Minutes of Proceedings

1. APOLOGIES

1.1 Apologies were received from Bernard Mitchell. 

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 5 December 2014 were approved without amendment.

4. MATTERS ARISING

4.1 SARC members noted that all but one of the action points relating to the minutes of 5 December 2014 were now complete.

4.2 SARC members requested sight of audit reports for “partner bodies” with NI Assembly in their title, to provide some assurance in relation to reputational risk.

ACTION: TREVOR REANEY

5. INTERNAL AUDIT ACTIVITY / ASSURANCE, INCLUDING DRAFT INTERNAL AUDIT PLAN 2015-16

5.1 Eight Internal Audit reports have been issued in final form during the period 1 April 2014 to 31 March 2015, two of which received a substantial assurance rating and six were assessed as being satisfactory:

• Review of Members Expenses – Substantial
• Review of Procurement –Satisfactory
• Review of Usher Services – Satisfactory
• Review of Financial Planning – Satisfactory
• Review of Justice Committee – Satisfactory
• Review of Information Assurance – Satisfactory
• Review of Ethics – Satisfactory
• Review of Hansard – Substantial
  

5.2 In addition, a draft report in respect of the audit of Secretariat support to the NI Assembly and Business Trust was issued on 10March 2015, with a satisfactory level of assurance. A draft report for Accounts payable was issued on 11 March 2015, also with satisfactory assurance.

5.3 Follow-up audits have been completed and reports issued in respect of:

Use of Consultants – Satisfactory; Risk Management – Substantial (increased from satisfactory); Clerk / Chief Executive’s Office – Substantial; Public Accounts Committee – Substantial; Education Service – Satisfactory; Secretariat Pensions – Substantial (increased from satisfactory); Building Services – Satisfactory (increased from limited); Procurement – Satisfactory; and Usher Services – Substantial (increased from satisfactory).

5.4 The final report on Information Assurance issued on 12 January 2015, with a total of 15 recommendations, five at risk rating 2 and the remaining 10 rated 3. Recommendations were made regarding the use of the Information Assurance Maturity Model as a self-assessment tool, bi-annual compliance checks and the information security and assurance standards expected in all relevant contract specifications. The assurance level was satisfactory.

5.5 The final report in respect of the Ethics audit was issued on 21 January 2015. Three recommendations were made, one each at risk rating 1, 2 and 3. The assurance rating was satisfactory.

5.6 The final report in relation to the audit of the Official Report was issued on 27 January 2015. A total of three recommendations were made, all at risk rating 3. The recommendations made related to communication with Committees, guidance for producing bound volumes, and version control.  The assurance rating was substantial.

5.7 A draft report for the audit of the Secretariat’s support to the NI Assembly and Business Trust was issued on 10March 2015, with 11 recommendations for management consideration. Three of the recommendations are at risk rating 2 and the remainder rated 3. Among the issues raised were the management of a financial surplus, demands on staff time and bank account permissions.             The final report will issue once management responses have been received. The assurance rating on the draft report is satisfactory.

5.8 The draft report on the Accounts Payable audit was issued on 11March 2015, with 11 recommendations, one at risk rating 1, eight at risk rating 2 and the remaining two rated 3. The assurance rating for this assignment is   satisfactory. Recommendations were made in respect of further development of PECOS, approval of creditor set up, and prompt payment targets. The final report will issue following receipt of management responses.

5.9 Internal Audits are currently in progress in respect of Accounts Preparation, Social Media, Support Services and Post Contract Benefit Realisation.

5.10 As discussed at the December 2014 meeting, the Internal Audit plan for 2014/15 was subject to extensive disruption because of two investigations. Although the reports relating to both investigations have now been issued, Internal Audit is still liaising with PSNI regarding the ongoing work in both cases. Further suggested changes to the plan were discussed with SARC members and as a result of a request from the Head of HR, the iTrent audit was deferred until the 2015/16 plan. This was to facilitate the implementation of the remaining modules of the system. In addition, the planned corporate   governance audit was re-scheduled for the same period in order to assess the impact of SP15+ on the Assembly’s governance arrangements.

