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SECRETARIAT AUDIT AND RISK COMMITTEE (SARC)
WEDNESDAY 24 JUNE 2009
ROOM 29, PARLIAMENT BUILDINGS
Members:
Alan McQuillan, Chairperson
Alban Maginness MLA
Colm McKenna
Attendees:
Trevor Reaney, NIA
Stephen McCormick, NIAO
Brian Moreland, NIA
Richard Stewart, NIA
Paula McClintock, NIA
Glenda Grant, NIA
David Johnston, NIA, Secretary
1 APOLOGIES
1.1 No apologies were received. 2. DECLARATIONS OF INTERESTS
2.1 No interests were declared.
3. MINUTES OF LAST MEETING
3.1 The draft minutes of the meeting held on 23 April 2009 were approved without amendment.
4. INTERNAL AUDIT ACTIVITY / ASSURANCE
4.1 Brian Moreland advised that final reports had issued in respect of the audits on Members’ Pensions, Payroll, Outsourced Service Contracts and Secretariat Travel and Subsistence. SARC members and attendees had received copies of the final reports. It was noted that these reports now contained ‘Satisfactory’ ratings but concern was expressed that some of the language used by the external provider in the text of the reports seemed inconsistent with the grading and that the Management Responses indicated that some recommendations were clearly disputed. Problems experienced during the audit and preparation of the reports were also noted. 4.2
4.2 Colm McKenna undertook to send his specific comments on the reports to Brian Moreland, copied to the SARC Chairperson.
ACTION: COLM McKENNA
4.3 It was agreed that the Rules of the Assembly Members’ Pension Scheme should form an addendum to the Members’ Pension Scheme report.
ACTION: BRIAN MORELAND
4.4 Stephen McCormick reported that NIAO had no major concerns about the Pension Scheme but would be highlighting the fact that formalisation of meetings of the Members’ Pension Scheme audit committee needed to take place.
ACTION: BRIAN MORELAND
4.6 Trevor Reaney undertook to arrange a familiarisation briefing by Procurement staff at the next SARC meeting.
ACTION: TREVOR REANEY / RICHARD STEWART
4.7 Brian Moreland reported on a meeting involving himself, the Senior Information Risk Owner (SIRO), the Head of Information Systems and the Information Standards Officer to discuss the findings in the draft report of the Information Security Review. It had been agreed that additional information, including that relating to best practice in a number of the issues raised, was required before finalising the agreed action. The final report will be issued to SARC members and attendees.
ACTION: BRIAN MORELAND
4.8 Brian Moreland reported that an Information Security Audit is due later in the year, once an effective, appropriately priced service provider has been identified.
4.9 Brian Moreland advised that revised scorings had been applied to the risk analysis used to inform the audit plan, and submitted a revised schedule for 2009 / 2010, indicating the number of available audit days, budgets and the outline timing for each assignment. This will be further revised to take account of the requests made at paragraph 4.5 above.
ACTION: BRIAN MORELAND
4.10 In relation to overall assurance levels, Brian Moreland reported that the level of assurance identified in recent audit assignments has been generally satisfactory, with the majority of recommendations being risk priority three. The exception to this was the review of Information Security, which, although not a formal Internal Audit, will contribute to the assessment of the system of risk management, control and governance. Internal Audit would therefore emphasise the need for management to consider the extent to which the Secretariat adopts current best practice in information security. The assessment of the overall level of assurance will continue to be informed by the outputs from audit assignments identified on the plan and the degree to which recommendations accepted by management have been implemented. The initial level of assurance for the 2009/10 year to date has been assessed as satisfactory. Internal Audit will continue to support the Assembly’s developing risk management arrangements. Consideration of the organisation’s key corporate and directorate risks will be used as a primary source to inform the allocation of Internal Audit resources.
4.11 A draft design for the schedule detailing progress towards the implementation of Audit recommendations was tabled and the format agreed. It was also agreed that only amber and red ratings need appear, and the need for recommendations to be as specific as possible and with clear target dates was stressed. The schedule will continue to be an agenda item at both SARC and the Secretariat Management Group.
