board of management meeting of audit committee · audit committee requires at least one member to...

BOARD OF MANAGEMENT

Meeting of Audit Committee Meeting to be held

on Tuesday, 24 May, 2016 at 1.30pm

A.16.2.01 Resignations and Appointments A.16.2.02 Apologies for absence

A.16.2.03 Any additional Declarations of Interest including specific Items on Agenda A.16.2.04 Minutes of Meeting of Audit Committee held on 23 February 2016 *

A.16.2.05 Matters Arising/Action Sheet from Meeting of Audit Committee held on 23 February

2016 *

A.16.2.06 Minutes of Joint Meeting of Audit and Finance and General Purposes Committee

held on 24 November 2015 *

A.16.2.07 Internal Audit Progress Report: 2015/2016 *

A.16.2.08 Internal Audit Reports:

Procurement and Creditors / Purchasing *

Budgetary Control *

Follow Up Reviews *

A.16.2.09 External Audit - Annual Audit Plan for the 2015/16 Audit *

A.16.2.10 External Auditor Appointment from 2016/17 * Reserved Items: A.16.2.11 Reserved minutes of Joint Meeting of Audit and Finance and General Purposes

Committees held on 24 November 2015 *

A.16.2.12 Evaluation of Auditors:

(i) Internal

(ii) External

A.16.2.13 Date of Next Meeting of Audit Committee: Schedule of meetings 2016-17 to be

agreed.

* papers attached ~ papers to follow

DRAFT

1

BOARD OF MANAGEMENT

AUDIT COMMITTEE

Minutes of Meeting held on Tuesday 23 February 2016

at 1.30pm in the Board Room Present: Mr B Hope (Convener) Mr C Sanders Mrs A Templeton Mrs D Newton In attendance: Mrs A Lindsay Mr S Inglis (Henderson Loggie) Ms A MacDonald (Audit Scotland) Ms F Newcombe (Clerk) Mrs E Melton (Minutes) Mr Hope welcomed everyone to the meeting.

ACTION DATE A.16.1.01 Resignations and Appointments 1.1 Mrs Newton was welcomed as a new member of the

Audit Committee.

A.16.1.02 Apologies and Absence 2.1 Apologies for absence were received from Mr Ash Major

and Mrs Megan Palmer-Abbs.

A.16.1.03 Any additional Declaration of Interest including

specific items on the Agenda

3.1 There were no additional declarations of interest. A.16.1.04 Minutes of meeting held on 24 November 2015 4.1

It was agreed that Agenda item 7.1 be amended to: The programme for 2015/2016 includes:

Business Development /Research Procurement (including credit purchasing, petty

cash and Purchase Cards, and Partnership working.

Mr Sanders proposed and Mr Hope seconded that the Minutes be accepted as a true record, with the above amendment.

Clerk to the Board

Next meeting

A.16.1.05 Matters Arising/Action Sheet from Meeting held on 24

November 2015

DRAFT

2

ACTION DATE 5.1 6.3 Achieved

1.1 Achieved 1.3 Achieved

A.16.1.06 Internal Audit Progress Report: 2015/16 6.1 Internal Audit schedule progressing as planned. A.16.1.07 Internal Audit Reports: 7.1

Three internal audit reports were discussed:

7.2 Partnership Working:

The outcome of this report was Good with no recommendations.

Student Support The report highlighted weaknesses around the introduction of the Highlands and Islands Association. While it is recognised that HISA is still in development, there were several areas of weakness identified with no clear benefit established.

7.2 Business Development There has been significant progress since the previous internal audit however several points of action remain incomplete. The follow-up review will be scheduled in September 2016.

A.16.1.08 Annual Report of the Audit Committee 2014/15 8.1

Mr Hope informed the Committee that this report was now an annual requirement of the Regional Strategic Body as agreed through the Financial Memorandum. In future years this report will be drafted by the Director of Finance for consideration by the Audit Committee in November for presentation for approval to the Board in December. Discussion was held on the future content of the report.

Clerk November Meeting

A16.1.09 Reserved minutes of Joint meeting of Audit and

Finance and General Purposes Committees held on 24 November 2015

9.1

The Minutes were not accepted as a true record. Ms MacDonald and Mrs Lindsay will amend the Minutes for approval at the next meeting.

Ms MacDonald and Mrs Lindsay

Immediate

Board Evaluation The Board evaluation was discussed. Mr Sanders, Mrs

Templeton and Mr Hope will meet to plan forward progress.

Clerk to the Board

Immediate

DRAFT

3

ACTION DATE A.16.1.10 Date of Next Meeting – 24 May 2016 The meeting closed at 15.30 hrs

Audit Committee – 23 February 2016

1

ACTION SHEET/MATTERS ARISING FROM AUDIT COMMITTEE MEETING HELD ON 23 FEBRUARY 2016

ACTION DATE A.16.01.04 Minutes of meeting held on 24 November 2015 4.1 It was agreed that Agenda item 7.1 be amended to: the programme for 2015/2016

includes: Business Development Research Procurement including credit purchasing, petty cash and Purchase Cards and Partnership working.

Mr Sanders proposed and Mr Hope seconded that the Minutes be accepted as a true record, with the above amendment.

Clerk Next Meeting

A.16.1.08 Annual Report of the Audit Committee 2014/15 8.1 Mr Hope informed the Committee that this report was now an annual requirement of the

Regional Strategic Body as agreed through the Financial Memorandum. In future years this report will be drafted by the Director of Finance for consideration by the Audit Committee in November for presentation and approval to the Board in December. Discussion was held on the future content of the report.

Clerk

November meeting

A.16.1.09 Reserved minutes of Joint meeting of Audit and Finance and General Purposes

Committees held on 24 November 2015.

9.1 The minutes were not accepted as a true record. Ms MacDonald and Mrs Lindsay will amend the Minutes for approval at the next meeting.

Ms MacDonald and Mrs Lindsay

Immediate

Board Evaluation The Board evaluation was discussed. Mr Sanders, Mrs Templeton and Mr Hope will meet

to plan forward progress. Clerk Immediate

DRAFT

Audit Committee 24 November 2015 KMM Emboldened paragraphs, decisions taken

1

BOARD OF MANAGEMENT

JOINT AUDIT and FINANCE & GENERAL PURPOSES COMMITTEE

Minutes of Meeting held on

Tuesday 24 November 2015 at 2.00pm in the Board Room

Present: Mr B Hope (Convener) Mr C Sanders Mrs A Templeton Mr A Major Mrs Palmer-Abbs Mr A Campbell Dr Hutt Mr J Bodman Prof P Maher Mr S Russell In attendance: Mrs A Lindsay Mr S Inglis (Henderson Loggie) Ms A MacDonald (Audit Scotland) Mrs K Matthews (Minutes) Mr Hope welcomed everyone to the meeting, especially members of the F & GP, Ms MacDonald and Mr Inglis. Due to the joint nature of the meeting it was agreed to change the order of business.

ACTION DATE A.15.3.12 External Audit: Audit Scotland 2014/2015 12.1 This item is reserved and the minute is held in

confidence.

(Comfort Break 15.00 – 15.10 hrs) A.15.3.06 Internal Audit: Annual Report 2014/2015 6.1 Mr Inglis spoke to the Annual Report highlighting

paragraphs as follows.

6.2 1.10 – No significant issues identified, however some areas had been identified which would benefit from the formalisation of existing practices to fully comply with the New Code of Good Governance.

6.3 1.11 - Following discussion it was agreed that the word ‘over-claimed’ would be amended to reflect the fact that this was within the financial year.

Mr Inglis Immediate

DRAFT


2

ACTION DATE In response to questioning, Mr Inglis confirmed that there had been no indication in the in-year information provided that would have fore-warned the auditors of the issue. It was confirmed that the provision of real time accounts to budget holders will ensure more accurate budget control.

6.4 1.12 - Business Development/Research. A Commercialisation Strategy has been completed and a further review of this area is included in the internal audit programme for 2015/2016.

6.5 1.13 – Opinion. Mr Inglis stated that, notwithstanding the paragraphs stated above, College has the “proper arrangements in place to promote and secure value for money.”

6.6 Corporate Governance – At the time of audit College was reviewing and updating Standing Orders, the Constitution, Code of Conduct, Declarations etc to ensure compliance with the new Code of Good Governance for Scotland’s Colleges. The audit provided the Board and management a sound base to ensure full compliance to include this within the Statement of Corporate Governance and Internal Control.

6.7 The Committee agreed that January would be the optimum time to undertake an annual evaluation of the effectiveness of Board.

