SECRETARIAT AUDIT AND RISK COMMITTEE (SARC)
THURSDAY 30 SEPTEMBER 2010
ROOM 106, PARLIAMENT BUILDINGS
Members:
Alan McQuillan, Chairperson
Colm McKenna
Pat Ramsey MLA
Attendees:
Trevor Reaney, NIA
Andrew Allen, NIAO
Richard Stewart, NIA
Dr Gareth McGrath, NIA
Paula McClintock, NIA
Brian Moreland, NIA
Eddie Kelly, NIA
Georgie Campbell, NIA
David Johnston, NIA, Secretary
1 APOLOGIES
1.1 Apologies were received from Stephen McCormick, NIAO. He was represented by Andrew Allen. 2 DECLARATION OF INTERESTS
2.1 In relation to Procurement, the Chair declared that he is advising a party in a major litigation case relating to a Government tendering process.
3. MINUTES OF THE PREVIOUS MEETINGS
3.1 The minutes of the SARC meetings held on 18 May and 24 June 2010 were approved without amendment.
4. MATTERS ARISING
4.1 18 May minutes, Paragraph 5.11 Brian Moreland reported that he had sought advice from a variety of sources, including the Information Commissioner, on the retention of evidence following the investigation into the unauthorised release of Members’ expenses information. It had been agreed that the lower risk hard drives could be released. SARC members stressed that the IT procedures that had been introduced following the leak must continue to be adhered to by Secretariat staff.
4.2 Paragraph 9.1
SARC members noted that the Awareness Workshop for Heads of Business and middle managers in the Secretariat held on 3 September 2010 had been well attended and received, raising awareness of risk management and governance issues.
4.3 Paragraph 11.1
Georgie Campbell advised that “Engaging with Members on Information Security issues” would be added to the Corporate Risk Register.
4.4 24 June minutes, Paragraph 4.1
It was noted that measures are now in place to ensure that non-executive SARC members receive all relevant correspondence.
5 INTERNAL AUDIT ACTIVITY / ASSURANCE
5.1 Brian Moreland reported that a total of six Internal Audit reports had issued in draft or final form since the May 2010 meeting of the Secretariat Audit and Risk Committee.
5.2 The final report for Payments Processing was issued on 4 June 2010, with a total of seven recommendations made, five at risk rating 1, and one each at rating 2 and 3. Recommendations made related to the requirement for a purchase order system, supplier set-up on the SUN system and authorisation levels. Internal Audit arrived at a “Satisfactory” level of assurance.
5.3 The final report for the audit of Faster Closing was issued on 4 June 2010. Three recommendations were made, one each at risk rating 1, 2 and 3.
Recommendations were made regarding the documentation of procedures and timetables for the production of annual and interim accounts and the need to record those involved in the preparation and review of reconciliations. This assignment was given a “Substantial” assurance rating.
5.4 The final report on the Communications Office was issued on 8 July 2010, and a total of 22 recommendations were made, two of which were risk rating 1, 11 rated 2 and the remaining nine rated 3. The assurance level for this audit was “Satisfactory”. The main recommendations related to working patterns (to reduce overtime costs), the procurement of advertising services, contract management and a database for the recording and classification of media enquiries.
5.5 The final report on the Provision and Allocation of Accommodation and Furniture was issued on 7 September 2010, with a total of 16 recommendations made for management consideration. Of these, seven were classified as risk rating 2 and the remaining nine rated 3. Recommendations were made in relation to the documentation of management checks, enhanced segregation over requests for furniture/goods, financial monitoring and approvals for office transfers and major accommodation work. In addition, a recommendation was made regarding the development of service level-type agreements with NICS Properties division. The overall assurance rating for this exercise is “Satisfactory”.
5.6 A draft report in respect of the Official Report (Hansard) audit was issued on 31 August 2010, and a total of 16 recommendations were made. Only one of these was given a risk rating of 1, with four risk rating 2 and the remaining 11 rated as 3. The assurance level from this audit was “Satisfactory”. Recommendations were made regarding records of the demands for Hansard services (e.g. from Committees), the introduction of a new workflow database system and access to supporting documentation for payment processing. A meeting to discuss management responses was held on 29 September 2010.
