Minutes of Proceedings

1             APOLOGIES

1.1         No apologies were received.  The Chair welcomed Commission member Mr Peter Weir MLA to the work of SARC.

2       DECLARATION OF INTERESTS

2.1       There were no declarations of interests.

3              MINUTES OF THE PREVIOUS MEETING

3.1          The minutes of the SARC meeting held on 19 June 2014 were approved subject to one typographical amendment.

4              MATTERS ARISING

4.1          Paragraph 4.1

SARC members noted that the draft revised policy on Business cases was to be discussed at the October 2014 SMG meeting.

4.2          Paragraph 5.5

SARC members noted that the Central Procurement Directorate (CPD) had declined to sign, other than in relation to collaborative issues, a SLA with the NI Assembly.  Members were disappointed that this was the case, but asked officers to proceed to have the SLA as offered completed, and were content, from a governance perspective, for the Assembly Secretariat to continue to use CPD.

ACTION:  RICHARD STEWART

4.3          Paragraph 5.7 

SARC members noted that certain security-related aspects of the Usher Services audit report had already been referred to the Assembly Commission for consideration.

4.4          Paragraph 11.3

The SARC Independent member reported that the familiarisation tour of the Roof Project had been very useful.

5              INTERNAL AUDIT ACTIVITY / ASSURANCE

5.1       Brian Moreland advised that since the SARC meeting on 19 June 2014, two Internal Audit reports have been issued in final form:

• Review of Members’ Expenses - Substantial
• Review of Financial Planning - Satisfactory

5.2      In addition, the draft Information Assurance report was issued on 24 September 2014 with a satisfactory level of assurance.  The final report will be issued following receipt of management’s response to the recommendations made.

5.3      Follow-up audits have been completed and reports issued in respect of the Director General’s Office (substantial); the Education Service (satisfactory); and the Administration of Secretariat Pensions (raised to substantial from satisfactory).

5.4      The final Financial Planning report was issued on 28 July 2014, with a total of 10 recommendations; two were at risk rating two, with the remaining eight recommendations at risk rating three.  Internal Audit arrived at a satisfactory level of assurance. Recommendations made include the need to enhance clarity over roles and responsibilities for financial planning across the organisation; ensuring adequate resources are dedicated to the annual budget setting exercise; management of GAE within directorates; realistic budget setting within directorates; and general support, awareness, training and compliance issues.

5.5      In relation to the review of Information Assurance, 18 recommendations have been made, including adoption of the Information Assurance Maturity Model as a best practice standard; provision of regular updates to the Accounting Officer on information assurance matters; consolidation of existing records into an Information Assets Register; and the introduction of regular compliance checks. Four recommendations were given risk rating 2 and the remaining 14 were given risk rating 3.  Information Assurance has been awarded a satisfactory level of assurance.

5.6      Internal Audits are currently in progress in respect of Secretariat support for the Justice Committee and Ethics.  Fieldwork is nearing completion and reports should be drafted in line with current priorities.  The draft Terms of Reference for the audit of the NI Assembly and Business Trust have been issued for management consideration and fieldwork will begin shortly.

5.7      SARC members sought clarification in relation to the concept of an Ethics audit and were advised that it was included in the Internal Audit Public Sector Standards and would provide assurance of processes in the NI Assembly Secretariat.

5.8      Brian Moreland advised SARC members that recent fraud investigation exercises had interrupted the Internal Audit programme for 2014/15.  He presented members with a revised schedule.  With the revision of timings, the use of contingency days and some external support, it is currently anticipated that the remaining assignments will be completed within the 2014/15 year.  SARC members requested that a column showing original dates be added to the schedule so that slippage can be assessed.

ACTION:  BRIAN MORELAND

5.9      It was noted that a request has also been received in respect of the Northern Ireland Assembly Legislative Strengthening Trust.  Internal Audit proposes to undertake the audit in February/March 2015.  SARC members were of the view that it would be appropriate for the SARC Chairperson to be furnished with a copy of any audit report on a “Partner Body” after it has been received by the body’s trustees.   Trevor Reaney advised that this could be considered and that the audit arrangements could be incorporated in the wording of the Memorandum of Understanding; the agreed Memorandum of Understanding for the Northern Ireland Assembly Legislative Strengthening Trust will be shared with SARC members in advance of the audit.
ACTION:  GARETH McGRATH / TREVOR REANEY

5.10    The overall level of assurance for the period 1 April to 30 September 2014 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.   It was noted that 100% of the audits completed since 1 April 2014 had resulted in either substantial or satisfactory assurances.  The SARC Chair welcomed this fact and the progress that it represented.  In the same period, the overall rate of acceptance of Internal Audit recommendations is 100% for recommendations made at risk ratings 1 and 3, and 80% for those at risk rating 2.

