HARTLEPOOL COLLEGE OF FURTHER EDUCATION
Minutes of the meeting of the Audit Committeeheld on Wednesday16thNovember 2017at 5.30pm inConference Room 4
Present: / Mr S Fallowfield [Chair]Mrs J Regan
Mrs M Roberts
Mr S Salvin
Also Present:
Mr D Hankey / [Principal]
Mrs K Dales / [Assistant Principal: Finance]
Mrs Debra Cassidy / Head of Finance
Mr M Ward / Chair F&GP
Mr P Mitchell / Member F&GP Committee
Mrs L Watson / Member F&GP Committee
Ms L Robson / [RSM UK Audit LLP]
Mr C Barrett / [RSM UK Audit LLP]
Mr P Church / [RSM UK Audit LLP]
Mr A Theakston / [Clerk to the Corporation]
1 / Apologies for absence
There were no apologies for absence. The Chairman welcomed Lucy Robson a partner of RSM, to her first meeting of the committee.
2 / Declarations of interest relevant to the business of the meeting
There were no Declarations of Interest.
3 / Minutes of the meeting held on 28thJune 2017
The minutes were approved and signed by the Chairman.
4 / Matters arising and action points
There were no matters arising and action points.
5 / To note the external audit findings for the year ended 31 July 2017 of the financial statements and regularity auditor, RSM, for recommendation to the Board for approval
Ms L Robson [RSM] gave a brief overview of each area audited, their approach and the responses:
Management over ride of internal controls: no significant issues noted.
Income recognition: income appears reasonably stated, the final reconciliation statement is awaited from the ESFA which should be received in the next couple of weeks.
Pension scheme liabilities: comfortable it has been appropriately included in the accounts and has been audited. The deficit has reduced quite significantly. MW noted that the deficit had reduced largely due to assumption used by the actuary and expressed some doubt as to its consistency.
Restructuring costs: no significant issues identified.
Going concern: this is a key risk area. RSM advised that they had reviewed management’s calculations of the year end covenants under the loan agreement and agreed with their view that the covenant had been met, albeit as KD had previously stressed, there was minimum headroom.
As the financial health score had moved from good to satisfactory in 2016/17 it had been assessed by the ESFA as a significant decline in the financial health who had had sent an Early Intervention letter dated 6th November. A copy is attached.
RSM advised that they were not aware of a precedent from which they could give advice. A meeting was scheduled with the ESFA for 22nd November and RSM advised that they would be happy to speak with the ESFA if the College so wished. Once the meeting had been held the outcome would be discussed and the next step decided although it was essential that a considered recommendation to the Board could be made at its meeting on 7th December.
Hartlepool Business Development Centre Limited: a small profit has been made.
3 [issues identified during audit and regularity work]
Fixed Assets- nil net book value items: management are to consider how best to tackle whether some assets should be written off and how to manage and monitor this going forward. The suggested approach was to tackle them incrementally.
4 – Unadjusted/adjusted misstatements: key in the adjustments is the £11k of Corporation Tax Liability of HBDC which will be payable over next 12 months.
5 – Potential impropriety issues identified during audit: none identified.
6 – Significant deficiencies in internal control: none identified.
7 – Significant findings from the audit: RSM confirmed that they had identified no significant findings and the Chairman expressed thanks to K Dales, D Cassidy and their team for achieving such a very satisfactory audit and also thanked the auditors involved for their diligence and co-operation.
The Chairman was authorised to sign:
Audit of Financial Statement – Year ended 31 July 2017
Regularity Assurance Engagement – Year ended 31 July 2017
6 / To consider the audit committee’s annual report 2016/17 for recommendation to the Board for approval
The committee considered the above report and agreed to recommend to the Board that it is approved. The report was signed by the Chair, SFallowfield.
7 / To consider the audit committee’s self-evaluation for 2016/17 for recommendation to the Board for approval
The committee considered the self-evaluation which supported the annual report as above and agreed to recommend to the Board that it is approved.
8 / To consider the draft consolidated reports and financial statements for the period 1 August 2016 to 31 July 2017 for recommendation to the Board for approval
Commercially sensitive.
9 / To consider the draft HBDC Ltd directors reports and accounts for the period 1 August 2016 to 31 July 2017 for recommendation to the Board for approval
Commercially sensitive.
10 / To consider the letter of support from the College to the Company for recommendation to the Board for approval
Commercially sensitive.
11a / To consider the engagement letter between HCFE and RSM for the Financial Statements Audit for recommendation to the Board for approval
The engagement letter was considered and recommended to the Board for approval.
11b / To consider the engagement letter between HCFE and RSM for the report on Teachers’ Pensions for recommendation to the Board for approval
The engagement letter was considered and recommended to the Board for approval.
12 / To receive and consider any risk reports from committees
None.
13 / To consider the Risk Register 2017/18
Commercially sensitive.
14 / To consider the revised Whistleblowing Policy for recommendation to the Board
The Whistleblowing Policy had been updated and a copy is attached. It was noted that new section 6 required a nominated governor to deal with concerns by the whistle-blower if he/she thought that the matter was not being properly dealt with. The chairman had agreed that this person should be the board’s vice chairman (the chairman possibly being required for a later stage of the process) and this was approved by the committee for recommendation to the board. Mr M Ward had indicated his willingness to fulfil the role whilst he was in office.
15 / To receive the RSM Internal Auditors annual summary
Phil Church [RSM] gave a brief overview of the report which summarises the work that has been carried out. Five assignments were undertaken which resulted in 15 management actions in the follow up review. All actions were fully implemented apart from one ‘medium’ action relating to ESF clauses - an updated management action was agreed with the college. The report was considered and agreed by the committee.
16 / To consider the ESFA Financial Health letter
This letter received 18 October stating our ‘financial health’ had an underlying grade of ‘Satisfactory’ was noted by the Committee.
17 / To consider the ESFA Early Intervention letter
As minuted earlier the Committee considered the letter received 6 November 2017 which stated that there had been a ‘significant decline in the financial health score’ and therefore the Intervention Team would be in touch to arrange a meeting. This meeting will take place on 22 November. Governors will be briefed on the outcome of the meeting. D Hankey stated that this was a national issue.
18 / Any other business
18a / To note the Independent Auditors Opinion to ESFA – 16-19
This document was noted by the Committee. Funding rules have been applied therefore a clean report is expected.
18b / To note the Independent Auditors Opinion to ESFA – Adult and Apprenticeships
This document was noted by the Committee. Funding rules have been applied therefore a clean report is expected.
18c / To note the RSM Mock Substantive Funding Audit
Commercially sensitive.
19 / To note the date and time of the next meeting as Tuesday 6th March 2018 at 5:30pm.
20 / Meeting with External Advisers (if required)
A meeting was not required.
………………………………………
CHAIRMAN
Action points from the meeting on 16th November 2016
No / Item / By Whom / By Date8,9,10, / Submit report and accounts etc. to board for approval / KD/AT / 1.12.17
11 / SF to sign report then submit to board / SF/KD/AT / 1.12.17
13 / Add loan covenant to Risk Register / KD / 31.12.17