ACTION: BRIAN MORELAND
4.12 In relation to risk management, Brian Moreland advised that it is now standard practice for the relevant areas of the Corporate and Directorate risk registers to be considered during each Internal Audit assignment to ensure that the risks identified during the planning process remain valid and the control measures recorded are up to date and effective.
Any significant risk management issues will be brought to management’s attention during each assignment and, if necessary, during the regular updates to the Secretariat Management Group.
4.13 Brian Moreland reported that no further Freedom of Information requests had been received in relation to Internal Audit.
4.14 Brian Moreland reported that the revised Government Internal Audit Standards (GIAS) were launched in April. The revised standards have strengthened the links between the requirements for Internal Audit in public sector bodies and the professional standards of the Institute of Internal Auditors. This may have long-term training implications for Internal Audit.
4.15 Brian Moreland advised SARC that the second meeting of the Inter-Parliamentary Head of Internal Audit Group is due to take place in Jersey on 26 June 2009. The agenda is due to cover a number of issues, including the revised Internal Audit Standards issued by HM Treasury, system security and planning, but it is anticipated that the main focus of the meeting will be on expenses. SARC will be informed of any useful approaches taken within the other bodies that could be applied successfully in the Assembly.
4.16 Brian Moreland advised SARC that a submission in respect of the appointment of an Audit Manager was considered and approved by the Secretariat Management Group on 12 June 2009. A job description has been drafted and the Head of Internal Audit will discuss the details of the competition with Recruitment in due course. It is likely to be December 2009 at the earliest before an individual would be in post.
4.17 It was reported that the Chairperson and member of SARC, along with the Head of Internal Audit, had attended the Chief Executives Forum workshop “Public Accountability for Members of Audit Committees” at Malone House on 20 May 2009. The workshop was useful and informative. SARC will be kept informed of other relevant training events and conferences.
5 REPORT ON IMPLEMENTATION OF SECRETARIAT REVIEW RECOMMENDATIONS
5.1 The contents of the report were noted. All recommendations have been implemented or appear in the revised Corporate Plan, with the exception of the recommendation that a non-executive director be appointed to the Management Board. Trevor Reaney advised that it appeared to be more appropriate to have such representation at Assembly Commission level, possibly with observer status, as legislation would not allow for a non-executive Commission member. In the light of the discussion, Stephen McCormick indicated that the NIAO audit letter would be amended to recommend that consideration be given to non-executive representation at Commission level. Trevor Reaney stated that a paper would be put to the Commission in September for consideration. It was suggested that any non executive appointed to the Commission should also become a member of SARC.
SARC members agreed that no further action was needed on the Review Recommendations implementation report and it could be regarded as closed for the purposes of the Committee.
6. NI ASSEMBLY ACCOUNTS 2008-09
6.1 Alan McQuillan thanked all involved in the production of the accounts and the helpful meeting on 19 May 2009 to consider the draft accounts. Paula McClintock advised that one adjustment had been made in respect of fixed assets. Stephen McCormick commented that the accounts were of good quality, incorporating key changes from last year relating to the valuation basis for Ormiston House and the inclusion of a “negotiable amount” in respect of Fair pay provision.
7. REPORT TO THOSE CHARGED WITH GOVERNANCE
7.1 Stephen McCormick reported that the NIAO audit was now complete and should result in the Comptroller and Auditor General providing a clean audit opinion. No report on the account was required. The high quality of the account submitted by the Assembly on 22 May 2009 had assisted in the timely completion of the audit and the certification and laying of the account prior to summer recess.
Stephen McCormick explained that key risks had been identified for carrying out the audit. These were the phasing in of the new Corporate Governance structures; Ormiston House; High Level Financial Controls; and Members’ Travel and Subsistence Allowance. Observations and recommendations to management were in the areas of Related Parties; Business Continuity Plan; Support Staff Contracts; Agency Staff Costs; Hospitality; Taxi Scheme Expenditure; Training Expenditure; and Procurement Compliance.
7.2 Following discussion of the report, Stephen McCormick agreed to make it clear that a retired Director is referred to in 6.1 of the report, and, following email correspondence, to remove 6.9.
ACTION: STEPHEN McCORMICK
7.3 Paula McClintock circulated draft management responses to the report, and stated that these would be finalised and submitted to NIAO that afternoon.
