Minutes of Proceedings

SECRETARIAT AUDIT AND RISK COMMITTEE (SARC)
WEDNESDAY 25 JANUARY 2017
ROOM 106, PARLIAMENT BUILDINGS

APPROVED

Members:
Jim Brooks, Chairperson
Derek Martin

Attendees:
Lesley Hogg, NIA
Louise Mason, NIAO
Laura McHugh, NIAO
Richard Stewart, NIA
Tara Caul, NIA
Dr Gareth McGrath, NIA
Paula McClintock, NIA
Brian Moreland, NIA
Eddie Kelly, NIA
David Johnston, NIA, Secretary

1 APOLOGIES

1.1 Apologies were received from Jim Wells MLA and Stephen Welch, Director of Facilities.

2 DECLARATION OF INTERESTS

2.1 There were no declarations of interests.

3 MINUTES OF THE PREVIOUS MEETINGS

3.1 The minutes of the SARC meeting held on 5 October 2016 were approved without amendment.

4 MATTERS ARISING

4.1 SARC members noted the six completed action points.

5 INTERNAL AUDIT ACTIVITY / ASSURANCE

5.1 Brian Moreland, Head of Internal Audit, gave SARC members an overview of the internal audits completed since 1 April 2016; in particular, he drew attention to the Review of the Committee for Regional Development which had resulted in an Unacceptable assurance level. Testing during the follow-up audit confirmed that 11 of the 14 recommendations had been implemented. Testing of the implementation of the remaining three recommendations will be carried out following committee visits of the type involved. Management has indicated, however, that all recommendations have been implemented.

5.2 SARC members sought assurance that the implementation of the recommendations would prevent any recurrence. Dr McGrath advised that the lessons learned had been promulgated across the Directorate.

5.3 Brian Moreland reported that a revised version of the Post Contract Benefits Realisation follow-up report had been issued in the new format with management comments attached.

5.4 In relation to audits in progress, Mr Moreland advised that draft reports have been submitted for review in respect of the Provision of Hardware and Software, and the Bill Office. The draft report in respect of the Voluntary Exit Scheme has been issued to management for responses. Fieldwork on the review of Winding Up Expenditure and the Committee for Communities is now underway. As already mentioned, the draft follow-up report on the Committee for Infrastructure (formerly Regional Development) has also been issued for management comment.

5.5 Mr Moreland informed SARC of additional audit work completed in 2016/17, as follows:

Review of OCE Specified Payments – unplanned activity – report was issued
on 27 May 2016;
Review of Committee for Regional Development – issues raised at end of 2015/16 necessitated deeper review – final report issued 18 August 2016;
Special Investigation – Training/Travel & Subsistence;
NIABT accounts review – report to Trustees issued December 2016; and
Broadcasting Contract – report issued December 2016.

5.6 Mr Moreland advised that, as discussed at the October SARC meeting, the Internal Audit plan, including forthcoming audits of the Roof Project and Cyber security, remains on target for completion. The Head of Internal Audit will carry out background work to determine an approach to the General Data Protection Regulation. It is anticipated that this will result in a recommendation to SARC for an audit of the Secretariat's preparations in respect of the Regulation. Timing can be agreed in due course, but it is not anticipated to be carried out until the last quarter of the 2017/18 programme. Preparations will also be made for the Terms of Reference for a Secretariat-wide review of travel and accommodation. It is recommended that this should include Secretariat staff travelling either directly on Assembly business or in association with, for example, "partner bodies".

5.7 Discussion ensued, in the light of March 2017 Assembly elections, in relation to the annual audit of Members' expenses. Mr Moreland advised that he planned to proceed with the audit, including Constituency Office visits scheduled for April, and that he would keep SARC informed of progress.

5.8 The Head of Internal Audit reported that the new Internal Audit IT system is due to come into operation in January 2017 and that there will be a period of parallel running with the existing system.

5.9 Mr Moreland also reported on work performed to date against that planned, along with actual days versus budget.

5.10 SARC members were informed that the overall level of assurance for the period 1 April 2016 to 25 January 2017 is Satisfactory. As for previous years, 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.

5.11 Mr Moreland advised SARC that no whistleblowing cases have been reported to Internal Audit to date this year and that no new cases of fraud have been identified by, or reported to, Internal Audit since the last SARC meeting.

5.12 In relation to an ongoing investigation, the PSNI had requested further information held by the Finance Office and HR. Internal Audit has been informed that all the information requested has been released.

5.13 Mr Moreland outlined the Internal Audit staffing position and informed SARC that all members of the unit have identified relevant generic and specialist training for the year ahead. An in-house investigation training session was held on 30 November 2016. The training was provided by PwC and included staff from Internal Audit, Finance, IT and HR. All in attendance found the session useful and relevant. Both Internal Auditors have achieved the Certified Internal Auditor (CIA) designation, and the HIA and Audit Manager have been awarded the Qualification in Internal Audit Leadership (QIAL).

6 AUDIT RECOMMENDATIONS SCHEDULE

6.1 SARC members discussed the contents of the schedule and noted the continuing high level of implementation of accepted Audit recommendations, with 14 recommendations currently "in progress".

7 FINAL REPORT TO THOSE CHARGED WITH GOVERNANCE 2015-16

7.1 SARC members noted that discussions between the NI Audit Office and Secretariat staff, following the October SARC meeting, had concluded, and the final Report to those charged with Governance had been issued in December 2016.

8 NIAO AUDIT STRATEGY 2016-17

8.1 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 2016/17, and SARC members considered and noted the strategy's contents, including the timetable of key dates.

8.2 In particular, SARC members expressed dissatisfaction with the recurring uncertainty on the Members' Pension liability, with the risk that the Northern Ireland Assembly may significantly under or over-estimate its budget position, which could result in an Excess Vote and a technical qualification of the Assembly's Annual Accounts, as occurred in 2014‐15. The SARC Chairperson stated that SARC would review any changes to the accounting treatment of the pension funds. Mr Stewart advised that alternative options had been discussed with DoF and NIAO a number of years ago but that these were not deemed compatible with FReM. Officials will, however, reconsider options for the accounting treatment of Pension Scheme provisions.

ACTION: RICHARD STEWART

9 SARC 2017/18 OBJECTIVES

9.1 SARC members agreed that no changes were necessary to the current SARC objectives and acknowledged that the full range of responsibilities was set out in the SARC Terms of Reference.

10 CORPORATE RISK REGISTER

10.1 SARC members noted the changes made to the contents of the Corporate Risk Register and commented that the register is professional and modern. The contents were discussed and SARC members were content.

11 STEWARDSHIP STATEMENTS (at 30 September 2016)

11.1 SARC members discussed and noted the contents of the Stewardship Statements as at 30 September 2016.

12 KEY GUIDANCE FROM DEPARTMENT OF FINANCE

12.1 SARC members noted the contents of the four DAO letters, three DAO/FD letters and one FD letter that had been issued by the Department of Finance since the October SARC meeting and, where appropriate, their application to the Assembly Secretariat.

13 A.O.B.

13.1 There was no other business.

14 DATE OF NEXT MEETING

14.1 It was agreed that the date for the next meeting of SARC would be agreed by correspondence.