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 14 March 2012 were approved, subject to one minor amendment.
4. MATTERS ARISING
4.1 Paragraph 4.2
Richard Stewart confirmed that the guidance on whistleblowing had been updated.
4.2 Paragraph 4.3
Richard Stewart advised that the report on the creation and management of contracts may be available by end June 2012.
4.3 Paragraph 5.5
The SARC Chairperson reported that he had been advised that the matter in relation to the Print contract should be resolved in the near future. He requested that the follow-up audit take place three months after the issue is resolved.
ACTION: JOHN STEWART / BRIAN MORELAND
4.4 Paragraph 5.6
Brian Moreland advised SARC members that the verification follow-up audit in relation to the Assembly and Business Trust was scheduled to take place in early June 2012.
4.5 Paragraph 5.10
It was noted that the draft report on Business Continuity Planning had been issued. Trevor Reaney advised that the Assembly Commission would need to consider recommendations in relation to a back-up facility, and Colm McKenna stressed the importance of getting the business need right.
4.6 Paragraph 5.11
It was noted that the draft report on Systems under Development had issued.
5. INTERNAL AUDIT ACTIVITY / ASSURANCE
5.1 Brian Moreland presented a revised activity report for 2011/12 to SARC. A total of ten Internal Audit reports have been issued in final form for the year April 2011 to March 2012. Of the ten final reports, one received a substantial assurance rating, six were assessed as being satisfactory and two were limited. One report, in respect of the Managed Print Contract, was recorded as unacceptable. In addition to the final reports, the draft report in respect of Business Continuity is currently under consideration by management:
Review of Procurement Cards – Limited
Review of Members Expenses – Satisfactory
Review of N.I. Assembly & Business Trust – Limited
Review of Print Contract – Unacceptable
Review of Learning & Development – Satisfactory
Review of Bill Office – Substantial
Review of Events Office – Satisfactory
Review of Freedom of Information Unit – Satisfactory
Review of Secretariat Payroll – Satisfactory
Review of Systems Under Development – Satisfactory
5.2 Brian Moreland reported that a total of nine follow-up audits were also completed in the 2011/12 year, with the progress previously reported on the implementation of accepted recommendations continuing:
Building Services Branch –Satisfactory
Secretariat Travel & Subsistence –Substantial
NI Assembly & Business Trust –Limited
Legal Services –Substantial
Procurement Cards –Substantial
5.3 Internal Audit understands that the Director of Information and Outreach has been involved in a number of discussions with the supplier in an attempt to reach an acceptable solution for both parties in respect of the fixed fee element of the managed print contract.
5.4 Management has now given assurance that the remaining recommendations in respect of the NI Assembly and Business Trust have either been implemented or are in progress. Internal Audit will revisit these in June to verify implementation.
5.5 The recommendations made regarding the use of procurement cards (which included the correct approval of business justification forms, inappropriate use in respect of travel and subsistence and physical security) were implemented rapidly and the assurance level during the follow-up review increased from limited to substantial.
5.6 Brian Moreland reported on audits recently completed and in progress.
The Business Continuity Planning assignment was performed by PWC following a procurement exercise for external support. The draft report was issued on 28 March 2012 with a limited level of assurance. Issues arising from the audit include the focus on the unavailability of Parliament Buildings, the prioritisation of operations and procedures, limited testing and the observation that the plan has not been finalised. Discussions have been held with management and responses are currently being prepared. The final report will be circulated as soon as the responses have been received.
5.7 A draft report on the Examiner of Statutory Rules was issued on 5 April 2012 with a total of two recommendations. The level of assurance arising from this audit is substantial.
5.8 The audit of the Commission and Corporate Support Unit is currently under way and testing is nearing completion. A draft report is expected by the end of May 2012.
5.9 Work on the Office Resources audit is nearing completion and the draft report is currently being prepared for management consideration. Weaknesses have been identified in physical security and stock control records which are likely to result in a limited level of assurance.
5.10 In relation to the draft Internal Audit Strategy and periodic plan for 2012/13, Brian Moreland advised that, as the staffing levels for Internal Audit remain in flux, the plan presented at the SARC meeting on 14 March 2012 remains essentially unchanged, with the understanding that it will be revisited at the September meeting.
At that point, it is anticipated that a realistic assessment should be available (based on actual resources) of the achievable programme for the 2012/13 year.
5.11 Brian Moreland advised that following completion of the Internal Audit programme for 2011/12, the overall level of assurance for the period 1 April 2011 to 31 March 2012 is satisfactory. 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 Internal Audit resources continue to be affected by participation on the Business Efficiency Project and by maternity leave.
