Minutes of Proceedings
Date: 01 October 2013
Venue: Room 106
1.1 No apologies were received.
2. DECLARATION OF INTERESTS
2.1 In respect of agenda item 4.2, Leslie Cree MLA declared an interest as a Trustee of the NI Assembly and Business Trust and a Trustee of the NI Assembly Legislative Strengthening Trust. Trevor Reaney declared an interest as a Trustee of the NI Assembly Legislative Strengthening Trust.
3. MINUTES OF THE PREVIOUS MEETING
3.1 The minutes of the SARC meeting held on 24 June 2013 were approved without amendment.
4. MATTERS ARISING
4.1 Paragraph 4.1
In relation to the revised NI Secretariat Assurance Framework, SARC members were content that it gave assurance that systems are in place. Officials acknowledged that how those systems work in practice will be reflected in the Governance Statement.
4.2 Paragraph 5.10
SARC members discussed the NI Assembly Legislative Strengthening Trust’s request for Internal Audit services. Trevor Reaney outlined the background to the establishment and funding of the trust. Brian Moreland advised that, with some adjustments to scheduling, there would be scope to complete this audit in the current year without impact on the current programme and presented an outline Memorandum of Understanding. SARC members acknowledged the potential reputational risk to the Assembly “brand” and, on the basis of the assurances received, agreed in principle to Internal Audit’s involvement. They requested that it be made clear in writing that SARC has no role in relation to the subsequent findings of any such audit. Louise Mason suggested that management ensure that this work is within the Commission’s ambit.
ACTION: BRIAN MORELAND
4.3 Paragraph 9.2
SARC members noted ongoing work to develop consolidated guidance on Business Case management. Members suggested that the guidance should refer to Managing Public Money NI, include intended project/contract management arrangements, responsibilities and tolerance levels, and specify the handling arrangements for single tender actions.
ACTION: RICHARD STEWART
4.4 Paragraph 9.3
SARC members considered the further details provided in relation to Procurement Compliance. Trevor Reaney reassured SARC that there were no issues relating to fraud or monies not being spent as intended.
SARC members noted the Procurement database arrangements.
Members stressed the importance of updating Business Cases and were assured that the quality of Business Case management would be reflected in Business area audit reports.
ACTION: DIRECTORS TO NOTE
4.5 Paragraph 12.2
In relation to “Corporate governance in central government departments: Code of good practice NI 2013”, SARC members welcomed the “comply or explain” analysis provided by officials as to how the key principles of the code apply to the Assembly Commission. It was noted that this analysis will form the basis of future “comply or explain” reporting.
4.6 It was noted that all other actions arising from the SARC minutes of 24 June 2013 were now complete.
5. INTERNAL AUDIT ACTIVITY / ASSURANCE
5.1 Brian Moreland advised SARC that six Internal Audit reports have been issued in final form during the period 1 April to 18 September 2013; three received a substantial assurance rating, two were assessed as being satisfactory and one was limited.
Review of Members’ Expenses – Satisfactory
Review of Legal Services – Substantial
Review of Risk Management - Satisfactory
Review of Public Accounts Committee - Substantial
Review of Independent Financial Review Panel - Substantial
Review of Building Services – Limited
5.2 The final report in respect of this year’s exercise in relation to Members’ Expenses was issued on 29 April 2013, with a total of six recommendations; three at risk category 2 and the remaining three at category 3. Recommendations were made in relation to the statement of particulars of employment, trigger points for the £1,000 limit on stationery expenditure and the administration of rental payments. The recommendation rejected by management related to supporting documents in respect of claims to purchase; however, Internal Audit is satisfied with the management response. The assurance level for the audit was satisfactory.
5.3 The final report on Legal Services was issued on 3 April 2013 and a total of six recommendations were made and accepted, all of which were risk rating 3. These recommendations included recording advice in the database, recording evidence of approval of advice and the encryption of legal advice being sent to clients. The assurance level for the audit was substantial.
5.4 The final report in relation to Risk Management was issued on 6 June 2013, with a total of 18 recommendations made, four of which were risk category 2 and the remaining 14 were category 3. Recommendations were made to broaden the matrix for assessing risk, the use of scores to aid the determination of risk appetite and re-establishing the links between risks and objectives. The assurance level for this audit was satisfactory.
5.5 The final report in respect of the audit of the Public Accounts Committee was issued on 23 July 2013. Only four recommendations were made for management consideration; two each at risk categories 2 and 3. These recommendations were in relation to the completion of checklists, the preparation of Committee reports and the format in which records are maintained. One recommendation, in respect of the preparation of job instructions, was rejected. The assurance level for the audit was substantial.
5.6 The final report on the Independent Financial Review Panel was issued on 31 July 2013 with six recommendations, one at risk rating 2 and five rated 3. Recommendations were made in relation to records of costs associated with support to the panel, updates to the register of interests and publication of the IFRP annual report. The assurance rating for this review was substantial.
5.7 The final report in respect of Building Services was issued on 5 September 2013 with a limited level of assurance. A total of 14 recommendations have been made, of which nine are risk rating 1, two rated 2 and the remaining three at risk rating 3. Recommendations were made in respect of contract arrangements; the availability of contract documentation, which was not readily accessible during the audit; records of expenditure, which varied from those in Finance Branch, primarily because of coding issues; the demonstration of value for money; and compliance with procurement procedures.