Based on an examination of the Accounts, the Report to those Charged with Governance, and the assurances given at the meeting, SARC agreed to recommend that the Clerk/ Director General sign the 2008-09 accounts. Alan McQuillan and Trevor Reaney again expressed thanks to the staff involved in achieving the smooth completion of the accounts process.
The final Accounts submission to NIAO is to be emailed to SARC members for information with the final version of the Comptroller and Auditor General’s Letter to Those Charged with Governance.
ACTION: PAULA McCLINTOCK
8. CORPORATE RISK REGISTER
8.1 SARC members welcomed the colour-coded and scoring matrix changes made to the latest version of the Corporate Risk Register, and sought and received assurances in relation to the gaps identified in relation to Risks 5 and 6.
9. MEMBERS’ EXPENSES
9.1 Paula McClintock presented a briefing paper on Members’ Expenses and, following discussion by SARC on processes, risks, checks and appeals, undertook to provide more detail on Premises Costs, giving separate breakdowns for Rents, Rates and Insurance.
ACTION: PAULA McCLINTOCK
9.2 Trevor Reaney outlined developments in relation to the Senior Salaries Review Body, the recommendations of the Standards and Privileges Committee, reviews in Scotland and Wales, and the unfolding situation at Westminster — all of which will be taken on board in the current review of the Members’ Financial Services Handbook. Recommendations are due with the Assembly Commission in September and, if approved, will go before the House in early Autumn. Implementation would be phased thereafter.
SARC members stressed the importance of removing “grey” areas from the handbook and stated that it would be helpful if the Commission could issue a direction/rules to MLAs in due course. This would also serve as a protection to Finance Staff.
ACTION: RICHARD STEWART
9.3 Brian Moreland stated that provision had been made in the Internal Audit plan to accommodate the 25% review of MLA’s expenses as recommended in the SSRB report.
ACTION: BRIAN MORELAND
10. SARC REPORT FOR ASSEMBLY COMMISSION
10.1 The format of the report was discussed and agreed, with the “Key Objectives” section moving to item 3. The report is to be drafted over the summer, in consultation with the Chairperson, and considered at the September SARC meeting.
ACTION: GEORGIE CAMPBELL
11. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
11.1 Paula McClintock advised SARC that IFRS would require a restatement of the accounts, which would then be submitted to NIAO by 30 September 2009 for completion of audit by the end of December 2009. Although the format and level of disclosure would change, the accounts figures should not. Colm McKenna suggested that an explanatory note would be helpful and undertook to liaise with Paula McClintock on the wording.
ACTION: COLM McKENNA / PAULA McCLINTOCK
11.2 It was agreed that the restated accounts would be emailed to SARC members for information.
ACTION: PAULA McCLINTOCK
12. GIFTS AND HOSPITALITY
12.1 The Assembly Secretariat’s new Gifts and Hospitality Policy was circulated and noted. The Head of Finance is to provide a summary of key control issues for circulation to Secretariat staff.
The Chairperson inspected a sample of the current manual Hospitality Registers, and Paula McClintock outlined plans to move to a central electronic register by the end of August. SARC stated that this should be an open register. An update on progress is to be provided for the September SARC meeting.
ACTION: PAULA McCLINTOCK
13. NI ASSEMBLY / DEPARTMENT OF FINANCE AND PERSONNEL CORRESPONDENCE RE FINANCIAL RESPONSIBILITIES
13.1 Correspondence between the Interim Clerk/Director General and DFP in 2007 and 2008 was circulated, and it was noted that no formal funding mechanisms for the Assembly were in place. Trevor Reaney explained that arrangements would need, in the medium term, to be put on a statutory footing. It is essentially a legislative issue for the Commission to take forward.
14. AOB
14.1 Alban Maginness MLA explained that this was his last SARC meeting, and he paid tribute to the good work undertaken by SARC in fulfilling its role of challenge so professionally. He wished the Committee well for the future. Alan McQuillan thanked Alban Maginness for his help on SARC.
15. DATE OF NEXT MEETING
15.1 The next meeting of SARC will take place on Wednesday 9 September 2009 at 10.00 am in Room 29, Parliament Buildings. |
