SECRETARIAT AUDIT AND RISK COMMITTEE (SARC)
WEDNESDAY 9 SEPTEMBER 2009
ROOM 29, PARLIAMENT BUILDINGS
Members:
Alan McQuillan , Chairperson
Sean Neeson MLA
Colm McKenna
Attendees:
Trevor Reaney, NIA
Stephen McCormick, NIAO
Brian Moreland, NIA
Richard Stewart, NIA
Paula McClintock, NIA
Catherine Dornan-Weir, NIA
Georgie Campbell, NIA (agenda item 7)
John Gibson, NIA (agenda item 8)
David Johnston, NIA, Secretary
1 APOLOGIES
1.1 No apologies were received. The Chairperson thanked Mr Sean Neeson MLA for his attendance at the meeting on behalf of the Assembly Commission pending the appointment of a replacement for Mr Alban Maginness MLA.
2. DECLARATIONS OF INTERESTS
2.1 The Chairperson declared a potential interest in relation to Procurement, but this had been discussed with the Clerk/Director General and had been deemed to be manageable.
3. MINUTES OF LAST MEETING
3.1 The draft minutes of the meeting held on 24 June 2009 were approved without amendment.
4. MATTERS ARISING
4.1 Paragraph 4.2
The audit reports listed are to be reissued to Colm McKenna, who will submit any comments thereon to the Head of Internal Audit.
ACTION: BRIAN MORELAND / COLM McKENNA
4.2 Paragraph 4.4 The various risks and liabilities relating to the Members’ Pension Scheme were discussed. It was noted that Trustee training is ongoing, legal advice is being sought on technical issues and that the NIAO is due to report on the scheme shortly. There was therefore reassurance that progress was being made and that audits of the scheme showed no significant problems.
It was agreed that, in view of the potential scale of the scheme and future liabilities, SARC would continue to carefully monitor this issue. An interim report on the contracting out of associated services is to be prepared for the December SARC meeting.
ACTION: RICHARD STEWART
4.3 Paragraph 4.7 The Head of Internal Audit advised SARC that the final report on Information Security should be available week commencing 21 September 2009.
4.4 Paragraph 8.1
The July 2009 version of the Corporate Risk Register was discussed.
Trevor Reaney explained that the register would be further updated at the Secretariat Management Group meeting on 18 September 2009, prior to it being considered at the Assembly Commission meeting on 24 September 2009. It was agreed that a tracking mechanism should be added to the register to reflect any scoring changes from the previous versions.
ACTION: GEORGIE CAMPBELL
4.5 Paragraph 9.2 Trevor Reaney explained that the Assembly Commission had requested a review of the Members’ Financial Services Handbook, following the recent Senior Salaries Review Body report. Recommendations are due with the Commission in October, and, if approved, will go before the Assembly in the Autumn. He advised SARC that the Commission has decided that Members’ expenses for the first part of the current financial year are to be published by end September 2009, and Members’ expenses, with transaction level detail, for the period 2003 to 2008 would be published by end November 2009. Thereafter, details of Members’ expenses will be published quarterly. SARC agreed that developments in other legislatures would be monitored to ensure that the Assembly has appropriate measures in place.
4.6 Paragraph 11.1 Paula McClintock reported that significant progress has been made on the restatement of the accounts as required by the International Financial Reporting Standards and that the 30 September deadline for submission to NIAO will be met. Only a few standards apply to the NIA accounts, but adjustments have been made in relation to employee benefits and Ormiston House. Colm McKenna offered to provide the wording of an explanatory note. Stephen McCormick indicated that NIAO was happy with progress on the restatement of accounts and that NIAO would complete the subsequent audit as soon as possible. It was agreed that the restated accounts should be cleared by SARC members via correspondence prior to the accounts being signed by the Accounting Officer.
ACTION: COLM McKENNA / PAULA McCLINTOCK
4.7 Paragraph 12.1
Paula McClintock reported on work over the summer in the development of an electronic Gifts and Hospitality register. Progress has been made in the areas of workflow and authorisation. Discussions are ongoing with the IS Office. A Finance Director letter, FD (DFP) 19/09, which had issued on 3 September 2009, would also help to inform the exercise. It was agreed that the system, when up and running, would record information from its date of operation and that details from the existing paper records would not need to be input. Brian Moreland emphasised the need for the Finance Office to regularly remind Secretariat staff by Postmaster of the requirement to record gifts and hospitality in the register.
