Minutes of Proceedings

SECRETARIAT AUDIT AND RISK COMMITTEE (SARC)

WEDNESDAY, 15 MAY 2019 at 10.00AM

ROOM 106, PARLIAMENT BUILDINGS

Present: 
Jim Brooks, Chairperson
Derek Martin
Jim Wells MLA

In Attendance:
Lesley Hogg, NIA
Rodney Allen, NIAO
Tara Caul, NIA
Gareth McGrath, NIA
Paula McClintock, NIA
Eddie Kelly, NIA
Ashleigh Mitford, NIA

Opening/Review

The meeting commenced at 10.04 am.

1. Apologies

Apologies were received from Richard Stewart, Director of Corporate Services and Brian Moreland, Head of Internal Audit.

2. Declaration of Interests

Jim Wells declared an interest as a trustee of the Assembly Members Pension Scheme.

3. Minutes of Previous Meeting

Minutes of the previous meeting, held on 5 February 2019, were approved without amendment.

4. Matters arising

It was noted that the action point from the meeting of 5 February 2019 had been completed.

5. Internal Audit – Annual Assurance Report 2018-19

Eddie Kelly provided an overview of Internal Audit’s Annual Assurance Report 2018-19, commencing with an overview of the annual reporting process and Internal Audit Planning 2018-19. He explained that the Report included an overview of Internal Audit Activity 2018-19 and the status of any ongoing activity as at 31 March 2019.

Eddie outlined that the basis of his annual assurance was derived from the findings and assurance levels from the reviews undertaken during the course of the year, guided by a risk based plan and agreed with senior management.  Eddie stated that the scope of the Internal Audit Plan was limited to those parts of the organisation that remained operational during the year, reflecting the lack of procedural activity.  Eddie reported that the level of assurance provided by the scope of the Internal Audit Plan was meaningful, that Internal Audit had sufficient resources to carry the work out during the course of the year, and that there had been no impairments to Internal Audit’s operational independence. 

Eddie noted that Internal Audit continued to operate in compliance with the Public Sector Internal Audit Standards (PSIAS). He also highlighted that he had carried out a preliminary internal quality assurance review, in anticipation of an external review planned for 2019-20, and had developed a continuous improvement plan to ensure that high levels of compliance are maintained.

Eddie stated that during 2018-19, each audit resulted in a positive level of assurance being provided.

Eddie reported that, on the basis of the work carried out by Internal Audit during 2018-19, and the high level of effective implementation of Internal Audit recommendations by management, satisfactory assurance can be provided as regards the framework of internal control, risk management and governance and that it has operated effectively during 2018-19.  Eddie advised that his opinion can be used by the organisation to inform its 2018-19 Governance Statement.

Derek Martin noted that the reduced level of internal audit and general staff resources throughout the organisation, had raised concerns at SARC as to whether an overall satisfactory assurance level was achievable by year-end.  Derek stated that he was very pleased that this had been so competently achieved and congratulated the work of the Internal Audit unit.   He also stated that the organisation was very well run, particularly in the current political circumstances and commended all involved for the good result.

Jim Brooks agreed and added that internal audit was a key element of overall assurance in relation to the organisation. 

6. Internal Audit Plan and Resource Plan 2019-20

Eddie presented the Internal Audit Plan and Resource Plan 2019-20, as agreed by SMG on 16 April 2019.

He explained that the risk based Plan had been formulated by taking a range of factors into consideration including: The Corporate and Directorate Risk Registers; the schedule of audits performed over the previous four years; results of previous audits; the draft Corporate Strategy 2018-23; and discussions with the Clerk/Chief Executive, Directors, and a range of senior managers.

Jim Brooks welcomed the scope of the Plan as it included key areas and, over a period of time, areas of broader concern. He commended the plan in terms of its focus on resource allocation, its ambition and its appropriateness for the organisation and its position.  Jim stated that he was pleased with the link between the plan,  the resource days and scope of work to be carried out, describing this development as a significant step forward.  Derek Martin agreed that incorporating internal audit resource with the plan provided confidence that the plan can be delivered.

Jim welcomed the table setting out Internal Audit coverage over the course of the current 4-year and previous Audit Strategies and the comprehensive audit coverage over the period.

Jim stated that he wanted to look at the coverage of the Internal Audit Plan taking into account the Corporate Risk Register. Eddie confirmed that he would be reviewing the Audit Strategy and that this would be an appropriate time to consider the issue of risk against range and scope. Eddie also highlighted that he would continue to monitor delivery of the Internal Audit Plan during the year and report to SMG and SARC.

SARC members thanked Eddie and endorsed the Internal Audit Plan 2019-20.

7. NIAO update on audit of 2018-19 Financial Statements

Rodney Allen informed SARC that the NIAO’s audit work commenced on 7 May 2019, in line with the audit strategy presented to SARC on 5 February 2019. Rodney noted that while some early issues were under discussion, there was nothing to report to SARC at this stage, and that the NIAO was on track to complete the audit of the 2018-19 Financial Statements as planned.

8. Draft Assembly Resource Accounts 2018-19

Paula McClintock apologised for the short time available for SARC to consider the draft Annual Report and Accounts, and explained that it reflected the very tight timeframe of the year-end timetable and thanked the Finance Office team for its considerable effort in producing these. 