5.11 The overall level of assurance for the period 1 April 2014 to 31March 2015 remains 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 SARC members noted that the results of the audits completed this year have resulted in either substantial or satisfactory assurance; this is the first time that 100% of the results of the Internal Audit programme have been in these categories.

5.13 The overall rate of acceptance of Internal Audit recommendations remains high. All recommendations at risk ratings 1 and 3 have been accepted, with 75% of those at risk rating 2 accepted.

5.14 The SARC Chair welcomed the overall Satisfactory rating for the year and viewed this as being at the “higher end” of Satisfactory. He thanked the management of the organisation and staff in the business areas who had brought about improvement and culture change over the past six years.

5.15 The approach taken by the Assembly’s Internal Audit unit continues to comply with both the Public Sector Internal Audit Standards (PSIAS) and the professional standards of the Chartered Institute of Internal Auditors (CIIA) on which they are based. Feedback from management on the conduct of assignments remains favourable and this is reflected in the high level of   acceptance and implementation of recommendations. As well as the primary focus remaining on core elements of the programme, such as financial planning, procurement and Committees, some resource was allocated to more novel work in the audit of Ethics.

5.16 Primary impacts on the organisation from the 2014/15 programme were in financial planning, procurement and information management.

5.17 In addition, the unit was involved in two investigations, both of which required a significant amount of resources to be diverted from the 2014/15 plan. Although this required approval from SARC to adjust the remaining programme, several recommendations were made as a result of the investigations which should enhance control. The PSNI is continuing to work on both cases. Contact is ongoing to obtain updates on progress and, where necessary, to provide any additional information.

5.18 SARC members noted that the PSNI investigations were ongoing, and they also noted the possibility of a further investigation. SARC members will be kept informed of any developments.

5.19 Brian Moreland reported that the meeting of the Inter-Parliamentary Head of Internal Audit Group held in London in January 2015 provided an opportunity for HIAs to compare the approach taken regarding the audit of Members’ expenses. Although there are variations in the approach taken, there now appears to be general acceptance that this work forms an important element in the assurance framework of each legislature. The next meeting is due to take place in June/July in the Isle of Man.

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

5.21 Internal Audit staffing will be affected by SP15+ and the full impact on the programme will be determined throughout the course of the year. All members of the Internal Audit unit have identified relevant generic and specialist training for the year ahead.

5.22 The Head of Internal Audit presented the Internal Audit Strategy and draft Audit Plan for 2015-16, in which 325 audit days are planned.  The SARC Chair expressed concern at the proposed significant reduction in audit days, with very few contingency days available. The Clerk/Chief Executive outlined the fact of reducing staff numbers and the need to focus on frontline service delivery but undertook to review the proposed reduction in audit days. It was also suggested that the number of days allocated to some audits could possibly be reduced and noted that the number of days was comparable to another larger public body.

ACTION: HUGH WIDDIS

6. “IN PROGRESS” AUDIT RECOMMENDATIONS SCHEDULE

6.1 SARC members noted the continuing high level of implementation of accepted Internal Audit recommendations, with 13 recommendations currently “in progress”.

7. RTTCWG 2013 AUDIT RECOMMENDATIONS SCHEDULE

7.1 SARC members noted that all but two of the 17 recommendations in the Report to those charged with Governance 2013 have been fully implemented

8. RTTCWG 2014 AUDIT RECOMMENDATIONS SCHEDULE

8.1 SARC members noted that, of the seven recommendations in the Report to those charged with Governance 2014, five have already been fully implemented. 

9. OUTSTANDING AUDIT RECOMMENDATIONS SCHEDULE

9.1 SARC members noted the nil return.

10. NIAO AUDIT STRATEGY & Update on Audit of 2014-15             

Financial Statements

10.1 Louise Mason gave SARC members an overview of the NIAO’s planned audit strategy in relation to the Northern Ireland Assembly’s Financial Statements for 2014/15, and SARC members considered the strategy’s contents. Louise explained that NIAO has set its quantitative materiality threshold at   approximately 2% of gross expenditure, which equates to £860,000. However, the regularity of Members’ expenditure will be audited to a separate quantitative materiality threshold of approximately 1% of gross expenditure, which equates to £430k.  Members’ expenditure has been identified as a significant risk, with other risk factors being Pension provision, Procurement, and Accounts submission deadlines. This year’s timelines have been agreed with Secretariat officials.