Progress is to be reported to the December 2009 SARC meeting.
ACTION: PAULA McCLINTOCK
5. NI ASSEMBLY RESOURCE ACCOUNT 2008/09: FINAL REPORT TO THOSE CHARGED WITH GOVERNANCE
5.1 It was again acknowledged that a thorough and professional set of accounts had been produced. Stephen McCormick drew attention to the NIAO recommendation that the Assembly Commission should consider permitting the Chair of the Audit Committee to attend Commission meetings as an observer. Trevor Reaney reported that this proposal would be considered by the Commission on 24 September 2009.
6. INTERNAL AUDIT ACTIVITY / ASSURANCE
6.1 Brian Moreland reported that the final report in respect of the audit of Secretariat Travel and Subsistence had issued on 18 June 2009. The main findings related to the action required to minimise the need for imprests, self authorisation of travel and subsistence claims and segregation of duties. Of the six recommendations that were made, one was risk rating 2 and the remainder were given a risk rating of 3. The overall level of assurance for this assignment was satisfactory.
6.2 The draft report for the audit of the OFMDFM Committee had issued on 31 July 2009. A total of 21 recommendations were made, of which two were allocated risk rating 1, 12 risk rating 2 and the remaining seven were given risk rating 3. The main issues raised include the introduction of notional budgets to encourage effective financial management, approval at Director level for the purchase of gifts, the use of meeting checklists and clear records of management checks. The overall assurance rating was satisfactory. This is the first audit of a Statutory Committee in the current programme, and the final report will be available for the December SARC meeting. ACTION: BRIAN MORELAND
6.3 Brian Moreland advised that the draft report on Business Travel had issued in early September 2009. The assurance rating is satisfactory, with a relatively small number of recommendations for improvement. The main findings from the audit relate to the physical security of procurement cards and rail tickets, the receipt of authorisation forms before travel and the production of job instructions.
6.4 The report for the Education Service follow-up was issued on 20 August 2009, with 12 of the 14 recommendations accepted by management having been fully implemented. The remaining recommendations have been partially implemented and are linked to the full development of the Outreach Strategy and feedback processes. An Internal Audit is currently under way in Recruitment and a follow-up of the audit of Gifts and Hospitality is also in progress.
6.5 Following discussions at the June meeting of SARC, Brian Moreland submitted a revised Internal Audit Programme for 2009/10. The planned audit in Facilities has been deferred until the 2010/11 year to facilitate a return to Members’ Pensions and Payroll. In addition, the audit of the External Liaison Unit planned for November has been re-scheduled to February to permit the Procurement audit to be completed in an earlier timescale. It has been possible to retain coverage of the Procedural side of the Secretariat within the current plan. SARC members indicated that they were content with the balance achieved in the revised plan.
6.6 The Head of Internal Audit has provided an options paper to the Clerk/Director General on the performance of the 25% audit of Members’ expenses as recommended in the SSRB report. A provisional budget of 30 days has been included in the 2009/10 audit plan; however, this figure may vary depending on the nature and extent of the testing required. SARC members were firmly of the view that initial audits in this area should be conducted in-house.
6.7 Brian Moreland advised that the overall level of assurance remains at a satisfactory level, informed primarily by the outputs from Internal Audit assignments. As before, the majority of the recommendations made have been assessed as risk rating 2 or 3. In addition, the follow-up audits to date have indicated that the majority of the recommendations accepted by management have been implemented. For those not yet fully implemented, there is evidence of work in progress which will be re-examined in due course.
6.8 SARC members noted the improving trend in assurance levels and felt this showed real progress. After discussion, it was agreed that the focus of SARC should now be on working with SMG to drive up assurance levels. It was agreed that consideration should be given to setting specific targets for this, although these needed to be realistic. It was agreed that a paper on this would be brought to SARC in December 2009 to allow time for any issues to be included in forthcoming Business Plans for 2010/11. ACTION: TREVOR REANEY / BRIAN MORELAND
6.9 The Chairperson requested that the schedule of outstanding audit recommendations be expanded to include all post-Secretariat Review internal and external audit recommendations that remained outstanding. Brian Moreland reported that this task was under way. It was emphasised that where recommendations had been superseded or were no longer relevant this should simply be explained but this would then give SARC a complete record of all audit recommendations and the action taken on foot of each. ACTION: CATHERINE DORNAN-WEIR
6.10 Brian Moreland advised that invitations to tender have been issued in respect of a second round of audits to be completed by external suppliers. Steps have been taken to ensure that the issues surrounding reporting that arose following the initial exercise are not repeated. The assignments included in this exercise are: Faster Closing; Data Protection; AP1 Payments; Provision of telephones, voicemail, mobile phones etc; and Managing Attendance.