6.8 Corporate Planning - It had been agreed that a review of corporate planning arrangements should be delayed until after the appointment of the new Principal

A.15.3.07 Internal Audit : Annual Plan 2015/2016 7.1 Included in the programme for 2015/2016 are:

Business Development/Research Procurement (including credit purchasing, petty

cash and Purchase Cards), and Partnership working.

7.2 Mr Hope thanked Mr Inglis for his reports and the assurances given

Dr Hutt, Mr Campbell, Mr Russell and Prof Maher left the meeting at 15.40 hrs

Mr Hope requested Mrs Lindsay to remain. The meeting resumed at 15.50 hrs. A.15.3.1 Resignations and Appointments 1.1 The resignation of Mr Gerrard was noted, with Mr Hope

especially appreciative of the support Mr Gerrard had provided over the years he had been a co-opted member of the Audit Committee. Mrs Croydon was requested to

DRAFT


3

ACTION DATE write to Mr Gerrard offering the Board’s thanks for his service.

Mrs Croydon Immediate

1.2 Mrs Lindsay advised that the Terms of Reference of the Audit Committee requires at least one member to have recent relevant financial or audit experience. The resignation of Mr Gerrard has left the Committee without such a member.

1.3 Mrs Croydon was requested to determine if any of the current Board applicants have any financial expertise and to inform Mr Major as soon as possible.

Mrs Croydon

Immediate

A.15.3.2 Apologies for Absence 2.1 There were no apologies for absence. A.15.3.3 Any additional Declaration of Interest including

specific items on the Agenda.

3.1 There were no additional declarations of interest. A.15.3.4 Minutes of Meeting held on 26 May 2015 4.1 Mr Sanders proposed and Mr Hope seconded that the

Minutes be accepted as a true record

A.15.3.5 Matters Arising/Action Sheet from Meeting held on

26 May 2015

5.1 There were no matters arising. A.15.3.08 Internal Audit 8.1 (i) SUMS Report and Action Plan 2014/2015:

Mr Inglis confirmed that the Henderson Loggie Audit Certificate had been submitted to the SFC on 8 October 2015 with reasonable assurance that the FES return contains no material mis-statement.

8.2 (ii) Student Support Funds Report 2014/2015: Mr Inglis confirmed that Henderson Loggie were able to certify all fund statements for the year, and submit to appropriate bodies, without reservation.

8.2.1 It was noted that a significant sum had been awarded to one student for taxi travel, however on investigation this was not considered unreasonable in the circumstances.

8.2.2. Mrs Palmer-Abbs suggested that Mrs Lindsay may be able to access addition travel funding from the Community Planning Partnership.

Mrs Lindsay

For Noting

8.3 (iii) SFC Student Support Fund Return 2014/2015: Return and Audit Certificate submitted.

8.4 (iv) EMA Return 2014/2015: Return and Audit Certificate submitted

DRAFT


4

ACTION DATE A.15.3.09 Care Inspectorate College Nursery Audit Report

(April 2015)

9.1 Mr Hope thanked Mrs Lindsay for including this report in the Audit papers, the contents of which were noted. It was overall an excellent report. Mr Sanders requested assurance that the HR matter had been resolved.

A.15.2.10 Long Term Agenda Planning 10.1 No additional agenda items. A.15.2.11 Date of Next Meeting – 24 February 2016 The meeting closed at 16.25 hrs

Moray College UHI

Internal Audit Progress Report

2015/16 Annual Plan

24 May 2016

1

Internal Audit Progress Report May 2016

Progress with the annual plan for 2015/16, finalised in November 2015, is shown below. Where appropriate follow-up of action plans will be

undertaken and reported in future.

Audit Area

Planned

reporting

date

Report status Report

Number

Overall

Conclusion

Audit

Committee Comments

Annual Plan 2015/16 November

2015

Draft 12/11/15

2nd Draft 17/11/15

Final 24/11/15

2016/01 N/A 24/11/15

Student Support February

2016

Draft 16/02/16

Final 16/02/16

2016/02 Satisfactory 23/02/16

Budgetary Control May 2016 Draft 13/05/16

Final 18/05/16

2016/05 Requires

Improvement

24/05/16

Procurement and Creditors /

Purchasing

May 2016 Draft 11/05/16

Final 18/05/16

2016/06 Requires

Improvement

24/05/16

Business Development /

Research

February

2016

Draft 17/02/16

Final 18/02/16

2016/03 Satisfactory 23/02/16

Partnership Working February

2016

Draft 15/02/16

Final 16/02/16

2016/04 Good 23/02/16

Credits Audit November

2016

Student Support Funds Audit November

2016

2

Internal Audit Progress Report May 2016

Audit Area

Planned

reporting

date

Report status Report

Number

Overall

Conclusion

Audit

Committee Comments

EMA Audit November

2016

Follow-Up Reviews May 2016 Draft 11/05/16

Final 18/05/16

2016/07 N/A see

comments

24/05/16 21 Fully implemented or No longer

relevant

10 Partially implemented

13 Little or no progress

3 No opportunity to implement

47 in total

Moray College UHI

Procurement and Creditors / Purchasing

Internal Audit Report No: 2016/06

Draft Issued: 11 May 2016

Final Issued: 18 May 2016

LEVEL OF ASSURANCE

Requires Improvement

Moray College UHI – Procurement and Creditors / Purchasing

Page No.

Section 1 Overall Level of Assurance 1

Section 2 Risk Assessment 1

Section 3 Background 1

Section 4 Scope, Objectives and Overall Findings 2

Section 5 Audit Approach 3

Section 6 Summary of Main Findings 3

Section 7 Acknowledgements 4

Section 8 Action Plan 5 - 13

Level of Assurance In addition to the grading of individual recommendations in the action plan, audit findings are assessed and

graded on an overall basis to denote the level of assurance that can be taken from the report. Risk and

materiality levels are considered in the assessment and grading process as well as the general quality of the

procedures in place.

Gradings are defined as follows:

Good System meets control objectives.

Satisfactory System meets control objectives with some weaknesses present.

Requires

improvement System has weaknesses that could prevent it achieving control objectives.

Unacceptable System cannot meet control objectives.

Action Grades

Priority 1 Issue subjecting the College to material risk and which requires to be

brought to the attention of management and the Audit Committee.

Priority 2 Issue subjecting the College to significant risk and which should be

addressed by management.

Priority 3 Matters subjecting the College to minor risk or which, if addressed, will

enhance efficiency and effectiveness.

Content

1


Requires


This review focused on the controls in place to mitigate the following risks on the Moray College UHI’s Risk

Register:

Impaired reputation with stakeholders (risk rating: medium);

Exposure to internal fraud (risk rating: medium);

Exposure to external fraud (risk rating: low); and

Qualification of statutory accounts by auditors (risk rating: low)

As part of the Internal Audit programme at Moray College UHI (‘the College’) for 2015/16 we carried out a

review of the College’s arrangements surrounding procurement and non-pay expenditure. Our Audit Needs

Assessment, completed in November 2011, identified this as an area where risk can arise and where Internal

Audit can assist in providing assurances to the Board of Management and the Principal that the related

control environment is operating effectively, ensuring risk is maintained at an acceptable level.

Ensuring that there are robust procurement rules and procedures is important to ensure that the College is

purchasing goods and services that represent best value while ensuring compliance with the Procurement

Reform Act Scotland which started to come into force from 18 April 2016. The College’s Financial

Regulations cover key areas relating to procurement within the College and include sections relating to:

authorisation and control of capital expenditure; authorisation and control of revenue expenditure; order

book and payments; and contracts and tendering. Supporting these are more detailed Financial Procedures.

Staff from the UHI Procurement Shared Service visit the College regularly and provide staff with

procurement guidance and training.

Most College expenditure is processed through PECOS, electronic purchase order raising, authorisation and

receipting software. All PECOS purchase orders are interfaced into the finance system, Symmetry,

overnight. When invoices are received by Finance they are checked against purchase orders and if they can

be matched then they are processed in Symmetry, ready for payment in the next payment run. Some

invoices are received without a purchase order, and these must be authorised before they are directly input

into the finance system. Other expenditure is made by cheque, internet banking transfer, direct debit,

purchase card or via petty cash.

1. Overall Level of Assurance

3. Background

2. Risk Assessment

2


This audit focused on the systems of internal control in place within Finance, and in Curriculum Directorates

and Support Services, for the ordering of goods and services and the payment of invoices. This included

purchases made through petty cash and purchase cards.