5.7 A draft report following the audit of the Assembly’s procurement policies and procedures was issued on 2 August 2010. A total of 11 recommendations were made, all of which are risk rating 1. The assurance rating for this audit is “Limited”. The recommendations made cover a range of issues from training for contract managers to the central monitoring and oversight of procurement activity. Recommendations were also made to enhance budgetary control and the management of contract extensions and variations. A meeting was held on 10 September 2010 to discuss the report and management responses are expected shortly.
5.8 As previously discussed at SARC, the Clerk / Director General wrote to the PSNI regarding the possibility of a criminal investigation being pursued. Following a request for clarification, the PSNI have confirmed that no further action will be taken.
5.9 Brian Moreland reported that the overall level of assurance for the period 1 April 2010 to 30 September 2010 is “Satisfactory”. This is based on the levels of assurance arising from individual Internal Audit assignments that have been carried out to date as per the plan approved by SARC. Although the recent Procurement audit resulted in a “Limited” assurance rating on the draft report, early implementation by management of the recommendations made should serve to improve this rating in the relatively short term.
5.10 Brian Moreland advised SARC that no further Freedom of Information requests had been received in relation to Internal Audit.
5.11 Brian Moreland informed SARC members that the latest meeting of the Inter-Parliamentary Head of Internal Audit Group was held in the Isle of Man on 17 September 2010. Among the issues discussed were assurance mapping, implementation of recommendations and Internal Audit’s involvement in cost reduction exercise.
5.12 Internal Audit continues to offer consultancy support to various business areas of the Assembly. This currently includes a review of the broadcasting contract, the outputs from the spending review and development of a programme of efficiency reviews.
5.13 The Trainee Auditor, Carla Campbell, is continuing to study for the Practitioner – level qualification (PIIA).
5.14 In response to the Head of Internal Audit’s overview, Colm McKenna requested clarification as to how the Payments Processing audit report, where five out of the seven recommendations were classified as risk
rating 1, could be given an overall assurance rating of “Satisfactory”. Brian Moreland advised that this reflected individual auditor judgement and the nature of the recommendations. The SARC Chair stated that clear guidance was needed on what constitutes a risk rating 1, and Brian Moreland undertook to arrange a meeting of his Internal Audit team to take this forward.
ACTION: BRIAN MORELAND
5.15 Pat Ramsey expressed concern about the findings of the draft audit report on the Assembly’s procurement procedures, which had a limited assurance, and general procurement issues.
Brian Moreland undertook to email the final report to SARC members as soon as it is available.
ACTION: BRIAN MORELAND
5.16 Colm McKenna queried the implementation figures and graphics relating to the period prior to 2009 and 2009-10 and suggested that an additional column be added entitled “Still to be implemented” to ensure that the various components matched the totals. Brian Moreland undertook to rework the table accordingly, and to check the accuracy of the data, for resubmission to SARC members by email by 8 October 2010.
ACTION: BRIAN MORELAND
6 OUTSTANDING AUDIT RECOMMENDATIONS
REVISED SCHEDULE
6.1 Brian Moreland advised that, as previously discussed at SARC and SMG, Internal Audit will continue to maintain a comprehensive record of the progress towards implementation of accepted recommendations. An exception report will now routinely be made available at SARC meetings to indicate those recommendations that have passed their implementation date and for which no evidence has been provided to confirm that the agreed action has been taken. The overall rate of acceptance of Internal Audit recommendations remains above 90%. The implementation rate of Internal Audit recommendations is showing signs of improvement. A number of recommendations from the 2009/10 year and earlier that are yet to be implemented will be followed up with management to ensure they remain relevant and the outcome will be reported back to SARC.
A significant number of recommendations for the 2010/11 year are yet to pass their implementation dates. A number of the recommendations not yet implemented are subject to policy development and movement of responsibilities between directorates.
6.2 Trevor Reaney advised SARC members that he had tasked Directors to address any outstanding recommendations no later than 30 November 2010. It was suggested that this date be brought forward to the end of October 2010.
ACTION: TREVOR REANEY
6.3 SARC members requested that the exception report be reordered with the greatest risks appearing first.
ACTION: BRIAN MORELAND
6.4 SARC members examined each of the outstanding recommendations in detail. Members expressed concern that some of the information did not appear to be complete / fully up to date and that many issues that could be dealt with relatively quickly appeared to be still on the register.
