Minutes of Proceedings
Date: Tuesday, 06 September 2011
Venue: Room 106
1 . APOLOGIES
1.1 No apologies were received. SARC members acknowledged with gratitude the excellent work undertaken by Alan McQuillan in his role as SARC Chairperson from March 2009 until his appointment to the Independent Financial Review Panel in July 2011.
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 27 June 2011 were approved without amendment.
4. MATTERS ARISING
4.1 SARC members noted that the actions at Paragraphs 5.3, 5.5, 8.2, 8.4 and 8.5 were completed.
4.2 Paragraph 4.3
Paula McClintock informed SARC that one duplicate payment identified under the National Fraud Initiative is currently being rectified. It dates from 2008 and amounts to £1,250.
4.3 Paragraph 5.4
Trevor Reaney reported that the final Procurement Compliance Report had been issued to SARC on 28 June 2011. He advised that the initial report was based on a red/green classification for the first time (previously red/amber/green) and that it showed a high proportion of red assessments. He had asked for the report to be checked for accuracy and a comparison made against the previous red/amber/green system. The comparison showed the level of reds to be 2-3% in 2010/11.
4.4 Paragraph 8.1
Trevor Reaney informed SARC that, following a Procurement and Contract Management workshop, involving SMG and Procurement staff, held on 5 September 2011, he had decided that the Business Efficiency project team, employing procurement expertise if necessary, should take forward examination of the areas of contract creation, procurement and contract management.
4.5 Paragraph 8.3
Trevor Reaney and Pat Ramsey advised that, despite best efforts, there were no developments to report regarding the anonymous complaint. Legal advice has been sought in relation to the contract and a meeting with the contractor will take place in September 2011.
Colm McKenna requested that the “break clause” details be reviewed.
ACTION: TREVOR REANEY / GARETH McGRATH
4.6 Paragraph 8.6
Trevor Reaney reported back to SARC that external expertise is being engaged to provide quality assurance in relation to the Support Services contract.
5 INTERNAL AUDIT ACTIVITY / ASSURANCE
5.1 Brian Moreland advised that a total of four Internal Audit reports were issued in final form in the period 1 April 2011 to 31 August 2011. In summary, of the four final reports, one received a satisfactory assurance rating, two were assessed as being limited and one was unacceptable.
5.2 The final report on Procurement Cards was issued on 25 May 2011 and a total of 10 recommendations were made, all of which were accepted by management. Of these, three were risk rating 1, four risk rating 2 and the remaining three were rated 3. Recommendations were made regarding the correct approval of business justification forms, inappropriate use of a card in respect of travel and subsistence, and the override of internal controls (relating to the use of a card when travelling without Assembly Members). Recommendations were also made regarding the physical security of procurement cards and the requirement for adequate supporting documentation.
The assurance level for the audit was limited.
5.3 The final report on Members’ Expenses issued on 25 May 2011, with a total of three recommendations made and accepted. One recommendation was risk rating 2 and the remainder were rated 3.
Recommendations made related to payments being made for staff salaries only where valid employment contracts are held; the administration of rental payments; and the publication of Members’ expenses information.
Internal Audit arrived at a satisfactory level of assurance for this assignment.
5.4 The final report in respect of the audit of the Northern Ireland Assembly and Business Trust issued on 13 June 2011. Fourteen recommendations were made, six risk were rating 1, 7 risk rating 2 and the remaining recommendation was rated 3.
The main recommendations made related to the Assembly’s financial contribution to the Trust, the cost of internal events and the need to introduce effective financial controls. Additional recommendations were made in relation to staff attendance at events, travel and membership contributions.
The assurance rating for this audit was limited.
5.5 The audit of the Managed Print Contract was carried out following a request from the Director of Information and Outreach and was not on the original programme for 2011/12. The final report for this assignment issued on 23 June 2011, with an unacceptable level of assurance.
Two recommendations were made, both of which were risk rating 1. The recommendations related to the management information held in support of invoices by the supplier and the nature of the contract award documentation. It should be noted that this assurance rating relates solely to the fixed fee elements of the contract.
5.6 Brian Moreland reported that a total of four follow-up audits have also completed in the same period, with generally encouraging progress on the implementation of accepted recommendations. The assurance levels for two of the areas audited (Hansard, and Secretariat Travel and Subsistence) increased to substantial.
The follow-up audits were as follows:
Provision and Allocation of Accommodation and Furniture - satisfactory;
Official Report (Hansard) - substantial;
Secretariat Travel and Subsistence - substantial;
Procurement – limited.
5.7 Brian Moreland updated SARC on audits that are currently under way.
A draft report on Events was issued for management comments / responses on 15 August 2011. Eight recommendations have been made, three at risk rating 1, one at risk rating 2 and the remainder rated 3.