Paula provided SARC with an overview of the draft Accounts. She highlighted that there was a slight underspend in the year-end Net Resource Requirement Outturn verses the Spring Supplementary Estimate (SSE) and provided an overview of the contributing factors. Paula clarified that the full impact of the reduction in Members’ salaries was included in the SSE.

Paula advised SARC that there had been no change to accounting policy or substantial differences in approach compared to the last financial year.  She did however draw SARC’s attention to the significant increase in the valuation, by Land and Property Services, of Parliament Buildings and the land on which it is situated as a result of an increase to the Building Cost Information Service Index.

Paula provided an overview of the Performance Report outlining the work that had been carried out in relation to the development of a draft Corporate Strategy and accompanying Corporate Plan for 2018-19, as well as outturn against the Corporate Plan.  Paula also provided an overview of the Governance Statement and advised SARC that additional information regarding an incident of attempted fraud, previously discussed at SARC, would be included in the final Report.

In relation to the Remuneration Report, Paula advised that the only substantive difference to last year was in relation to the recent reduction in Members’ salaries as a result of determinations by the Secretary of State during the ongoing political hiatus.

In view of the very limited time that SARC had to consider the draft Annual Report and Accounts, Paula advised that members could contact her with any comments or queries once they had time to consider them in detail. SARC thanked Paula and her team for the speed with which they had produced the draft.

Action: SARC members to contact the Head of Finance, by 16 May 2019, with any further comments or queries on the draft Annual Report and Accounts.  

9. Corporate Risk Register

SARC members noted the March 2019 Corporate Risk Register.  They also noted that time had been scheduled for SARC’s June 2019 meeting to have a full discussion on the June 2019 Corporate Risk Register.

10. Directorate Risk Registers

SARC members considered the contents of the Directorate Risk Registers and Directors gave brief overviews of the key risks identified.

Tara Caul drew SARC’s attention to Directorate Risk 2 - Loss of staff complement, skills and knowledge, within the Legal, Governance and Research Services Directorate Risk Register.  Tara informed SARC that, while there were currently no professional procurement staff in the Procurement Office, an appointment of an AG5 Procurement Manager had been made on a temporary basis, commencing Tuesday 21 May 2019. Tara also outlined the interim arrangements she had put in place in relation to over £30k procurements which are the responsibility of the Procurement Office.

Derek asked if the current arrangements would be sufficient should there be a sudden increase in activity and about the systems in place for under £30k procurements.  Tara advised that further temporary arrangements may need to be put in place should there be an increase in procurement activity and that there were robust systems in place for under £30k procurements delegated to business areas.

Derek queried whether the organisation had any concerns over the delay in the Parliamentary Buildings Security System Project.  Lesley advised that this was a short term delay to what was a longer term project. Derek also sought clarification regarding the circumstances which had led to there being no professional procurement staff in the Procurement Office.  Lesley advised that the situation was due to a resignation coinciding with two long-term absences.

Gareth McGrath spoke to the Parliamentary Services Directorate Risk Register.

In relation to ‘Directorate Risk 2 - Assembly Commission IT systems are not resilient and/or are vulnerable to external attack’ Gareth highlighted that the organisation had made significant investment in IS security and resilience, both in terms of staff and systems, and had made very good progress in this area.

Regarding Directorate Risk 3 - Resumption of normal Assembly business is impeded by reduced readiness of the Secretariat, Gareth emphasised that recruitment would be necessary upon resumption of normal Assembly business.   He also outlined the current status of the Assembly Broadcasting contract, noting that the scope and cost had been reduced.

Jim Wells observed the difficulty attracting staff in many sectors at present and that recruitment is likely to be a challenge for the Assembly upon resumption of normal business.

Jim Brooks said that maintaining a state of readiness became more difficult as the period of political uncertainty continued.  He stated that the state of readiness had been extremely well managed and that the leadership, direction and motivation provided to staff was a remarkable achievement by management.   Lesley highlighted the steps taken in relation to temporarily redeployed staff such as organising return events, regular engagement and ongoing training.

Lesley spoke in relation to the Corporate Services Directorate Risk Register.  No key issues or queries were raised.

11. Stewardship Statements (at 31 March 2019)

SARC members noted the contents of the Stewardship Statements for the period 1 October 2018 - 31 March 2019.

In particular, Lesley highlighted the issue of physical security in Parliament Buildings. Jim Brooks noted that this was not a new issue but that it was right that it be raised.  Jim Wells said that the Chief Executive had been very clear when communicating the risk to the Commission.

12. SARC Annual Report and Self-assessment

Jim Brooks invited comments in relation to the draft Report.

After discussion, and clarification in relation to the status of the Assembly Members Pension Scheme, SARC members were content with the draft SARC Annual Report and self-assessment, for the Annual Report to be presented to the Assembly Commission and for the Annual Report to be published on the Assembly website.

Action: Jim Brooks to present SARC Annual Report to the Assembly Commission at its June meeting.

13. AOB

There was no other business.

14. Date of Next Meeting

The date of the next meeting is Tuesday 18 June 2019.

The meeting ended at 11:20 am.