2011. In summary, one received a substantial assurance rating, nine were assessed as being satisfactory and one limited. The Internal Audits to which these reports refer included coverage in all directorates:

Review of Speaker’s Office – Satisfactory

Review of Business Office- Table Section – Satisfactory

Review of Payments Processing – Satisfactory

Review of Faster Closing – Substantial

Review of Communications Office – Satisfactory

Review of Procurement – Limited

Review of Accommodation and Furniture – Satisfactory

Review of Official Report (Hansard) – Satisfactory

Review of FAPP and Members’ Salaries – Satisfactory

Review of Support Services Branch – Satisfactory

Review of Legal Support the Assembly Committees – Satisfactory

5.2 Brian Moreland informed SARC that a total of 13 follow-up audits were also completed in the 2010/11 year with encouraging progress on the implementation of accepted recommendations. It was also noted that the assurance levels for three of the areas audited (Use of Taxis, Speaker’s Office and Business Office) increased to substantial and one moved from limited to satisfactory (Managing Attendance). The follow-up audits were as follows:

Business Travel – Satisfactory

OFMDFM – Satisfactory

Data Protection – None (Advisory Review)

Taxi scheme – Substantial

Telephony – Limited

Managing Attendance – Satisfactory

Speaker’s Office – Substantial

External Liaison Unit – Satisfactory

Payments Processing – Satisfactory

Faster Closing – Substantial

Business Office (Table Section) - Substantial

NI Assembly Members’ Pension Scheme (AMPS) – Satisfactory

HR Recruitment - Satisfactory

5.3 It was noted that a number of the key issues raised during 2010/11 are in relation to procurement policies and procedures. The Internal Audit report which issued on 7 October 2010 detailed a number of areas where improvement was required.These included recommendations regarding training in respect of contract management, the central monitoring and oversight of procurement activity and the management of contract extensions and variations. Recommendations were also made in relation to the approval of business cases at the appropriate level and one case where single tender action was taken. Internal Audit noted the early implementation of a number of the recommendations made on this report.

5.4 A number of concerns have also been raised regarding the issue and use of mobile phones. The number of official handsets issued remains high and difficulties have been encountered when staff have been asked to identify and refund personal calls on monthly / quarterly bills — a number of individual bills are quite high. Internal Audit is aware that management are currently considering options to resolve this issue.

5.5 Brian Moreland also advised SARC in relation to audits recently completed or in progress:

Print Contract — following a request from the Director of Engagement, Internal Audit began a review of the information available in support of the contract currently in place with The Stationery Office Ireland. This work was to focus on the Managed Service Element of the contract which was fixed for the first two years.

5.6 Events — work on this assignment has been delayed due to the Audit Manager’s participation on the spending review team and efficiency review preparations. The audit has been re-assigned and is due to be completed in June 2011.

5.7 Northern Ireland Assembly and Business Trust — a draft report was issued on 19 April 2011 and a total of 14 recommendations made. Of these, six were risk rating 1, seven rating 2 and the remaining one was risk rating 3. A meeting was held on 12 May 2011 to discuss management responses to the recommendations and the final report will issue when revised responses have been received. The recommendations made relate to the Assembly’s financial contribution to the operation of the NIABT, financial management and membership subscriptions. Internal Audit arrived at a limited level of assurance for this assignment.

5.8 The final report on the use of procurement cards was issued on 25 May 2011 with a total of ten recommendations made. Of these, three were risk rating 1, four rated 2 and the remaining three were rated 3. Recommendations have been made relating to procedures following breaches of usage guidelines, documentary evidence in support of card use and security of cards when not in use. The assurance rating for this audit is limited.

5.9 The final report in respect of the audit of Members’ Expenses was issued on 25 May 2011 with three recommendations made, one at risk rating 2 and the remainder category 3. Recommendations were made regarding employment contracts and targets for the inclusion of information on the website. The assurance level for this assignment was satisfactory.

5.10 In relation to audit planning, Brian Moreland reported that, as discussed previously with SARC members, a number of factors would reduce the staffing resource immediately available in the Internal Unit for the next twelve months. This includes the participation of the Audit Manager in the efficiency review team with effect from May 2011. The audit programme for 2011/12 has therefore been amended to take account of this, while providing cover in each directorate. The revised programme is intended to continue to offer sufficient Internal Audit scrutiny in order to provide the Accounting Officer and SARC with a realistic evaluation of the Assembly’s risk management, control and governance arrangements.

5.11 Brian Moreland informed SARC that the overall level of assurance for the period 1 April 2010 to 31 March 2011 is satisfactory. This represents a continuation of the trend for improvement seen in the previous twelve months. This assessment is based on the levels of assurance arising from individual Internal Audit assignments, the action taken by management to implement recommendations, and the results of follow-up audits.

5.12 Brian Moreland informed SARC that, at the request of the Clerk/Director General, Internal Audit had conducted a review of the documentation held in relation to the tender of the Broadcasting Contract in 2010. This included information held in Procurement, Legal Services and the Clerk/Director General’s office. Interviews were also conducted with key staff involved in the process. A report was issued indicating areas for consideration in future exercises and focusing on a more formal approach to the identification and management of risk, particularly in the case of significant/complex exercises. Recommendations were also made in respect of the training for staff involved in procurement exercises including contract managers and panel members. Detailed discussions have been held between the Clerk/Director General and all involved in the procurement process to identify the actions necessary to minimise the risk of similar issues arising in future exercises.

5.13 Brian Moreland reported that the next meeting of the Inter-Parliamentary Head of Internal Audit Group is due to be held in Dublin on 23 and 24 June 2011. Among the subjects for discussion will be the impacts of resource pressures, fraud risk and Internal Audit involvement in efficiency / VFM reviews.