The Chair requested that the Clerk/Director General raise the exception report at the next SMG meeting and convey to Directors the view of SARC that greater focus needs to be given to implementing outstanding recommendations.
The Clerk/DG made reference to the progress made to date on corporate governance issues and the overall improvement in levels of assurance in recent years. This was agreed, and members indicated that it was positive that so much progress had been made. Indeed, what was now happening was that SARC was able to focus in on those recommendations still outstanding after a period. They fully supported the removal of items no longer relevant or that have been superseded, as this will allow SARC to focus in on the issues that are current and represent the greatest risks.
ACTION: TREVOR REANEY
7 INTERNAL AUDIT PLAN – UPDATE
7.1 The Head of Internal Audit reported that work has progressed well on the plan agreed at the May 2010 meeting. However, the requirement to divert resources to other activities such as the spending review, the broadcasting contract and efficiency reviews will impact on the last quarter of the programme. At present, Internal Audit would recommend deferring the Internal Audit of the Corporate Policy Unit until the 2011/12 year.
In addition it may not be possible to complete the full range of follow-up audits as planned. The recommendation schedule will continue to be updated using management updates with the understanding that follow-up audits will also take place. When the full impact of the above activities, including any developments in the area of Procurement, has been assessed a more accurate revision of the plan will be possible.
ACTION: BRIAN MORELAND
8 PROCUREMENT / PAYMENT PROCESSING
8.1 The SARC Chair stated that the awaited final report on Procurement Procedures, the final report on Payment Processing and the recommenced procurement process in relation to the Broadcasting contract were significant issues that could represent increased reputational and financial risk. In addition, SARC should be alive to the wider background of this issue within Government and to the fact that effective procurement would become even more important as available money tightened.
It was agreed that this was such an important issue for the Secretariat that it required more time than was available in a normal meeting. SARC members agreed the following action:
- The attendance of SARC members to be arranged, if possible, at a proposed briefing on the Broadcasting contract process for Assembly Commission members.
ACTION: TREVOR REANEY
- An additional meeting of SARC to be held week commencing 25 October 2010, or as soon as possible thereafter, to discuss procurement issues more generally and these matters.
ACTION: DAVID JOHNSTON
9 CORPORATE GOVERNANCE FRAMEWORK
9.1 SARC members noted the Secretariat’s Corporate Governance Framework as a good reference document. Colm McKenna’s suggestion that it would benefit from the addition of a graphic was agreed. It was agreed that the Framework should be submitted to the Assembly Commission, and, if approved, be placed on AssISt and the Assembly website.
ACTION: GEORGIE CAMPBELL
9.2 Trevor Reaney suggested that the Corporate Governance Framework could form the basis of a future workshop on the Secretariat’s Corporate Governance arrangements.
ACTION: TREVOR REANEY
9.3 Andrew Allen informed SARC that the NI Audit Office is carrying out a review of risk management at present with a view to producing a Good Practice Guide, which may further inform matters.
10 CORPORATE RISK REGISTER
10.1 SARC members noted the latest Corporate Risk Register and considered Risks 5 and 9 in detail. Members also noted that possible emerging risks in relation to Procurement need to be kept under review.
11 REVISED STEWARDSHIP STATEMENT FORMAT
11.1 The revised Stewardship Statements to be introduced with effect from 30 September 2010 were noted.
12 MANAGEMENT ACCOUNTS
12.1 Paula McClintock gave an overview of the Management Accounts to end
August 2010.
13 SARC TERMS OF REFERENCE – ANNUAL REVIEW
13.1 It was felt that the SARC Terms of Reference were appropriate in their present form but that they should be submitted to the Assembly Commission for review in the spring of 2011. The review should include consideration of the need to increase the membership of SARC, possibly timed around the end of existing SARC members’ contracts in early 2012.
ACTION: TREVOR REANEY / GEORGIE CAMPBELL
14 A.O.B.
14.1 There was no further business.
15. DATE OF NEXT MEETING
15.1 As outlined in Paragraph 8.1, it was agreed that, diaries permitting, an additional meeting of SARC will be held week commencing 25 October 2010, or as soon as possible thereafter.
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