We also considered whether the procurement strategy followed and procedures in place support best value

purchasing across the College in relation to non-pay spend.

The table below notes each separate objective for this review and records the results:

Objective Findings

The objectives of the audit were to

ensure that:

1 2 3 Actions

already

planned No. of Agreed Actions

1. Procurement procedures support best value

purchasing in relation to non-pay spend. Requires

Improvement 0 0 0

2. Procurement procedures are appropriate

for all levels of expenditure and are

complied with throughout the College.

Requires

Improvement 0 0 0

3. The risk of unauthorised and excessive

expenditure is minimised. Requires

Improvement 0 1 0

4. All liabilities are fully and accurately

recorded. Good 0 0 0

5. All payments are properly authorised,

processed and recorded. Satisfactory 0 0 1

6. Appropriate controls are in place over the

amendment of standing supplier data on the

finance system.

Satisfactory 0 0 2

Overall Level of Assurance Requires

Improvement

0 1 3

System has weaknesses that could

prevent it achieving control objectives

4. Scope, Objectives and Overall Findings

3


From discussions with Finance staff, and a sample of budget holders in Curriculum Directorates and Support

Services, we established what procurement strategies, procedures and monitoring arrangements were in

place within the College. These were then evaluated to establish if they followed recognised good practice.

Specifically, we sought to establish whether the procurement procedures ensured that areas of high spend

across the College were monitored appropriately, identified opportunities for pooling of expenditure in

order to achieve best value, and ensured that joint purchasing arrangements available to the College were

utilised where appropriate.

We documented controls in place within the purchasing / payments system through interviews with Finance

staff and sought to establish whether the expected key controls were in place by reference to standard

control risk assessment templates. We also performed compliance testing where considered necessary to

determine whether key controls were working effectively, including selecting a sample of items of

expenditure from the financial ledger and testing to ensure compliance with the College’s Financial

Regulations and Procedures.

Strengths

The College uses the UHI Shared Procurement Service, which gives College staff access to

knowledgeable procurement personnel for advice and training, and the College has access to a range

of procurement tools and procurement purchasing frameworks;

The PECOS purchase ordering, authorising, and receipting system provides a robust and efficient way

for controlling expenditure; and

Purchasing cards, petty cash, direct debits and cheques have appropriate authorisation processes in

place.

Weaknesses

Not all expenditure was procured through an APUC (Advance Procurement for Universities and

Colleges) Framework Agreement where these appeared to be available for goods and services

selected for testing and, where relevant, evidence of quotes obtained is not routinely retained on

PECOS. Maintenance contracts require to be tendered through the Public Contracts Scotland (PCS)

tender portal. These issues had already been identified by the College and the UHI Shared

Procurement Service will be working with College staff in the near future to identify areas of non-

compliance and determine future procurement action required;

Non-PECOS expenditure only requires one signature to authorise it, and BACS and internet banking

payments only require one person to process these, which does not allow for adequate segregation of

duties;

Checks over changes in bank account details which are done prior to each major payment run are not

always kept on file and do not show the period to which they relate; and

New supplier forms are not always completed and the new supplier form does not require

justification of the new supplier to be detailed.

6. Summary of Main Findings

5. Audit Approach

4


We would like to take this opportunity to thank the staff at the College who helped us during the course of

our audit visit.

7. Acknowledgements

5

ABC Li88888mited Audit Report Moray College UHI – Procurement and Creditors / Purchasing

Objective 1: Procurement procedures support best value purchasing in relation to non-pay spend.

The College is a member of APUC (Advance Procurement for Universities and Colleges) which provides procurement support and guidance for the Further and

Higher Education sector. In addition the College is part of the UHI Procurement Shared Service which gives access to a shared procurement resource and it

provides a procurement staff member who is based in the College for a minimum of three days every fortnight and is contactable via phone or email while off site.

This staff member’s remit is to provide support and guidance to the College on all levels of procurement, to manage any tender activity over £20,000 and to support

the College with policy development and training for staff on procurement related topics.

The Procurement Reform Act Scotland started to come into force from 18 April 2016. Under this there is no legal requirement for the College to have a

procurement strategy, although there is one in place, and the College is planning to refresh its three year Procurement Strategy and support this with an annual

Forward Contracting plan. The College’s Financial Regulations and procurement thresholds have been amended to meet the new requirements and these and other

Procurement Reform Act Scotland requirements have been communicated to budget holders through senior management and budget holder training sessions in

April 2016.

A contracts register has been created using APUC’s ‘Hunter’ database and a four year non-pay spend analysis has been completed with high risk areas highlighted to

senior management. A range of procurement tools are used by the College including the Public Contracts Scotland (PCS) Quick Quote (in order to receive quotes

for goods and services from a range of suppliers in a short timeframe) and PCS Tender systems. The PECOS purchase ordering system also has some direct links to

approved suppliers’ purchasing websites.

The College’s Financial Procedures state that: ‘If the items required can be purchased from our preferred suppliers (under a Framework Agreement) then the

appropriate supplier must be used.’ The Financial Procedures define the preferred suppliers as APUC suppliers, which have already been vetted by APUC. Part of

the UHI Procurement Shared Service remit is to promote regional collaboration with the other Academic Partners and public authorities. Since August 2015 the

College has participated in collaborative opportunities for insurance and a new finance system which have delivered savings. Purchasing cards (credit cards with the

ability to only make purchases of certain goods and services) are in use to reduce purchasing administration.

As part of the audit we met with four budget holders (the Head of Estates, ICT Officer, and two curriculum budget holders) and discussed their use of framework

suppliers. It was noted that there were some areas, particularly in Estates, where the procurement tools available were not being used. However all staff

interviewed were aware that they now needed to work with the UHI Procurement Shared Service staff to ensure compliance with the Procurement Reform Act

Scotland going forward. As work is planned in this area no recommendation has been raised.

8. Action Plan

6


Objective 2: Procurement procedures are appropriate for all levels of expenditure and are complied with throughout the College

New Financial Regulations and Financial Procedures came into force from March 2016 and set out quote and tender requirements that vary depending on the

value of purchases. These are:

£0-£5,000 (VAT exclusive): items to be purchased from the College’s preferred suppliers (under an APUC Framework Agreement in which case APUC

will have already tendered and negotiated the prices and appointed the best value suppliers) where possible, or otherwise one quote is required, however

purchasers must have regard to value for money in making purchases. The previous Financial Regulations (pre-March 2016) required that for amounts up

to £5,000 (VAT inclusive) every effort should be made to ensure the best value supplier was used with use of preferred suppliers where possible. From a

review of a sample of seven purchase orders (POs) raised between £0 and £5,000 in value, four related to goods and services that appeared to be

available through an APUC Framework Agreement. A framework supplier had only however been used in one instance;

£5,001-£49,999 (VAT exclusive): three quotes (preferably using the quick quote facility from Public Contracts Scotland (PCS) with quotes retained on

PECOS / PCS or use of a framework supplier. The previous Financial Regulations (pre-March 2016) required that for amounts from £5,000 to £30,000

(VAT inclusive) there were quotes from a minimum of three suppliers or from the PCS quick quote facility. From a review of a sample of eight POs

raised between £5,001 and £49,999 in value, seven related to goods and services that appeared to be available through an APUC Framework Agreement.

A framework supplier had only however been used in three instances. We also noted that evidence of quotes obtained was not routinely retained on

PECOS. We were advised by the Assistant Accountant that, as part of the Procurement Reform Act Scotland changes coming into place, going forward

Finance will be actively checking that this documentation is retained on PECOS and / or the College’s network drive. As action is planned no

recommendation has been raised regarding this;

>£50,000 (VAT exclusive): a tender must be undertaken using the PCS tender portal. The previous Financial Regulations (pre-March 2016) required that

for amounts over £30,000 (VAT inclusive) formal tenders must be invited from a minimum of three suppliers on the PCS tender portal. We noted from

discussion with the Head of Estates that there were 14 maintenance contracts that had not been tendered through the PCS tender portal (although prices

had been obtained from a small number of suppliers) however we were advised that he will be working to ensure that these are tendered when the

existing contracts come to an end. There were no individual expenditure items over £50,000 between 1 August 2015 and 14 April 2016, when audit

testing was carried out; and

Expenditure over EU thresholds requires special EU compliant processes to be followed. There were no such items during the period.

We consider that the procurement procedures are appropriate for all levels of expenditure, however as discussed above there has not been full compliance

with these. As staff are working to ensure compliance no recommendation has been raised.

7


Objective 3: The risk of unauthorised and excessive expenditure is minimised.