5.14 SARC members noted the Internal Audit staffing position and that the Trainee Auditor, Carla Campbell, is continuing to study for the Practitioner – level qualification (PIIA).

5.15 SARC members requested that the NI Assembly and Business Trust Internal Audit report be tabled at the late June 2011 SARC meeting and that two outstanding recommendations relating to the use of procurement cards be resolved by that date.

ACTION: BRIAN MORELAND

5.16 SARC members discussed at some length various issues arising from the audit reports especially in respect of procurement issues.

5.17 The Chair also advised members that he had been contacted by an unsuccessful bidder in a recent procurement who had raised a number of issues around that process. Stephen McCormick confirmed that NIAO had received an almost identical approach from this company.

5.18 The Clerk/Director General confirmed that the Chair had referred these matters to him and that he had commissioned a detailed review on all of the matters raised, some or all of which may have been dealt with already.

As soon as this review was complete he would evaluate the materials and discuss them with SARC members to agree a way forward.

5.19 On the generality of procurement issues, the Clerk/Director General indicated that he felt that this was one of the most difficult issues facing all public sector organisations especially in the current financial climate when getting value for money was more critical than ever. He referred to a major programme of development and training on procurement. This had been running in the Secretariat over the last number of months and he thanked SARC members for their attendance at, and contribution to, several staff training events on this issue.

5.20 SARC agreed with this assessment and supported the steps already being taken by the Secretariat.

5.21 After further discussion on the challenges posed by these issues, it was agreed that SARC should take time to focus on this at a meeting when there was sufficient time to do justice to the issues. It was therefore agreed that specific time for this would be set aside in the meeting at end June2011.

ACTION: DAVID JOHNSTON

5.22 SARC members requested that they be provided with a copy of the Print contract.

ACTION: BRIAN MORELAND

6. OUTSTANDING AUDIT RECOMMENDATIONS SCHEDULE

6.1 Brian Moreland advised that the overall rate of acceptance of Internal Audit recommendations remains over 95%. Further meetings have been held with the directorate liaison officers to clarify the requirements and responsibilities regarding the implementation of Internal Audit recommendations. The impact of the liaison officers appears to have been positive with the improvement in implementation rates continuing. SARC members noted the exception report listing two recommendations not yet implemented as agreed.

7. REVISED RISK MANAGEMENT POLICY

7.1 Georgie Campbell advised SARC that the Risk Management Policy which was introduced in 2008 contained a recommendation that it should be reviewed regularly as the risk management process became embedded throughout the Assembly Secretariat. It also recommended that the policy should be updated as necessary to reflect the changing environment. Since the introduction of the policy, changes have been made to, for example, the format of the Corporate Risk Register and Stewardship Statements and to the regularity with which the Secretariat Management Group reviews the Corporate Risk Register.

SARC members noted the revised Risk Management Policy, which was approved by the Secretariat Management Group in February 2011. The Assembly Commission has also been informed of the revised policy.

7.2 Stephen McCormick advised SARC members that the NIAO would be issuing its best practice guide on risk management during June 2011.

8. CORPORATE RISK REGISTER

8.1 SARC members noted the contents of the latest version of the Corporate Risk Register, including coverage of the risks associated with financial pressures.

9. STEWARDSHIP STATEMENTS (at 31 March 2011)

9.1 Trevor Reaney informed SARC members that the Stewardship Statements had recently been revised and made more comprehensive.

SARC members were happy with the contents of the Stewardship Statements completed by the various risk owners.

10. NIA RESOURCE ACCOUNTS

10.1 Updates were provided by Paula McClintock and Stephen McCormick in relation to the NIA Resource Accounts, which were submitted to the NIAO on 27 May 2011. It was noted that the accounts process had gone smoothly to date. A number of explanatory notes and additional information were suggested for inclusion in the accounts, the Statement of Internal Control and the Management commentary, and these will be considered by the Finance Office. Alan McQuillan thanked all involved for the smooth process to date. The Accounts will be considered again by SARC in late June 2011.

ACTION: PAULA McCLINTOCK

10.2 Pat Ramsey suggested that political parties be reminded, at the Assembly Commission and following the Business Committee, that returns are required for the Accounts in relation to Financial Assistance to Political Parties.

ACTION: TREVOR REANEY

11. NIAO AUDIT STRATEGY

11.1 SARC members discussed and noted the audit strategy outlined by the NI Audit Office in relation to the NI Assembly Resource Accounts.

12. SPENDING REVIEW 2011/15

12. John Stewart updated SARC on progress to date on the Business Efficiency review in the Assembly Secretariat. The SARC Chairman wished the review well and made an offer of SARC assistance, should it be required. It was agreed that SARC would be kept informed of any emerging impacts on risk management or corporate governance arrangements.

13. SARC ANNUAL REPORT AND SELF ASSESSMENT

13.1 Alan McQuillan thanked Georgie Campbell for drafting the SARC Annual Report. SARC members are to let the Chairman have any comments by week commencing 6 June 2011.

ACTION: COLM McKENNA & PAT RAMSEY MLA

14. NATIONAL FRAUD INITIATIVE (NFI) FOLLOW UP

14.1 Paula McClintock outlined the background to the NFI and advised SARC that a number of “mismatches” are currently being investigated but to date there had been no instances of fraudulent activity or duplicate payments. SARC members had no concerns at present but requested that the exercise be completed as soon as possible.

ACTION: PAULA McCLINTOCK

15. A.O.B.

15.1 There was no other business.

16. DATE OF NEXT MEETING

16.1 It was agreed that SARC would meet on Monday 27 June 2011 at 5.00 pm to consider the NIA Resource Accounts and to discuss procurement / contract management issues.