Internal Audit is encouraged by the early implementation dates for the recommendations, several of which have already been implemented.
5.8 SARC members expressed concern at the number of findings at risk rating 1 and in particular the absence of contract documentation. They also discussed the planned implementation of the remaining Building Services recommendations with the Director of Facilities, including approaches to senior DFP officials, if necessary, and noted the planned follow-up audit.
The Accounting Officer stated that he had no concerns regarding the use of monies and referred to quality checks undertaken by Commission staff and price checking by CPD. The Director of Facilities referred to a Letter of Assurance received from DFP.
5.9 Leslie Cree MLA inquired as to the number of audit days involved in producing the Building Services report. Brian Moreland undertook to contact the member with this information.
ACTION: BRIAN MORELAND
5.10 Brian Moreland advised that, during the period 1 April to 18 September 2013, follow-up audits were completed and reports issued in respect of Office Resources and Commission and Corporate Support Unit. The assurance level for the former was raised from limited to satisfactory.
5.11 Work is currently in progress in respect of the Education Service and the Director General’s Office. Preparatory work is also under way for a number of follow-up reviews.
5.12 Brian Moreland advised that, as discussed at the June SARC meeting, the external quality assurance review of the Internal Audit unit began on 18 June 2013. The exercise was completed by Michael Watson, the Head of Internal Audit for Craigavon Council. The draft report has now been received and a response will be presented at the next meeting of SARC.
5.13 In relation to planning, the Head of Internal Audit recommended a number of amendments to the programme for 2013/14. Discussions with management would indicate that the purchase-to-pay system will be in a more viable position for the audit to proceed in the next financial year. In addition, it is recommended that the annual review of Members’ expenses be completed in May / June each year in order to facilitate the analysis of transactions for the complete financial year. These changes would facilitate the completion of the possible audit of the Northern Ireland Legislative Strengthening Trust. In addition it would be possible to include the audit of Secretariat pensions in the current financial year. Louise Mason sought and received assurance that draft findings on Members’ expenses would be available to the NI Audit Office in line with the Accounts timetable. SARC members agreed to the proposed changes and noted that it is proposed to utilise the current contract with PWC to complete the audits of financial planning and procurement.
5.14 The overall level of assurance for the period 1 April to 30 September 2013 is satisfactory. 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.
5.15 Brian Moreland informed SARC that 83% of the audits completed had resulted in either substantial or satisfactory assurance, with the remaining 17% being limited; this represents a continuing improvement since the report to SARC in June. The overall rate of acceptance of Internal Audit recommendations remains high. All recommendations at risk rating 1 have been accepted, with 92% of those at risk rating 2 and 97% at rating 3 accepted.
5.16 Brian Moreland advised that the next meeting of the Inter-Parliamentary Head of Internal Audit Group is due to be held in Parliament Buildings in December 2013. The agenda will be agreed in due course.
5.17 In relation to fraud investigations, the specification for the provision of investigative services has been finalised and the invitations to tender issued, with a closing date of 30 September 2013. SARC will be informed of the outcome as soon as possible.
5.18 No further whistleblowing cases have been referred to Internal Audit since the June SARC meeting.
5.19 In relation to resources, Brian Moreland advised that Eddie Kelly is due to end his work with the Business Efficiency team in October 2013. SARC members noted that all members of the Internal Audit unit continue to identify relevant generic and specialist training, and that Catherine Dornan-Weir has successfully completed the IT Auditing Certificate with the Institute of Internal Auditors.
6. “IN PROGRESS” AUDIT RECOMMENDATIONS SCHEDULE
6.1 SARC members noted the continuing high level of implementation of accepted Internal Audit recommendations. The Director of Facilities confirmed that the Business Continuity Policy, Business Continuity Plan, and IT Recovery Plan are in place and that a supplier to perform testing has been appointed.
7. OUTSTANDING AUDIT RECOMMENDATIONS SCHEDULE
7.1 SARC members noted the nil return.
8. NIAO REPORT TO THOSE CHARGED WITH GOVERNANCE
8.1 Louise Mason gave SARC members an overview of the final Report to those charged with Governance in relation to the audit of the 2012-13 NI Assembly Financial Statements. The Report contains Management’s responses, and implementation of the recommendations will be monitored in the normal way. Louise also informed SARC that Richard Emerson had moved to other duties within the NI Audit Office. His new remit includes liaison with the Public Accounts Committee.
9. CORPORATE RISK REGISTER (5x5 matrix)
9.1 SARC members reviewed the contents of the September 2013 Corporate Risk Register. Members noted tracked changes since the June SARC meeting; these included a move to a 5x5 risk matrix, in line with a recent Risk Management audit recommendation.
10. SARC TERMS OF REFERENCE (ANNUAL REVIEW)
10.1 Members reviewed and agreed the SARC Terms of Reference, including some additional wording.
11. MANAGEMENT ACCOUNTS
11.1 SARC members noted the Management Accounts to end August 2013. The Director of Corporate Services advised SARC members that September expenditure was running at normal levels and no surrenders are planned to DFP. Trevor Reaney stated that the general financial position was tightening further, in line with year 3 of the Spending Review.
12.1 There was no other business.
13. DATE OF NEXT MEETING
13.1 It was agreed that the next meeting of SARC would take place on Thursday 5 December 2013 at 2.00 pm in Parliament Buildings.