Recommendations have been made in respect of risk assessments, contract management and records of approvals for events. The final report will issue following receipt of management responses.
The assurance rating for this audit is expected to be satisfactory.
Fieldwork on the Learning and Development audit has now concluded and a wash-up meeting was held with management during week commencing 15 August 2011. A draft report will issue shortly after, with the assurance level again expected to be satisfactory.
The audit of the Bill Office is currently in progress and a draft report is expected in early September 2011.
5.8 In relation to Audit Planning, Brian Moreland advised that, as discussed at the SARC meetings on 1 and 27 June 2011, Internal Audit will focus on the areas identified in the revised programme, which is based on the reduced level of staff resources for the remainder of the 2011-2012 year.
Work will continue in September 2011 to identify an appropriately experienced external source for the audits of Business Continuity and Information Systems (systems under development). SARC members were clear that should additional financial resources be required to enable an appropriate level of internal audit work to be undertaken, these should be made available to the Head of Internal Audit, notwithstanding the current financial pressures.
5.9 Brian Moreland informed SARC that the overall level of assurance for the period 1 April 2011 to 31 August 2011 is limited. This represents a reduction in the level of assurance in the previous activity report. The reduction is due primarily to the balance of assurance levels in respect of the four final reports issued since 1 April 2011, one of which was satisfactory, two limited and one unacceptable.
SARC members noted the wider context of a generally improving picture over recent years and the fact that the assurance levels of the audits currently in draft (and an additional assignment in progress) are expected to be satisfactory. This, together with management’s implementation of recommendations as agreed, should result in a return to an overall satisfactory level in the next quarter.
5.10 Brian Moreland reported that the most recent meeting of the Inter-Parliamentary Head of Internal Audit Group was held in Dublin on 23 and 24 June 2011. Among the subjects for discussion were the impacts of resource pressures on the ability of audit units to deliver an effective programme and potential increases in the risk of fraud.
Discussion also took place on the progress on audit arrangements in respect of Members’ expenses and the nature of delegation arrangements in the various legislatures.
5.11 Brian Moreland informed SARC that the revised Corporate Governance in Central Government Departments Code of Good Practice (2011) had issued (after some delay) in July 2011. In many respects the revised code is less immediately relevant to the Assembly than the version it replaces, as the focus is increasingly on ministerial departments. Internal Audit would, however, encourage compliance in respect of the sections of the document which remain relevant, such as that on risk management.
5.12 It was agreed that, for the December 2011 meeting, SARC members would be provided with details of accepted audit recommendations over recent years which are currently described by Directors as “still in progress”.
ACTION: BRIAN MORELAND / DAVID JOHNSTON
6 OUTSTANDING AUDIT RECOMMENDATIONS
6.1 SARC noted that there are currently no recommendations appearing on the outstanding audit recommendations schedule. Members welcomed the importance currently being attached to the timely implementation of audit recommendations by Directors and Heads of Business. SARC noted this general improvement in cultural accountability and stressed the need to for this to be maintained and developed. Trevor Reaney expressed appreciation for the efforts of Directors and Heads of Business.
7 CORPORATE RISK REGISTER
7.1 SARC members noted the Corporate Risk Register dated 5 July 2011. Trevor Reaney advised SARC that SMG will be revising the register at its next meeting on 15 September 2011. It was noted that, in future years, account may need to be taken of the challenges of delivering services against tighter budgets and with reduced staffing levels.
8 REPORT TO THOSE CHARGED WITH GOVERNANCE
8.1 Stephen McCormick advised that, given the summer leave situation, the report was not yet available for consideration at SARC. He had recently received draft management responses from Trevor Reaney and the report should issue very shortly. Trevor Reaney will discuss the Report to those charged with Governance, once received, with SARC members. If it is felt necessary, a special meeting of SARC may be convened.
ACTION: TREVOR REANEY
9 UPDATE ON PROCUREMENT / CONTRACT MANAGEMENT
9.1 The update was provided in matters arising, in relation to paragraphs 5.4, 8.1, 8.3 and 8.6 of the 27 June 2011 minutes.
10 MANAGEMENT ACCOUNTS
10.1 SARC members noted the Management Accounts to end August 2011 and were assured by the Director of Corporate Services that the underspends and overspend highlighted related largely to issues of timing.
An update was also provided in relation to Ormiston House.
11.1 Trevor Reaney informed SARC that the vacant SARC Chairperson position, along with a reserve list for SARC independent member, would be advertised on 8 and 9 September 2011. He also advised SARC members of a temporary senior staffing arrangement in the Facilities Directorate.
12 DATE OF NEXT MEETING
12.1 The next scheduled meeting of SARC will take place on Friday 9 December 2011 at 9.30 am in Room 106, Parliament Buildings.