10.2 Christine Burns informed SARC of progress on the Interim Audit. No issues of substance have arisen to date, and Christine reminded Secretariat officials of additional disclosures required in relation to the sale of Ormiston House. NIAO does not intend to issue an Interim Management letter.

11. ‘SPOTLIGHT’ PROGRAMMES UPDATE

11.1 Richard Stewart updated SARC members on actions relating to issues raised in the programmes.  In relation to Constituency offices, the Assembly Commission had noted that the Independent Financial Review Panel (IFRP) had already issued a consultation document covering the issues. It had been agreed that the Commission would write to the Panel to express its view that any disclosure requirement on Members (for example, on ownership of property or their landlords) should be couched in precise and unambiguous terms.

11.2 In relation to the provision of services to Members by third parties (including a Member’s own political party), the Commission had agreed not to undertake a retrospective review of services provided to Members by third parties on the basis that any such review would be costly, time consuming and would be unlikely to produce any beneficial outcome. The Commission also agreed to enhance the range of checks made on third party services provided to Members, including a more in-depth use of trends analysis for expenditure on items such as mobile phones.

11.3 Following an internal audit review, it had been recommended that the use of a proxy nominated by a Member to administer expenditure claims should be considered. The Commission had not accepted this recommendation.

11.4 The Commission had considered the range of stationery items that it provides to Members and had agreed to restrict the items that can be provided “free of charge” to Members.

11.5  Consideration had been given to further enhancements to the checks that are in place in respect of Members’ travel claims, and it had been agreed that a proforma would be produced and completed by all Members who claim motor mileage allowance to confirm that appropriate business insurance is in place.

11.6 The Commission had considered whether further checks should be implemented to ensure that Members’ support staff are engaged in assisting a Member to carry out his or her Assembly duties. The Commission had not agreed to implement any further checks but it had agreed to write to IFRP in response to its consultation exercise on Members’ support staff.  The Commission had agreed that the correspondence with IFRP should highlight the level of budget cut faced by the Commission.

12. DIRECTORATE RISK REGISTERS

12.1 SARC members reviewed and noted the contents of the Directorate Risk Registers. 

13. CORPORATE RISK REGISTER

13.1 SARC members noted the changes made to the contents of the Corporate Risk Register since the December 2014 SARC meeting, including the elevation of budget-related risk.

14. MANAGEMENT ACCOUNTS

14.1 SARC members noted the Management Accounts to end February 2015. Richard Stewart gave a verbal update on the emerging year-end position, including a likely underspend in the region of 2%.

15. SARC ANNUAL REPORT AND SELF ASSESSMENT

15.1 SARC members reviewed the draft SARC Annual Report 2014-15. The Chair undertook to reflect on whether any additional wording was required in the report, and SARC members are to consider the self-assessment and forward any amendments to the Secretary by the end of April. The SARC report will be finalised at the May SARC meeting for submission to the Assembly             Commission in June 2015.

ACTION: SARC MEMBERS / DAVID JOHNSTON

16. A.O.B.

16.1 Louise Mason reported that the audit of the Assembly Members’ Pension Scheme would be finalised shortly.

16.2 Louise Mason circulated the recently published NIAO Good Practice guide on Conflicts of Interest. Hugh Widdis informed SARC that officials are completing a “comply or explain” analysis of the document.

16.3 Paula McClintock provided SARC with an update on the National Fraud Initiative and advised members and the Accounting Officer that no issues of concern had arisen to date.

17. DATE OF NEXT MEETINGS  

17.1 SARC will next meet on Tuesday 19 May 2015 at 4.00 pm to consider the draft Annual Accounts 2014-15.

17.2 The subsequent full meeting of SARC will be held on Friday 19 June 2015 at 10.00 am.