There is a range of ways that expenditure is processed.

PECOS

The PECOS electronic purchase order raising, authorisation and receipting software is used for the majority of College purchases. Staff are set up as PO raisers

and / or authorisers on the system. A PECOS requisitioner raises a PO on PECOS, including value, description, supplier and expenditure coding (for the finance

system). This is routed to an authoriser on PECOS (based on the cost centre the expenditure is coded to) for approval. Once approved Finance then review

this and send out the PO to the supplier. When the goods are received in or the services are provided these must be receipted on PECOS. All receipted POs

are interfaced to the finance system overnight. Invoices are then matched by Finance to POs, and if these match then the invoice is then processed for payment

in the Finance system.

We discussed the list of approvers (by cost centre) with the Assistant Principal, who considered that the approvers on PECOS as at 14 April 2016 were

appropriate.

From a sample of 15 PECOS transactions between 1 August 2015 and 14 April 2016 we found that these were appropriately raised, approved and receipted, and

invoices were within the original PO or amended / extra PO.

Non-PECOS

There are a number of expenditure items that are not processed via PECOS. These include:

a) Invoices input directly into Symmetry, and not being approved on PECOS:

b) Direct Debits

c) Cheques

d) Internet banking transfers

e) Purchasing cards

f) Petty cash

8


Objective 3: The risk of unauthorised and excessive expenditure is minimised (Continued)

Observation Risk Recommendation Management Response

Non-PECOS (Continued)

a) Finance staff can directly input invoices into Symmetry which would feed

through into a payment run. The key mitigating controls in place to reduce the

risk of fraudulent invoices being input are:

reviews by the Assistant Accountant of invoice batches prior to posting

into Symmetry, including checking of a sample;

reviews of changes to bank account details since the previous payment run

(which mitigates against staff setting up fictitious suppliers or changing the

bank account details of existing suppliers in order to perpetrate a fraud);

and

budgetary control is the key control that should identify any significant

unauthorised or excessive expenditure such as where there could be

existing fictitious suppliers (from prior to when bank account changing

checks were put in place). This only highlights expenditure after it has

been made and relies on budget holders to actively review their budget

reports.

We reviewed five non-PECOS expenses between 1 August 2015 and 14 April

2016 and noted that:

Only one person was required to sign-off the invoice, which does not

provide sufficient segregation of duties; and

Two of the expenses should have had POs raised according to the

Financial Regulations’ requirements but did not. These related to

expenditure on projects that were externally funded. The Assistant

Principal advised that these were late invoices relating to a historic project

and that similar expenditure would not be likely to recur. As a result no

recommendation has been raised.

Expenditure may

be processed with

only one staff

member involved

which increases the

risk for fraudulent

transactions

R1 Ensure that all

non-PECOS

expenditure items

have two staff sign-off

off on these.

Agreed point and will ensure

all non-PECOS invoices have

two signatures.

To be actioned by: AFO /

Budget Holder

No later than: June 2016

Grade 2

9


Objective 3: The risk of unauthorised and excessive expenditure is minimised (Continued)

Non-PECOS (Continued)

b) Direct Debit:

All direct debits must be authorised prior to setting up by at least two staff.

c) Cheques

A cheque authorisation form must be signed by two staff with supporting documentation provided.

d) Internet Banking Payments

An authorisation form is required to be signed by two staff, with supporting documentation retained.

e) Purchasing Cards

There are restrictions placed on purchasing card use which limit what they can be used to purchase, and maximum credit amounts are set which we consider

are appropriate.

f) Petty Cash

Finance must approve amounts put into floats and the amounts involved are small.

Objective 4: All liabilities are fully and accurately recorded.

Processes in place are adequate to ensure that invoices that are processed into Symmetry (or interfaced from PECOS into Symmetry and matched to an invoice

on Symmetry as ready for payment) are shown in trade creditors. There is a quarterly accrual done for management accounts purposes for any approved POs

that are waiting to be matched to invoices to ensure that all committed expenditure is included. Online bluQube budgetary control reports that budget holders

can review include approved commitments.

10


Objective 5: All payments are properly authorised, processed and recorded.


We reviewed the payments controls in place and noted the following:

BACS payments

A sign-off authorisation sheet is required to be filled in and one member of staff

is required to upload the payment file (into a secure network folder) and then

another uses BACS software to process the payment. We noted that although

in practice there is required to be two staff involved there is no electronic

segregation of duties, meaning that one person could potentially upload an

unauthorised payment file and pay this which could lead to fraudulent payments

being made. The Assistant Accountant was not aware of there being any

maximum transaction limit on the BACS software.

There are twice monthly payment runs for suppliers. We tested all 18 such

payment runs between 1 April 2015 and 19 April 2016 and noted that all

payment batch forms were signed-off as required.

Internet Banking Payments

There is a form that is required to be completed setting out details of the

payment, which must be authorised and supported with appropriate

documentation. Although two staff are physically required to sign-off the form

only one person is required to process the payment on the internet banking

software.

There were approximately 80 internet banking payment transactions between 1

August 2015 and 14 April 2016 and we tested 10 of these to ensure there was

appropriate authorisation and we noted no issues.

Unauthorised

transactions may

be made from the

College’s bank

account which may

not be able to be

recovered.

R2 Implement

electronic segregation

of duties on BACS and

internet banking

software.

We have considered the way

forward and will implement

the electronic segregation of

duties on BACS and internet

banking payments and, in the

absence of a relevant staff

member to this process, the

Director of Finance will be the

second person to ensure the

two steps are implemented.

To be actioned by:

Assistant Accountant /

Accounting Technician

No later than: July 2016

Grade 3

11


Objective 5: All payments are properly authorised, processed and recorded (Continued)

Petty cash payments

Each petty cash expenditure item is required to be individually authorised on a form and signed by a staff member in the area concerned and a Finance staff

member. Total petty cash expenditure between 1 August 2015 and 29 February 2016 was £898 (70 transactions). We tested 10 items and noted no issues with

the authorisation of these.

Purchase card payments

Each monthly purchase card item is required to be described on a monthly purchase card log, and this log must be signed-off by the individual concerned and

their line manager, and accompanied with required documentation. Total purchase card expenditure between 1 August 2015 and 7 April 2016 on the 11

purchase cards was £98,543 (742 transactions). We tested 10 transactions and noted that they were adequately authorised and supported with documentation.

12


Objective 6: Appropriate controls are in place over the amendment of standing supplier data on the finance system.

Bank Account Changes

Where a supplier advises the College that they have changed their bank account a change authorisation form must be completed, the change verbally confirmed

with the supplier, and there is a check that the change has been made correctly on Symmetry. We tested a sample of five bank account changes between 1

August 2015 and 14 April 2016 and noted that all had appropriate forms and evidence.

The Assistant Accountant reviews a report showing changes in bank accounts before each twice monthly payment run and, when a member of senior management

signs-off the payment run, if there are any changes in bank details in that run then the documentation is attached for checking.


When there is a twice monthly payment run we noted that the changes in bank

account report referred to above is not always printed-off (we were advised

that it is not printed if there are no entries on it) and this report does not show

the period that it covers.

The bank account

changes report may

not be complete,

allowing

unauthorised

changes to bank

accounts to go

unnoticed which

could be used to

facilitate fraudulent

payments.

R3 Ensure the

payment run report is

always printed out and

shows the dates of the

report.

Agreed that the report should

be printed each time a

payment run is produced and

it has a date stamp on it.

To be actioned by:

Assistant Accountant


Grade 3

13


Objective 6: Appropriate controls are in place over the amendment of standing supplier data on the finance system (Continued).


New Suppliers

When there is a new supplier there should be a completed new supplier form.

We tested a sample of 10 new suppliers between 1 August 2015 and 14 April

2016 and noted that four did not have a completed new supplier form, although

one was an APUC approved supplier and one had an email justifying the setting

up of the supplier. We also noted that the form used did not include a section

to justify the use of the new supplier.

New suppliers may

be set up when

existing framework

suppliers are in

place. New

supplier details may

not be correct.

R4 Update the

new supplier form to

ensure there is a

justification for the

new supplier, and

ensure that all new

suppliers have a new

supplier form

completed.

Partially agreed. Some of the

new supplier checks are done

in the Symmetry system as we

tried to reduce paper but we

will ensure paperwork will be

completed each time and add

a line in for justification as to

why a new supplier is

required.

To be actioned by: AFO &

Assistant Accountant


Grade 3

Moray College UHI

Budgetary Control




LEVEL OF ASSURANCE

Requires Improvement

Moray College UHI – Budgetary Control

Page No.

