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
Stephen McCormick, NIAO
Richard Stewart, NIA
Dr Gareth McGrath, NIA
Paula McClintock, NIA
John Gibson, NIA
Brian Moreland, NIA
Eddie Kelly, NIA David Johnston, NIA, Secretary
1 APOLOGIES
1.1 No apologies were received. 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 INTERNAL AUDIT REPORT: PAYMENTS PROCESSING
3.1 SARC members discussed the report on Payments Processing, produced by an external auditor, in detail. Colm McKenna again raised the issue of a report where five out of the seven recommendations were classified as risk rating 1, yet an overall assurance rating of “Satisfactory” was given, and SARC members felt that this may convey a mixed message in relation to a business area involving money and a high fraud risk.
There was then a detailed discussion on the way in which risk ratings were arrived at and the assessment of this audit.
To help avoid any such confusion arising in future audits, it was agreed that the Head of Internal Audit would revisit the definition of audit risk categories and provide clarification to the next SARC meeting.
ACTION: BRIAN MORELAND
3.2 SARC was informed that all of the audit report’s recommendations have now been reported as being implemented with the sole exception of the introduction of a purchase order system. The potential costs of purchasing such a system were discussed, as was a timescale for its introduction. It was noted that the Head of Procurement is to scope a purchase order system within the next month but that, assuming that the necessary finance is available, full implementation is unlikely before September 2011.
3.3 SARC members agreed that a follow-up audit should be undertaken in December 2010 to confirm that appropriate controls are now in place and to outline in greater detail the rationale for the overall assessment rating of “Satisfactory”.
ACTION: BRIAN MORELAND
4 INTERNAL AUDIT REPORT: PROCUREMENT
4.1 Brian Moreland outlined that all of the recommendations in the report on Procurement, ranging from issues relating to single tender actions through to the management of compliance information, had been given a risk rating 1, with the overall assessment being Limited. SARC members expressed concern at the overall rating and findings of the audit and discussed the report in detail. Brian Moreland reported that some of the recommendations had already been implemented but that others would require decisions at SMG. Following discussion, it was requested that any recommendations with “ongoing” entered in relation to the implementation date should be replaced with a specific action and specific implementation date.
ACTION: BRIAN MORELAND/SMG
4.2 John Gibson, Head of Procurement, gave SARC members an overview of procurement processes - for procurements over £25,000, which are undertaken by professional staff in the Procurement Unit, and those under £25,000 (in bands of under £2,000; £2,000 to £10,000; and £10,000 to £25,000), which are undertaken by staff throughout the Directorates of the Secretariat. Lead buyers are also in place in a number of procurement areas, such as IT, travel and stationery.
4.3 It was acknowledged that significant progress had been made in the Secretariat in recent years in terms of better systems and processes but members felt that further progress is required in the area of compliance with these processes. In particular, Secretariat staff need to be more aware of the VFM, theft/fraud and corruption issues and reputational risk to the organisation.
Dr McGrath outlined the training and measures already in place in the Engagement Directorate in this regard, and it was noted that the revised Stewardship Statements required Directors to sign off on procurement compliance. SARC members also highlighted the need for tighter central monitoring of procurement compliance.
It was requested that consideration be given to how full compliance can be achieved including for failure to comply with procurement procedures, and that this be an agenda item at the next meeting of SARC.
ACTION: TREVOR REANEY/RICHARD STEWART/DAVID JOHNSTON
4.4 It was agreed that this was a complex issue to resolve and needed to be taken forward in a coherent and planned manner. SARC acknowledged the huge steps that had been made in many areas and felt that the exposure of these issues illustrated that SMG was prepared to unearth and address particular problems.
4.5 To take matters forward, it was agreed that the timing of the Head of Procurement’s Annual Procurement Compliance Report to the Clerk/DG should be reviewed so that it coincides with the Annual Accounts timetable.
This should be noted as an action point for SMG to address.
ACTION: TREVOR REANEY/JIM BEATTY
4.6 It was further agreed that Internal Audit should undertake a follow-up audit of procurement in January/February 2011.
ACTION: BRIAN MORELAND
4.7 Stephen McCormick commented that governance arrangements in the Assembly had undergone a significant improvement in recent years.
5 PROCUREMENT ISSUES
5.1 In relation to Procurement generally, SARC members are aware of a substantial issue that has arisen and are to be briefed further on the matter on 16 November 2010. SARC members agreed that a “lessons learned” review of the entire process as proposed by the Clerk/Director General should be undertaken by Internal Audit, with the earliest possible commencement date. Terms of Reference for this review are to be circulated to SARC members by 5 November 2010.
ACTION: BRIAN MORELAND
6 UPDATE ON OUTSTANDING AUDIT RECOMMENDATIONS
6.1 SARC members were content with the log of recommendations removed from the Exception report since the SARC meeting in September 2010, and they noted the revised schedule containing only four outstanding audit recommendations. Brian Moreland reported that the Engagement Directorate had established a liaison point for Internal Audit staff, and he recommended that this practice be replicated in other Directorates. The Chair and independent member of SARC thanked Secretariat staff for the progress made in implementing the outstanding recommendations and commented on the remarkable process improvements that had taken place recently in risk management and awareness generally.
6.2 SARC formally approved the actions that had been taken in reducing the list to its new size and the revised schedule. The Chair thanked attendees for the way in which business had been conducted, as SARC sought to take forward improvements in a positive and constructive manner.
7 A.O.B.
7.1 There was no further business.
8 DATE OF NEXT MEETING
8.1 It was agreed that the next meeting of SARC would take place in early January 2011. |
