Minutes of Proceedings

1. APOLOGIES

1.1 Apologies were received from Paula McClintock, Head of Finance.  The SARC Chair welcomed Sam Gardiner MLA to the meeting as the Assembly Commission representative.

2 DECLARATION OF INTERESTS

2.1 Bernard Mitchell declared an interest as a Board member of Translink should the draft report on the audit of the Regional Development Committee be discussed.  The SARC Chair advised that the report would not be discussed at SARC until Management responses have been received and the report is issued in final form.

3 MINUTES OF THE PREVIOUS MEETING

3.1 The minutes of the SARC meeting held on 16 December 2015 were approved without amendment.

4 MATTERS ARISING

4.1 SARC members noted that delegated procurement proposals are to be      discussed at SMG on 25 March 2016.  SARC also noted that the IFRP    Determination is still awaited but is expected to be published on 23 March         2016.

5 INTERNAL AUDIT ACTIVITY / ASSURANCE

5.1 Brian Moreland reported that 10 Internal Audit reports have been issued in final form since 1 April 2015: 

• Review of Accounts Preparation – Substantial
• Review of NIABT – Satisfactory
• Review of Support Services – Satisfactory
• Review of Members’ Expenses – Substantial
• Review of Social Media – Satisfactory
• Review of Post Contract Benefit Realisation – Satisfactory
• Review of Accounts Payable – Satisfactory
• Review of HR (iTrent) – Satisfactory
• Review of Payroll – Satisfactory
• Review of Politics Plus – Substantial
  
  

5.2 In addition, a draft report in respect of the audit of Corporate Governance was issued on 1 March 2016, with a satisfactory level of assurance. The          draft report on the Regional Development Committee will be issued by the   end of March.

5.3 Follow-up audits have been completed and reports issued in respect of  Financial Planning; the Justice Committee; Information Assurance; and the Official Report.

5.4 The final report on HR (iTrent) issued on 29February 2016, with a total of 20             recommendations, three at risk rating 1, eight at risk rating 2, and the remaining nine rated 3. Recommendations were made regarding the online application process, the retention of competition folders and competition merit lists. Although the majority of recommendations have been accepted, Internal Audit has made a number of audit comments in relation to recommendations that have either been rejected or accepted in principle. The assurance level was satisfactory.

5.5 The SARC Independent member agreed with the audit comments made and         was of the opinion that two of the recommendations, in relation to recruitment   competitions, should be reconsidered by Management.

5.6 The Accounting Officer stated that it was appropriate for SARC to challenge         such matters, and he agreed to revisit the two recommendations referred to.

ACTION: TREVOR REANEY / RICHARD STEWART

5.7 It was agreed that the Head of Internal Audit’s activity report should in future include a summary line for each completed audit detailing the number of  accepted recommendations, partially accepted recommendations and rejected recommendations.

ACTION: BRIAN MORELAND

5.8 The final report in respect of the Payroll audit was issued on 8 March 2016. Ten recommendations were made, three at risk rating 1, five at risk rating 2 and the remaining two rated 3.  Recommendations were made in respect of   the addition of starters, iTrent procedures, and system administrator checks. The assurance rating was satisfactory.

5.9 The draft report on Corporate Governance arrangements was issued on 1 March 2016.  A total of seven recommendations were made, three at risk   rating 2 and the remaining four at risk rating 3. The recommendations made related to the composition of SMG, the SMG Terms of Reference and corporate plan monitoring. The assurance rating was assessed as satisfactory, which represents a significant improvement on the previous audit.

5.10  A draft report on the audit of the Secretariat’s support for the Regional Development Committee will be issued during March with 13 recommendations for management consideration.  Nine of the recommendations are at risk rating 1 and four are at risk rating 2.  Several significant issues have been highlighted that have resulted in a less than favourable audit opinion.  Management have already been notified of the reasons for concern. The assurance rating on the draft report is still under consideration.

5.11 The final report on the Politics Plus audit was issued on 10 February 2016, with one recommendation, relating to a review of the Memorandum of Understanding, at risk rating 3. The assurance rating for this assignment is substantial.