Section 1 Overall Level of Assurance 1

Section 2 Risk Assessment 1

Section 3 Background 1 - 2

Section 4 Scope, Objectives and Overall Findings 2 - 3

Section 5 Audit Approach 4

Section 6 Summary of Main Findings 4

Section 7 Acknowledgements 5

Section 8 Action Plan 6 - 17

Level of Assurance In addition to the grading of individual recommendations in the action plan, audit findings are assessed and

graded on an overall basis to denote the level of assurance that can be taken from the report. Risk and

materiality levels are considered in the assessment and grading process as well as the general quality of the


Gradings are defined as follows:

Good System meets control objectives.

Satisfactory System meets control objectives with some weaknesses present.

Requires


Unacceptable System cannot meet control objectives.

Action Grades

Priority 1 Issue subjecting the College to material risk and which requires to be

brought to the attention of management and the Audit Committee.

Priority 2 Issue subjecting the College to significant risk and which should be

addressed by management.

Priority 3 Matters subjecting the College to minor risk or which, if addressed, will

enhance efficiency and effectiveness.

Content

1


Requires

Improvement System has weaknesses that could prevent it achieving control objectives.

This review focused on the controls in place to mitigate the following risks on the College’s Risk

Register:

Impaired reputation with stakeholders (risk rating: medium);

Not achieving non-core income targets (risk rating: high);

Exposure to internal fraud (risk rating: medium);

Failure to maintain a balanced budget (risk rating: high); and

Loss of financial sustainability (risk rating: medium).

As part of the Internal Audit programme at Moray College UHI (‘the College’) for 2015/16 we carried

out a review of the College’s arrangements surrounding budgetary control.

It was established on 18 June 2015 that the College had requested a draw down from the Scottish

Funding Council (SFC) on its Further Education (FE) funding which was in excess of its available funds by

£568,430. The College was unable to repay the funds at that time requiring a cash advance from the

University of the Highlands and Islands to meet its financial commitments. A full independent

investigation was carried out by an external consultant into the circumstances giving rise to the over-

claim and the College’s financial position. Management advised that it was established that the main

reason that the College had run out of funds was that budgets were not revised once it became

apparent that Higher Education (HE) student numbers had not been met, which impacted on College

income. Certain new budgetary control practices and protocols have been introduced, which were

subject to review as part of this audit.

Budgets are set through discussion between Finance staff and budget holders based on historic costs

along with relevant known or expected changes. The budget is approved by the Board and then loaded

into the College’s finance system, Symmetry.

Most purchases require a purchase order to be raised and authorised by separate staff on the College’s

procurement software, PECOS. Finance staff review all authorised PECOS orders to ensure there is

sufficient budget in place and, if so, the purchase order is sent to the supplier. There is a daily interface

between PECOS and Symmetry to bring across information about purchases. Some expenditure, such

as that made on purchase cards and utility bills paid by direct debit, are directly input into the

finance system but require appropriate authorisations.

1. Overall Level of Assurance

3. Background

2. Risk Assessment

2


Budget holders have access to information on their actual and budget non-staffing expenditure on

bluQube, an on-line reporting tool linked to the finance system. Staffing figures are centrally monitored

by Finance, and extra posts require authorisation by a member of the Senior Management Team and

extra staff hours require authorisation by a Director. The Assistant Accountant has quarterly meetings

with budget holders to monitor commercial income and non-staffing expenditure against budget, and

from these discussions changes may be made to forecast income and expenditure figures.

This audit looked at the College’s new budgetary control practices and protocols. It also specifically

considered budget monitoring procedures in place centrally and within a sample of Curriculum

Directorates and Support Services, and also cash flow reporting to senior management and the Board,

and the Scottish Funding Council.

The College’s budgeted income for 2015/16 is £12.274 million, and with budgeted staff costs of £9.036

million and other costs of £3.171 million, this gives a budgeted operating surplus of £67,000. The

management accounts at 31 January 2016 showed a forecast surplus of £145,000 for the year to 31 July

2016, whereas the management accounts to 31 March 2016 now show a forecast deficit of £167,000, an

adverse change of £312,000. The main reasons for the forecast deficit were:

forecast income not materialising, including £128,000 of forecast Project income (offset by £25,000

of forecast expenditure, a net £103,000 adverse variance) and £112,000 of Education contract /

non-fundable activity income;

an ESF clawback of £80,000 from 2014/15 not being included in the budget;

professional fees and memberships now being forecast as £96,000 over budget for the year to 31

July 2016; land & buildings maintenance £65,000 over budget; and plant & equipment, fixtures &

fittings, licences £68,000 over budget; and

the use of depreciation ‘cash’.

Offsetting the above negative variances were a number of positive variances, the main one being a

£181,000 increase in FE and HE fees due to higher student numbers than predicted.

The College is also forecasting a negative cash balance at 31 July 2016 of £156,094.

Although progress has been made with implementation of the College’s new budgetary control practices

and protocols there remains further work to be done to ensure that they are fully implemented and

effective. As noted above, the latest set of management accounts available at the time of our audit

indicated that the College was forecasting a deficit for the year to 31 July 2016 and a negative cash

balance at that date. Discussion with the Assistant Principal indicated that action was being taken to

address this position and, as a safety net, the College has arranged a £250,000 overdraft facility.

3. Background (Continued)

4. Scope, Objectives and Overall Findings

3


The table below notes each separate objective for this review and records the results:

Objective Findings

The objectives of the audit were to

ensure that:

1 2 3

Actions

already

planned

No. of Agreed Actions

1. Budgets are controlled in

accordance with the Financial

Regulations and Procedures.

Requires

Improvement 0 2 4

2. Budget setting is linked to corporate

and operational planning processes

and budgets are revisited when plans

change or funding targets are not

achieved.

Requires

Improvement 0 1 0

3. Information is available to

management in Curriculum

Directorates and Support Services

which is up-to-date and in a format

that can be easily understood.

Satisfactory 0 0 0

4. Budget holders have the necessary

skills for managing budgets. Good 0 0 0

5. Budget variations are reported and

acted upon. Satisfactory 0 0 0

6. There is accurate cash flow

reporting. Satisfactory 0 0 0

7. Senior management and the Board

regularly review the College’s

overall financial position.

Satisfactory 0 1 0

8. Improvements made to the

budgetary control framework in

2015/16 have been effective.

Satisfactory 0 0 0

Overall Level of Assurance Requires

Improvement

0 4 4

System has weaknesses that could

prevent it achieving control objectives.

4. Scope, Objectives and Overall Findings (Continued)

4


Finance staff and a sample of budget holders in Curriculum Directorates and Support Services were

interviewed, and reports reviewed, to determine current working practices in budget monitoring, and

the information and training provided to budget holders.

The processes used to prepare cash flow reports for senior management and the Board, and the

Scottish Funding Council were determined through discussion with Finance staff and review of

supporting working papers. We also established and reviewed the budget monitoring information

provided to the College Senior Management Team and Board.

Strengths

The College has a budgetary control framework in place which includes: budget setting and

approval; information being provided on non-staffing expenditure on bluQube for budget holder

monitoring; quarterly meetings between Finance and budget holders where income and non-

staffing variances from budget are reviewed; central review of staffing expenditure; and regular

budget reporting to the Principal’s Planning Group and the Finance and General Purposes

Committee;

Budget holders interviewed advised that the information they were provided with was up-to-date

and in a format that allowed them to review figures (using a drill down functionality) and

understandable;

Budget holders had sufficient skills and training in order to manage their budgets; and

The cash flow forecasting and reporting processes led to sufficiently accurate closing cash

balances being forecast.

Weaknesses

From review of management accounts there continues to be negative variances in some

expenditure categories, due to a mix of unexpected items, expenditure estimates not being

accurately budgeted for when setting the budget and accounting adjustments relating to previous

years;

Commercial income budgets were set without detailed supporting calculations for the numbers of

students or courses. Furthermore, when income was reviewed in meetings between Finance staff

and budget holders the forecast income figures were also estimated without supporting

calculations. Without detailed support for the budget or forecast income there is a greater risk

that these figures will not be accurate;

Although information is provided to the Finance and General Purposes Committee we considered

that the variance commentary provided could be improved and that the information provided

should be reviewed to determine whether this is the most appropriate to meet the needs of the

Committee; and

A number of areas for improvement were noted relating to greater documenting of procedures

and formal compliance with the Financial Regulations and Procedures.