5.11    The Accounting Officer advised SARC members that the Assembly Secretariat is in the fourth year of reducing budgets and further cuts are anticipated.  He alerted SARC to the fact that, in such circumstances, it will become inevitable that standards of governance will be reduced.   The SARC Chair suggested that, when the extent of additional cuts is known, it could be helpful for the Accounting Officer to outline the actions needing to be taken and their associated risk assessments.

5.12    Brian Moreland reported that the Inter-Parliamentary Head of Internal Audit Group had met in July 2014 and had discussed a number of current issues including the apparent reduction in the level of support provided by HM Treasury to bodies outside the new central GB departmental structure. It was proposed that the group would contact the relevant Treasury official to seek clarification on the future support that could be expected by those sitting outside the new arrangements.  The group is due to meet again in the New Year and a representative from HM Treasury is likely to be invited to attend.

5.13    The SARC Chair reported that he is to meet Eric Gregory, Chair of the Welsh Assembly Commission Audit and Risk Assurance Committee, in the near future to discuss the possibility of establishing an Audit and Risk Committee Chairs’ Forum.

5.14    No whistleblowing cases have been reported to Internal Audit during the year to date.

5.15    Brian Moreland advised that Michael Watson has completed the follow-up of the NIA External Quality Assurance Review of the NIA Internal Audit function and has concluded that Internal Audit fully conforms to the Public Sector Internal Audit Standards.  The SARC Chair and the Accounting Officer congratulated the Internal Audit unit on this achievement.

5.16    Eddie Kelly has carried out an External Quality Assurance Review of the House of Lords, in conjunction with the Isle Of Man Government Head of Internal Audit.  Fieldwork was carried out in July 2014 and the report was issued in August 2014.

5.17    All members of the Internal Audit unit have identified relevant generic and specialist training for the year ahead.

6              “IN PROGRESS” AUDIT RECOMMENDATIONS SCHEDULE

6.1          SARC members noted the continuing high level of implementation of accepted Internal Audit recommendations, with 19 recommendations currently “in progress”.  Following assurances from officials in respect of actions taken on two of the recommendations and assurance that another recommendation was no longer relevant, SARC members were content to remove these three recommendations from the monitoring schedule.

7              RTTCWG 2013 AUDIT RECOMMENDATIONS SCHEDULE

7.1       All but four of the 17 recommendations in the Report to those charged with Governance 2013 have been fully implemented.  SARC members noted the position in relation to the remaining four recommendations and were assured that post-project evaluations would be reported to SMG and subsequently to SARC. 

8              OUTSTANDING AUDIT RECOMMENDATIONS SCHEDULE

8.1       SARC members noted the nil return.

9              BUSINESS IMPROVEMENT PLAN SCHEDULE

9.1       Hugh Widdis gave an overview of progress on the implementation schedule.  Remaining items were largely IS related or related to the need for central guidance to be developed to take forward three generic BEP recommendations.  The Accounting Officer indicated that expected budget cuts may result in some of these elements not proceeding.  SARC members noted the position. 

10          NIAO REPORT TO THOSE CHARGED WITH GOVERNANCE 

10.1       Louise Mason thanked all those involved in ensuring that the Annual Accounts were certified prior to Summer Recess.  Louise noted that the four issues raised at interim audit had been addressed by management.  However, a further three matters had been raised at final audit — contingency arrangements for Finance staff absences; Business case monitoring; and one case relating to documentation for Office Cost Expenditure.  All points raised in the audit had been accepted by management.  In relation to contingency arrangements, SARC members requested and received an update on the staffing position in the Finance Office.

11          CORPORATE RISK REGISTER 

11.1       SARC members noted the minor changes made to the contents of the Corporate Risk Register since the June 2014 SARC meeting.  They queried whether the risk associated with budgets needed elevating.  Hugh Widdis informed SARC members that a refreshed Corporate Risk Register, including an elevated budget risk assessment, is to be considered at October SMG. 

12          SARC TERMS OF REFERENCE (ANNUAL REVIEW)

12.1    SARC members were content with the current wording, but recognised that it may require future updating in light of possible “Partner Body” Memorandum of Understanding developments.

13          MANAGEMENT ACCOUNTS

13.1    SARC members noted the levels of expenditure to end-August 2014, including higher than normal levels of Office Cost Expenditure and action taken in that regard. 

14           A.O.B.

14.1       SARC members have been apprised of ongoing Fraud investigations.

14.2       The SARC Independent member suggested that the Assembly Secretariat should check its Whistleblowing policy in relation to contractors, in light of the NI Assembly’s Public Accounts Committee’s findings relating to NI Water, and the use of confidentiality clauses, in the light of the Westminster Public Accounts Committee’s findings.

ACTION: DAVID JOHNSTON

15          DATE OF NEXT MEETING

15.1    It was agreed that the next meeting of SARC will be held on Friday 5 December 2014 at 4.00 pm.