5.12 Mr Moreland advised that the internal audit of Members’ expenses is currently in progress and constituency office visits are under way. It was agreed with the Director of Parliamentary Services that the audit of the business office should be delayed to permit the completion of end of mandate work. Follow-   up work in respect of four audits is taking place in March 2016.

5.13 The Accounting Officer has also instructed Internal Audit to review the nature and extent of a specified category of payments made under OCE in the period 1 January 2013 to 31 March 2015.  Following agreement of the terms of  reference, this work began during week commencing 7 March 2016 and is due to conclude by the first week in April.

5.14 Mr Moreland reported that, as discussed at the December meeting, the plan for the allocation of Internal Audit resources from 2016/17 onwards has been developed with the co-operation of, and input from, Directors and Heads of    Business. The Strategy and Plan were tabled for consideration by SARC members. The documents cover the four-year period from 1 April 2016. Following discussion with the Director of Facilities, it was recommended and         agreed that the audit of the roof project should move to January 2017 to permit any remedial work etc. to be completed before the start of the review.

5.15  The number of audit days available reflects the increase in administrative   work associated with the reduction of staffing in the unit, participation in working groups, consultancy and time for integrating an audit support package. Outline allocations have also been shown for the three years 2017/18 to 2019/20. However, variations can be expected in accordance   with specific demands and organisational change.

5.16 SARC members sought reassurance in relation to planned audit coverage of  Members’ expenses in light of the forthcoming Independent Financial Review Panel (IFRP) Determination, and also the savings resulting from SP15+ and  Voluntary Exit Scheme (VES).  Members were reassured that the Handbook reflecting the Determination would be subject to a review by IPSA, with IFRP being invited to confirm that it is content with the Handbook’s wording.  Brian             Moreland advised that a significant audit, based on the new rules, will take place in the first quarter of  2017/18.  The impacts of SP15+ and the VES will  be included in each             individual audit.  The VES is due to be audited in May 2016.  In the light of these assurances, SARC members approved the Audit Plan and Strategy.

5.17    Mr Moreland informed SARC that the overall level of assurance for the period 1 April 2015 to 31 March 2016 remains satisfactory. This assessment is based  on the levels of assurance arising from the individual Internal Audit  assignments, all of which were completed in accordance with the Government Internal Audit Standards; the action taken by management to implement recommendations; and the results of follow-up audits.  Although the assurance rating for one assignment in the 2015/16 year will fall short of  satisfactory assurance, the overall assessment for the year remains valid. Management in the business area concerned have already taken steps to resolve the issues that resulted in the audit opinion.

5.18    The overall rate of acceptance of Internal Audit recommendations remains high. All recommendations at risk rating 1 have been accepted, with 93% of those at risk rating 2 accepted and 88% at risk rating 3.

5.19    Mr Moreland reported on the Inter-Parliamentary Head of Internal Audit Group      meeting held in Edinburgh in February 2016.  A large part of the meeting was spent discussing planning issues and the means by which Internal Audit resources can best be utilised. The common theme remained a risk-based approach in accordance with best practice, and the position in the NI Assembly compares well with that found in the other legislatures.

5.20    Cyber security and social media remain high on the list of current issues facing each organisation and the use of penetration testing in conjunction with   compliance reviews will be re-visited by the group. The next meeting is due to take place in London in September or October 2016.

5.21    In relation to investigations, Mr Moreland informed SARC members that one of the cases previously discussed at SARC has now resulted in a court appearance and guilty plea. Advice from PSNI has been to consider any further recovery action after the sentence has been determined.

5.22    A file has now been passed to the Public Prosecution Service in respect of the     other live case of which SARC has been made aware.

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

5.24    Brian Moreland advised that Internal Audit staffing had been impacted 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.

3  “IN PROGRESS” AUDIT RECOMMENDATIONS SCHEDULE

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

4    RTTCWG 2015 AUDIT RECOMMENDATIONS SCHEDULE

7.1 SARC members noted the action taken in relation to the one remaining recommendation in the Report to those charged with Governance 2015. 