6. Summary of Main Findings

5. Audit Approach

5


We would like to take this opportunity to thank the staff at the College who helped us during the

course of our audit visit.

7. Acknowledgements

6


Objective 1: Budgets are controlled in accordance with the Financial Regulations and Procedures.

The College’s Financial Regulations and Financial Procedures set out the main requirements for budgetary control, covering both revenue and capital budgets. This includes responsibilities of budget holders and senior staff, approval of budgets by the Finance and General Purposes Committee and Board, and requirements for budget holders to

manage their budgets. The Financial Procedures require that budget holders will have access to budget reports, Finance staff will meet at least quarterly with budget holders, the Principal’s Planning Group will receive monthly budget monitoring information, and the Finance and General Purposes Committee will receive budget monitoring

information quarterly.


We reviewed whether the budgetary control requirements of the Financial Regulations and Procedures had been met

through review of documentation and discussion with staff. From this we noted that:

The Director of Finance is required to have budgets communicated to all budget holders as soon as

practicable following their approval by the Board of Management and no later than 1 August of the financial

year to which they apply. We found that non-staffing expenditure budgets could be obtained by budget

holders from the bluQube reporting software, but budgeted income figures were not confirmed with budget holders; and

The Director of Finance is responsible for providing regular updates in respect of all major capital

expenditure to the Finance and General Purposes Committee. We noted that this was not being done.

Budget holders may not be sure of their budgeted income

figures.

There may not be adequate overview of capital expenditure without regular updates to the

Finance and General Purposes Committee.

R1 Ensure that all budget holders are

provided with their full budgets at the start of the

academic year.

Implemented.

To be actioned by: Assistant Accountant

No later than: Done

Grade 3

R2 Provide updates on major capital

expenditure during the year, and on all capital

expenditure at least at the end of the year, to the

Finance and General Purposes Committee.

Capital expenditure is included on the balance sheet which is included in the

management accounts pack but will ensure a section is added to the commentary with

more detail.


No later than: Next quarterly accounts.

Grade 3

8. Action Plan

7


Objective 1: Budgets are controlled in accordance with the Financial Regulations and Procedures (Continued)


From discussion with the Assistant Principal it was noted that all ICT

spend should be approved by the ICT Officer to ensure that it is compatible with the College’s systems and the most appropriate for

use within the College. We noted that this was not formally set out within the Financial Regulations or Procedures.

ICT equipment

may be purchased that is not

appropriate or incompatible with College systems.

R3 Amend the Financial

Regulations or Procedures to require all ICT purchases to be

approved by the ICT Officer prior to any orders being placed.

Will amend the Financial Procedures and

Regulations to reflect existing practices.


No later than: To be Approved by Finance and General Purposes Committee

in June 2016

Grade 3

8




The Financial Regulations and Procedures provide a good budgetary

control framework, however there could be more detailed budgetary control procedures in place providing further information such as:

Budget setting – need for a formal budget setting timetable to be set annually; need for budget holder meetings with Finance which consider budgetary implications of College or departmental

operational plan items; the requirement for detailed commercial income calculations to be provided to support budgeted

commercial income; and set out how budget holders should be informed of finalised budgets;

Budget monitoring – information about areas budget holders should be monitoring (such as income and consumables) and ways for doing this, and information about the quarterly meetings

with Finance (including their purpose, how actions from these should be documented and followed-up, and what to do in the

event of unexpected variances being noted in these);

Reforecasting – details of how and when reforecasts will be done and reported; and

Capital budgeting – formal process for setting, reviewing, approving and reporting on the capital budgets.

The revenue and

capital budgetary control framework

may not be as robust as it could be without

detailed procedures in

place.

R4 Within the Financial

Procedures provide more detail about the budget setting,

monitoring, reforecasting and capital budgeting processes.

Will amend the Financial Procedures and

Regulations to reflect existing practices.

To be actioned by: Assistant Accountant No later than: To be Approved by

Finance and General Purposes Committee in June 2016

Grade 3

9




We reviewed the budget setting process used in 2015/16 and from this we noted

that:

Discussions between Finance and budget holders had been held to identify what budget figures should be. We noted that after these discussions some

budgets were cut without consultation and we were advised that this was not standard practice and will not be repeated in future.

After budget figures had been set these were collated using a spreadsheet and then reviewed at a College wide level. As the initial overall budget

figure (a budgeted deficit of £129,000) was considered unacceptable a further budget was prepared and taken to the Board in September 2015

which showed a budgeted surplus of £67,000.

The budget setting process was largely based on the 2014/15 forecast income and expenditure, as amended for known or expected changes,

which was considered reasonable. However we noted that the budget for some areas, such as Estates and ICT, where there are existing planned

maintenance contracts or software licences in place, should be set using this information. Due to the release of deferred income against Estates

expenditure in previous years not being taken into consideration when setting the 2015/16 budget the full cost of maintenance was not reflected in

the 2015/16 budget which has led to overspends in this area.

Commercial income figures were estimated by budget holders however

these should be backed up with detailed lists of planned courses and dates for these, and student numbers and income per student for each. The latest available management accounts (to 31 March 2016) show a forecast

outturn to 31 July 2016 for Education contracts / non-fundable activity income and Projects income of £112,000 and £208,000 below budget

respectively. There has been no Project income in the year and the position has been made worse by an £80,000 ESF clawback relating to

previous years.

Without the use of

detailed income and expenditure analysis in

setting the budget there is the risk that

budgeted figures are not as accurate as they

might be, which could lead to adverse budget variances and cash flow

issues.

R5 When setting

the ICT and Estates budgets ensure that

detailed lists of Estates planned maintenance

contracts and ICT software licences and

other contracts are used to assist with this.

Implemented during the setting of

16/17 budget.

To be actioned by: Budget holders / Assistant Accountant

No later than: Done

Grade 2

R6 Ensure that

there are detailed breakdowns supporting budgeted commercial

income figures. These figures should be

reviewed by Finance for reasonableness and

should form the basis for monitoring actual income

against budget during the year.

Accepted. We will request these

from budget holders to better monitor and control income and expenditure forecasts.

To be actioned by: Budget

holders / Assistant Accountant

No later than: Commencing August 2016

Grade 2

10


Objective 2: Budget setting is linked to corporate and operational planning processes and budgets are revisited when plans change or funding

targets are not achieved.

The College’s Strategic Plan is supported by a College Operational Plan, and individual departments may have their own operating plans which link into the priorities

set out on the College Operational Plan. When setting budgets (which is done generally in April – June for the following academic year), the financial implications of

any strategic objectives and operational plan activities should be factored into the budgets. We noted that this is not a formal process, but were advised that budget

holders would be aware of what they were planning to do and look for further funds for any operational plan activities when meeting with Finance to set budgets for

the following year.


Reforecasts

Every quarter the Assistant Accountant meets with budget holders to review budget variances and identify any areas where at the year-end the income or

expenditure is likely to differ from the original budget. This process is used to inform the ‘Forecast’ figures on the management accounts. We noted that the

reforecasting process places reliance on budget holder estimates, and that there are no detailed calculations provided to justify the forecasts. This could affect the

accuracy of the in-year reforecasts. We noted that there were significant movements in forecast income between the January 2016 and March 2016

management accounts, with significant fluctuations in categories (the Education contracts / non-fundable activity income category had a £80,000 adverse

movement, and the Project income category had a £128,000 adverse movement between these sets of management accounts). This would indicate that there is a need for more rigour in setting income budgets, and being more prudent when

setting these.

Reforecast figures may not be accurate leading

to the year-end outturn being inaccurate and

potentially leading to cash flow problems.

R7 Ensure that at quarterly budget holder

meetings with Finance that detailed analysis of

income is provided, taking the figures

provided at budget setting time and updating

these for actual income secured and specific

future activity planned. A prudent approach should be taken when setting

and forecasting income.

Accepted. We will request these from budget holders to better

monitor and control income and expenditure forecasts.

To be actioned by: Budget

holders / Assistant Accountant

No later than: Commencing August 2016

Grade 2

11


Objective 3: Information is available to management in Curriculum Directorates and Support Services which is up-to-date and in a format

that can be easily understood.