6.11 Brian Moreland reported that no further Freedom of Information requests have been received in relation to Internal Audit.
6.12 Brian Moreland updated SARC on the second meeting of the Inter-Parliamentary Head of Internal Audit Group, which was held in Jersey on 26 June 2009. The main item of discussion at the meeting was on the Internal Audit approach to the audit of Members’ expenses. It was noted that all units had set aside resources in the current year for these reviews and it was agreed that it would be useful to provide updates on key issues as they arise. Given the sensitive nature of this issue, there has been general caution regarding the use of external consultants to perform this work and it has been found that using consultants to a limited extent can be somewhat costly. The meeting was also used to compare the approach to a number of other issues, including system security and planning. On system security, there were a number of common themes, including the extent of compliance required to the Cabinet Office guidance. On the issue of planning, the Head of Internal Audit agreed to advise on the approach taken, and key risks considered, during the audits of Committees. In general, it was agreed that the risk based approach had resulted in an improvement in the allocation of audit resources.
6.13 Brian Moreland advised that Internal Audit continues to provide an in-house consultancy service and that he has been asked to provide input to several aspects of the terms and conditions currently being developed for the Assembly Secretariat. He has been asked to assist in the performance of a Gateway Review of the Genesis project. After initial discussions with the Director of Engagement, who will lead the review, it was agreed that there is no immediate conflict of interest. However, should this position change, SARC will be notified accordingly. Internal Audit continues to provide a brief presentation at the induction sessions for new staff in order to explain the role of the unit.
6.14 On staffing, Brian Moreland reported that a Trainee Auditor has been appointed and the recruitment of an Audit Manager is under way. On training, he drew SARC members’ attention to the Best Practice for Audit Committees in Government Annual Conference, to be held in London in November 2009.
7. SARC REPORT FOR ASSEMBLY COMMISSION
7.1 Georgie Campbell joined the meeting, and the Chairperson thanked her for drafting the 2008/09 SARC Report to the Commission. One minor wording amendment was accepted and the report was agreed for submission to the Assembly Commission meeting on 24 September 2009.
8. PROCUREMENT
8.1 John Gibson joined the meeting and gave a briefing on the Assembly Secretariat’s Procurement policies and procedures, including the unit’s current work programme. Mr Gibson highlighted that, due to resource pressures, the strategic programme was unlikely to be realised and that while every effort would be made to deliver the operational programme, that was going to be difficult as well. Discussion ensued on OGC and CPD frameworks, SMEs and contract management. The main risk was identified as the absence of a purchase order system but this has been mitigated by the implementation of the Assembly’s procurement database. It was acknowledged that the outcome of the Genesis project could have implications in relation to the CPD framework. The Chairperson thanked Mr Gibson for his helpful presentation.
9. COMPLAINTS AND WHISTLE-BLOWING POLICIES
9.1 Richard Stewart explained that, in relation to Complaints, formal feedback systems for Members and Visitors were still under development. On Whistle-blowing, there were references in the Assembly Secretariat’s Fraud Prevention Policy, but the development of a specific Whistle-blowing policy will take place as part of the new Terms and Conditions / Code of Conduct. In the interim, the NICS policy will continue to apply. There have been no cases of internal whistle-blowing to date.
10. NATIONAL FRAUD INITIATIVE (NFI) FOLLOW-UP
10.1 Paula McClintock reported that this exercise is being co-ordinated by the Finance Office. The Assembly has been advised of a number of “matches” in the areas of Payroll, Pensions and Creditors. There are no matters of concern to date and most of the matches have related to MLAs who are also councillors, and to duplicate Creditor records on the Assembly’s payment system. The exercise is ongoing; NIAO is to conclude it by the end of 2009, and the exercise is due to be repeated every two years. It is expected that benefit payments will be included next time around. The Chairperson stated that he regarded the NFI update as positive and reassuring.
11. ANY OTHER BUSINESS
11.1 None
12. DATE OF NEXT MEETING
12.1 The next meeting of SARC will take place on Wednesday 2 December 2009 at 10.00 am in Room 29, Parliament Buildings. |