5  OUTSTANDING AUDIT RECOMMENDATIONS SCHEDULE

5.1 SARC members noted the nil return.

6  NIAO Update on Audit of 2015-16 Financial 

Statements

9.1 Louise Mason informed SARC of progress on the Interim Audit.  Testing is complete, and a number of queries relating to Members’ expenses are being   followed up with Finance Office staff.

7 MEMBERS’ EXPENSES – UPDATE

7.1  Trevor Reaney updated SARC members on recent correspondence that he had received from the IFRP.  The Commission and the Panel have differing views on some historic payments and that disagreement remains.  Work is currently under way to identify any payments made in error as distinct from payments resulting from differences of interpretation.  This review will conclude on 8 April 2016, when options for action will be considered.

7.2  Colm McKenna advised that SARC members have also received and responded to correspondence from the Panel.  SARC members are to meet with the Panel on 19 April.  The SARC Secretary was asked to advise the Panel’s Secretary that full Panel attendance is expected at that meeting.

ACTION: DAVID JOHNSTON

8 DIRECTORATE RISK REGISTERS

SARC members reviewed and noted the contents of the Directorate Risk Registers.  The SARC Independent member noted the Security risk highlighted in the Facilities’ Risk Register and that this reflected the decision of the Assembly Commission not to implement a PSNI recommendation.  The Accounting Officer informed 

3.1 SARC that other PSNI recommendations will be put to the new Commission following the Assembly elections.

11.2 The SARC Independent member drew attention to Risk 3 in the Facilities’ Risk Register “Use of External Service Providers”, which had a “Red”  Residual risk assessment.  It was agreed that this would be reviewed by     officials.

ACTION: TREVOR REANEY / STEPHEN WELCH

4  CORPORATE RISK REGISTER

4.1 SARC members noted the changes made to the contents of the Corporate Risk Register since the December 2015 SARC meeting.  SARC members suggested that there may be merit in reflecting in the Corporate Risk Register risks relating to Members’ expenses.  This will be considered at SMG on 25 March 2016.

ACTION: SMG

5 MANAGEMENT ACCOUNTS

5.1 SARC members noted the Management Accounts to end February 2016, and the projected underspend at year-end, a proportion of which related to savings in staff and energy costs.  The Director of Corporate Services informed SARC members that final expenditure in 2015/16 would generally equate to the budget for 2016/17.

5.2 In relation to the Annual Accounts and the ongoing problem of uncertainty over the end-March final valuation from the Government Actuary’s Department (GAD) for provision for Members’ pension liabilities, SARC suggested that written advice should be obtained from GAD so that the Secretariat can demonstrate that every effort has been made to avoid the recurrence of an Excess Vote.  In addition, the SARC Chair suggested that there would be merit in approaching GAD to see if the discount rate formula used by GAD could be disclosed.    

ACTION: RICHARD STEWART

6 SARC ANNUAL REPORT AND SELF ASSESSMENT

14.1    SARC members reviewed the draft SARC Annual Report 2015-16.  SARC members will reflect on the wording of the “Key Issues” section, following their meeting with IFRP on 19 April 2016.

ACTION: SARC MEMBERS

14.2    Some other minor wording changes will be made, andthe report will be      finalised for submission to the Assembly Commission in June 2016.

ACTION: SARC CHAIR /DAVID JOHNSTON

7 A.O.B.

7.1 Trevor Reaney informed SARC that under the Financial Assistance for Political Parties (FAPP) scheme, the Assembly Commission has approved funding for a party choosing to go into Opposition.  The audit of FAPP by PwC will be copied to SARC members.

ACTION: RICHARD STEWART

15.2     Trevor Reaney informed SARC members that the recruitment of Clerk/Chief Executive would be completed in the last week in March and that, subsequently, hand-over arrangements would be put in place.

15.3    Sam Gardiner MLA thanked Secretariat officials for their co-operation and support during his time as an MLA.

16 DATES OF NEXT MEETINGS  

16.1    The next meeting of SARC will be held on Thursday 19 May 2016 at 2.00 pm        to consider the draft Resource Accounts.

16.2    A full SARC meeting, including consideration of the final Resource Accounts,        will take place on Friday 17 June 2016 at 2.00 pm.