Based on discussions with eight budget holders (from a total of 23 budget holders), we noted that the bluQube budget monitoring reports were adequate to

review non-staff expenditure against budget, and that information was up-to-date and in a format that was easily understood. Reports showed, by category: the

actual expenditure; budget; commitments (goods and services ordered but where the invoice was still to be received); and available funds (budget less actual

expenditure and commitments). Budget holders could also drill down into figures to get detailed expenditure listings and also export this to Excel where they

could further analyse figures. These reports could be improved by including an accurate phased budget (rather than the current phasing based on 1/12 of the full

year’s budget) and by having the names of budget codes in the reports (rather than just the budget code). However the College is moving to new Tech1 finance

software, along with other UHI partners, in the near future which will have different budget monitoring reports, and the Assistant Principal hopes that more

accurately phased budgets will be implemented in the future. As a result no recommendation has been raised regarding this matter.

Staff costs are reviewed by the Assistant Accountant when preparing the quarterly management accounts and the Assistant Principal also obtains payroll

information which they review. We noted that there was a small variance of £69,000 in staffing costs in the most recent management accounts available at the

time of finalising this audit (to 31 March 2016) which indicates that this is being managed tightly. The Assistant Principal advised that in terms of FTE staff

numbers the College is 1½ FTE below the number used in the budget.

Budget holders can request commercial income figures from Finance as these were not available on bluQube reports. However commercial income was

monitored at the quarterly meetings between Finance and budget holders. We were advised that in future budget holders will regularly get actual and budgeted

income figures on a spreadsheet after the quarterly meetings along with notes of any actions arising (which will be documented on the spreadsheet). As it is

planned to provide income figures to budget holders on a regular basis no recommendation has been raised regarding this.

Objective 4: Budget holders have the necessary skills for managing budgets.

From discussions with eight budget holders in both Curriculum Directorates and Support Services (covering the Head of Estates, the ICT Officer, Assistant

Principal and five staff responsible for budgets in curriculum areas) it was noted that all of those interviewed considered that they had the necessary skills for

managing their budgets, either through having received specific budget holder training or from on the job experience of the budget monitoring processes.

We were advised that staff were required to attend mandatory training on the use of bluQube in September 2015 and we noted that 20 of the 23 budget

holders were on the list of staff who received this training. The mandatory training included an on-screen presentation showing how bluQube worked, along

with a presentation by Finance staff setting out key information about: the updated budgetary control framework; the use of petty cash; purchasing cards (which

work similar to credit cards but have restrictions on what types of expenditure can be made on them); travel and subsistence; and information about how

PECOS should be used. We were advised that the remaining three budget holders will receive training in due course.

12


Objective 5: Budget variations are reported and acted upon.

Monitoring reports on bluQube only show funds remaining, which makes it difficult for staff to know whether they may be spending too much too soon. However

the reports used at the quarterly meetings between Finance and budget holders have actual and budget year-to-date figures and a variance. Although the budget

is only phased on a pro rata basis (number of months passed divided by 12, multiplied by the full year budget) which may not appropriately reflect the spending

patterns in the year, this at least provides a benchmark to identify variances at an early stage and consider whether corrective action is required. As set out under

Objective 3 above it is planned that these spreadsheets will be sent out to budget holders after budget meetings in future.

We noted from a review of the latest available management accounts (to 31 March 2016) that, in addition to the variances in income noted under Objective 1

above, there were some significant variances on expenditure item categories, such as professional fees and memberships now being forecast as £96,000 over

budget for the year to 31 July 2016; land & buildings maintenance £65,000 over budget; and plant & equipment, fixtures & fittings, licences £68,000 over budget

although these are partially offset by positive variances. Overall, expenditure to 31 July 2016 is forecast to be £122,000 over budget. From discussion with the

Assistant Principal we are aware that the variances are a mix of unexpected items, budgets being set too low for Estates costs (refer Objective 1 above) and

accounting adjustments relating to previous years. As noted under Objective 6 below, action has been taken to cut £90,000 from the non-staffing budget for the

remainder of the year.

13


Objective 6: There is accurate cash flow reporting.

Consideration of cash balances and cash flows are important to ensure that the College has sufficient funds to pay all its obligations as they fall due while

minimising its cash balances as required.

At the start of every month a Scottish Funding Council (SFC) Monthly Cash Flow Forecast Return is required to be completed. This sets out the forecast

expenditure for that month as well as analysing actual expenditure and closing cash balances for the previous month. We reviewed the forecast monthly closing

cash balance on the Returns from August 2015 to February 2016 against the actual closing cash balance and noted that there were variances fluctuating between

-£222,000 and +£372,000, with a minimum monthly closing bank balance noted of £193,000. We reviewed the reasons for fluctuations of more than £200,000,

which included bursary and supplier payments being lower than forecast and delays in receiving income, and consider these explanations were adequate.

In addition to SFC cash flow reporting there is cash flow reporting provided to the Finance and Resources Committee.

We noted from our review of the cash flow forecast as at 5 May 2016 that there is a forecast negative cash balance of £156,094 at 31 July 2016. This was

discussed with the Assistant Principal during the audit who advised that action was being taken to address this position. The forecasted expenditure includes a

£40,000 contingency and a further £90,000 has been cut from the non-staffing budget. It is also hoped that the College will receive further ESIF monies. As a

safety net the College has arranged a £250,000 overdraft facility.

14


Objective 7: Senior management and the Board regularly review the College’s overall financial position.

Principal’s Planning Group (PPG)

The PPG consists of the Principal, Assistant Principals, Associate Directors of Curriculum and Quality, the Director of Finance (who is currently on long term

leave), the Head of Human Resources and the Head of Marketing and External Relations. The PPG is the most senior executive body within the College, with key

financial responsibility for sustainability, risk management, value for money and internal control.

At the monthly PPG meetings there is an income and expenditure report (showing actual year-to-date, phased budget and full year budget figures) and a commercial

activity income analysis showing for individual areas the actual and budgeted income and variances. These reports had some comments against these to explain

reasons for variances and the reports are considered adequate for the PPG.

Finance and General Purposes Committee

We reviewed the quarterly management accounts pack provided to the Finance and General Purposes Committee and noted that it included:

income and expenditure report showing actual and budget to date, and forecast outturn and full year budget;

analysis of surplus / deficit and variance against phased budget by cost centre;

analysis of payroll cost and variance against phased budget by cost centre; and

commentary providing information about the variances.

15


Objective 7: Senior management and the Board regularly review the College’s overall financial position (Continued)


From our review of the management accounts presented to the December 2015 and

March 2016 Finance and General Purposes Committee meetings (management accounts to October 2015 and January 2016 respectively) we noted that:

The variance commentary could have been more insightful, providing more reasons for variances (such as due to budget phasing, increased expenditure for certain reason(s), or increased expenditure which would be offset by increased

income);

Short notes on major variances could be included next to each line on the income and expenditure statement (rather than only on the variance commentary);

A greater level of reforecasting could be done (this is linked R7 above); and

There was limited benefit in having payroll cost centre analysis and cost centre deficit / surplus analysis unless there was commentary on the major variances.

It may be difficult

for Board members to fully understand

variances from budget and provide

appropriate scrutiny unless there is

adequate information.

R8 Review the

information provided to the Finance and

General Purposes Committee with a view

to providing more insightful variance

commentary and more information about major risks such as not

meeting income targets. The Finance and

General Purposes Committee should also

consider whether all of the current information

provided is useful and whether further or

different information would be beneficial.

There has been a significant

improvement in 15/16 of what has been provided and accepted and

will provide more detail going forward. There is lengthy

discussions of the detail at the meetings but accept that need

additional information in the commentary.


No later than: Next quarterly

accounts.

Grade 2

16


Objective 8: Improvements made to the budgetary control framework in 2015/16 have been effective.

At the 22 September 2015 meeting of the Finance and Resources Committee the Assistant Principal outlined eight actions that were planned or had been

implemented to try to improve budgetary control. These focused on managing expenditure, although the PPG action also covers income. We have also made

some recommendations about strengthening budgetary control over commercial income earlier within our report (see R6 and R7).

Below we have set out the eight actions and provided our findings against each

Item Status Audit finding

The Symmetry Finance System has been enhanced

to provide budget holders with up-to-date and

easily accessible budget information. This had not

been available last session.

Implemented From discussion with budget holders and review of the bluQube reporting

software, information is now available for budget holders that is up-to-date

and easily accessible.

All budget holders are undertaking compulsory

budget training which will provide training on the

use of the upgraded system. Training on budget

monitoring and control will also include a

reassertion of the new internal budget control

rules now in place.

Partial As set out in Objective 4 above, 20 of the 23 budget holders attended one

of the compulsory training sessions. The training included details of the new

internal budget control rules in place.

Full spend analysis has been undertaken and as a

consequence of this spending profiles have been

reduced.

Implemented From discussion with budget holders they advised that they undertook a full

spend analysis with Finance staff to identify potential budget savings.