5.13 SARC members were also informed that the meeting of the Inter-Parliamentary Head of Internal Audit Group was held in Edinburgh on 22 and 23 March 2012, with Eddie Kelly representing the Assembly. Among the subjects discussed were emerging audit issues including the Internal Audit approach to social media and the cloud, External Quality Assurance arrangements and planning. The next meeting is due to be held in the autumn.
5.14 Brian Moreland advised SARC members of two ongoing fraud investigations. On 4 May 2012, Internal Audit received information (as per the Fraud Response Plan) from the Head of Finance that a sum of money had been reported missing from petty cash held in the Finance Office. Following an initial investigation by the Head of Finance to confirm the extent of the loss and prevent recurrence, Internal Audit notified the NIAO and DFP of the theft and interviewed a number of staff. This investigation is continuing and a report will issue shortly.
5.15 Internal Audit has also been made aware of an apparent theft of money from the Eurest safe and has requested a report from the Head of Security to clarify if there is a need to report under the Assembly’s Fraud Response Plan. The PSNI have already investigated this matter, and the matter is to be reported to the C&AG.
The Head of Internal Audit undertook to keep SARC members informed of progress.
5.16 SARC members stressed the importance of learning lessons from these incidents. Secretariat officials acknowledged the need to revisit the Fraud Response Plan and to explore options for the use of trained investigators in any future fraud cases.
ACTION: RICHARD STEWART / BRIAN MORELAND
6. OUTSTANDING AUDIT RECOMMENDATIONS
6.1 SARC members noted with approval the nil return but emphasised the need to reduce the number of recommendations where implementation is still “ongoing” after one year.
7. REVISED RISK MANAGEMENT STRATEGY
7.1 Hugh Widdis outlined the key features of the Risk Management Strategy which was agreed at SMG on 29 March 2012. These include revised Stewardship Statements, regular update meetings between the Clerk/DG and Directors, the introduction of risk appetite, and some focus on ‘closely connected bodies’. Work is ongoing on rolling out guidance on the risk management process and developing associated training. SARC members noted the revised Risk Management Strategy.
8. CORPORATE RISK REGISTER
8.1 SARC members discussed the Corporate Risk Register dated 11 May 2012, and noted that SMG members intended to fully review the list of Corporate risks and their associated Inherent and Residual assessments.
9. STEWARDSHIP STATEMENTS
9.1 SARC members welcomed the increased commonality shown in the statements, while noting that some were more detailed than others. Trevor Reaney confirmed that, based on the completed Stewardship Statements and face-to-face meetings with the Directors, he was satisfied with the levels of assurance given.
10. DRAFT NIA RESOURCE ACCOUNTS 2011-12
10.1 Paula McClintock apologised to SARC members and attendees for the late availability of the draft NI Assembly Resource Accounts. She highlighted the outturn and underspend figures and provided an overview of the Executive Summary, Management Commentary, Corporate Governance Report, Environmental and Sustainability Report, Remuneration Report, and the Statement on Internal Control. SARC members thanked Paula for the production of the accounts.
10.2 It was noted that the draft accounts were to be submitted to the NIAO on 25 May 2012; the SARC Chairperson asked members to review the draft accounts by then, raising any issues with Paula McClintock, copied to colleagues. The Accounts will be considered again by SARC in late June 2012.
ACTION: SARC MEMBERS
11. INTERIM REPORT TO THOSE CHARGED WITH
GOVERNANCE & DRAFT MANAGEMENT RESPONSES
11.1 Louise Mason gave SARC members a brief overview of the issues raised in the Interim Report to those charged with Governance, which are largely unchanged from those flagged up at the SARC meeting on 14 March 2012. The SARC Chairperson stated that he regarded the report as fair and balanced.
12. PROCUREMENT COMPLIANCE REPORT
12.1 Trevor Reaney informed SARC members of the early indicative findings of the interim Procurement Compliance Report.
13.1 Trevor Reaney updated SARC members on developments regarding the external quality assurance on the Support Services Contact.
13.2 Trevor Reaney informed SARC of forthcoming job rotation at Director level, with John Stewart moving to Information and Outreach, and Gareth McGrath moving to Clerking and Reporting, with effect from 4 June 2012.
14. DATE OF NEXT MEETING
14.1 It was agreed that SARC would meet in late June 2012 to consider the NIA Resource Accounts. The date is to be confirmed as soon as possible.
ACTION: PAULA McCLINTOCK / RICHARD EMERSON / DAVID JOHNSTON