Processes around petty cash and purchase card

usage have also been reviewed to tighten control

with new centralised purchasing processes in place

limiting certain purchases including travel,

accommodation, books, etc.

Implemented There are 11 purchasing cards (which work similar to credit cards but have

restrictions on what types of expenditure can be made on them) in place.

The Assistant Accountant advised that these have now been tailored to

need. We noted that an email had been sent to the credit card provider

asking them to change the types of expenditure each card had the ability to

be used for.

There are three petty cash floats in place and as expenditure was not

significant no testing was done in this area.

17


Objective 8: Improvements made to the budgetary control framework in 2015/16 have been effective (Continued)

Item Status Audit finding

Routine meetings between Finance staff and

budget holders are scheduled to address any issues

and more closely monitor spend.

Implemented We noted that meetings had taken place in November 2015 (for the

October 20115 management accounts) and February / March 2016 for the

January 2016 management accounts). We reviewed the listings of meetings

held and noted that there were some staff who did not have a record of a

meeting taking place however the Assistant Accountant said that, with the

exception of two instances where meetings were still being planned,

meetings had been held but the schedule had just not been updated to

reflect this.

Increased usage of our online procurement system

PECOS.

Partial The Assistant Accountant said that this action was made up of two

components:

a) greater use of framework agreements - this is an ongoing area for action

to educate staff to use procurement frameworks and further training is

planned.

b) greater use of PECOS (rather than purchase cards or petty cash) – see

comments above.

Authority protocols for various levels of spend

have been introduced with some budget spend

now having to be authorised at a higher level in

the organisation.

Outstanding We were advised that changes have been planned but still have to be

implemented in this area.

Monthly updates to be presented at PPG to

consider variances against budget.

Implemented These updates are being provided.

Moray College UHI

Follow-Up Reviews

2015/16




Moray College UHI – Follow Up Reviews

Content

Page No.

1. Management Summary 1

Introduction and Background 1

Objectives of the Audit 1

Audit Approach 1

Overall Conclusion 1 - 3

Acknowledgements 3

Appendices

Appendix I Updated Action Plan – Curriculum 4

Appendix II Updated Action Plan – Budgetary Control / General Ledger 5 - 6

Appendix III Updated Action Plan – Follow-Up Reviews 7 - 16

Appendix IV Updated Action Plan – Health and Safety 17 - 24

Appendix V Updated Action Plan – Corporate Governance 25 - 37

Appendix VI Updated Action Plan – Post Project Review –

Alexander Graham Bell Centre 38 - 39

Appendix VII Updated Action Plan – 2014/15 Student Activity Data 40

1


1. Management Summary

Introduction and Background

As part of the Internal Audit programme at Moray College UHI (‘the College’) for 2015/16 we

carried out a follow-up review of the recommendations made in the following Internal Audit reports

issued during 2014/15:

2015/02 – Curriculum;

2015/03 – Budgetary Control / General Ledger;

2015/04 – Follow-Up Reviews;

2015/05 – Health and Safety;

2015/06 – Corporate Governance;

2015/07 – Post Project Review – Alexander Graham Bell Centre; and

2015/08 – 2014/15 Student Activity Data.

Objectives of the Audit

The objective of each of our follow-up reviews is to assess whether recommendations made in

previous reports have been appropriately implemented and to ensure that, where little or no

progress has been made towards implementation, that plans are in place to progress them.

Audit Approach

For the recommendations made in the reports listed above we ascertained by enquiry or sample

testing, as appropriate, whether they had been completed or what stage they had reached in terms of

completion and whether the due date needed to be revised.

Action plans from the original reports, updated to include a column for progress made to date, are

appended to this report.

Overall Conclusion

The College has made some progress in implementing the 48 recommendations followed-up as part

of this review with 20 items being ‘fully implemented’ and one ‘no longer relevant’.

The main areas where recommendations have been assessed as ‘partially implemented’ (10

recommendations) or showing ‘little or no progress’ (13 recommendations) are Corporate

Governance (13 recommendations), where some actions have yet to be implemented because there

has been a change in Clerk to the Board, and Health and Safety (4 recommendations) where there

has also been a change in the Health, Safety and Sustainability Officer. Three recommendations from

the previous follow-up review have been assessed as showing ‘little or no progress’ and these are

due to awaiting an update to the College’s Strategic Plan. We would recommend the College

internally follows-up progress made against outstanding actions during the year to ensure that staff

are adequately progressing outstanding actions, and to increase the number of fully implemented

recommendations.

2


Overall Conclusion (Continued)

The recommendations that have been ‘partially implemented’, are showing ‘little or no progress’ or

where there has been ‘no opportunity to implement’ will be subject to follow-up at a later date.

Our findings from each of the follow-up reviews have been summarised as follows:

From Original Reports From Follow-Up Work Performed

Area

Recomm-

endation

Grades

Number

Followed-

Up

Fully

Implemented or

No Longer

Relevant

Partially

Implemented

Little or No

Progress

Made

No

Opportunity

to

Implement

Curriculum

A - - - - -

B 1 1 - - -

C - - - - -

Total 1 1 - - -

Budgetary

Control / General

Ledger

A - - - - -

B - - - - -

C 2 2 - - -

Total 2 2 - - -

Follow-Up

Reviews

High - - - - -

Medium - - - - -

Low 4 3 1 - -

A -

B 5 - 2 3 -

C 1 1 - - -

Total 10 4 3 3 -

Health and Safety

A - - - - -

B 5 3 - 2 -

C 4 2 1 1 -

Total 9 5 1 3 -

Corporate

Governance

A 19 6 6 7 -

B - - - - -

C - - - - -

Total 19 6 6 7 -

Post Project

Review – AGBC

A - - - - -

B 4 1 - - 3

C - - - - -

Total 4 1 - - 3

Student Activity

Data

A - - - - -

B 1 1 - - -

C 1 1 - - -

Total 2 2 - - -

Grand Total 47 21 10 13 3

3


Overall Conclusion (Continued)

The grades, as detailed below, denote the level of importance that should have been given to each

recommendation:

Wylie + Bisset Gradings

High Major weaknesses that the College’s previous Internal Auditors, Wylie+Bisset LLP,

considered needed to be brought to the attention of the Audit Committee and

addressed by senior management of the College as a matter of urgency;

Medium Significant issue or weakness which should have been addressed by the College as soon

as possible; and

Low Minor issue or weakness reported where management may have wished to consider

Wylie+Bisset LLP’s recommendation.

Henderson Loggie Gradings

A Issues which required the consideration of the Board of Management;

B Significant matters which could have been resolved by members of the Senior

Management Team; and

C Less significant matters, which did not require urgent attention but which should have

been followed-up within a reasonable timescale.

Acknowledgements

We would like to thank all staff for the co-operation and assistance we received during the

course of our reviews.

4


Appendix I – Updated Action Plan

Internal Audit Report 2015/02 – Curriculum

Para

Ref. Recommendation Grade Original Comments Agreed

Responsible

Officer

Agreed

Completion

Date

Progress at April 2016

3.3

Review of Proposed New

Programmes

R1 As part of the approval

process for new programmes

ensure that a detailed costing

exercise is undertaken which

includes an analysis of the income

and costs associated with the

new programme, including

College overheads. A sensitivity

analysis of students enrolled on

the programme and those

attending after the early

retention date should also be

included. Results of the costing

exercise should then be recorded

on Stage 1 initial course approval

forms.

B

The costing template will be

updated to incorporate

current costs and will also

reflect the change from

SUMs to Credits as this

information becomes

available from SFC.

This costing template will be

included within the essential

documentation required for

course approval.

Y

Y

Director of

Finance

Quality

Officer

May 2015

May 2015

The costing template has

been updated to identify

what surplus or deficit a

proposed new programme

will provide, and can be used

to identify break-even levels.

The requirement for a

costing template has been

included on the new course

form.

Fully Implemented

5


Appendix II – Updated Action Plan

Internal Audit Report 2015/03 – Budgetary Control / General Ledger

Para

Ref. Recommendation Grade Original Comments

Agreed

Responsible

Officer

Agreed

Completion

Date


5.2.2

Budget Variations are

Reported and Acted Upon

R1 Ensure all variances over

an agreed threshold are

highlighted to budget holders on

the monthly Income and

Expenditure Account Activity

reports.

C

Will consider the

practicality of this given

the phasing variances that

always arise between

actual and budget

assumptions.

See

comments

Assistant

Accountant

31 March

2015

Budget holders have been

provided with access to

bluQube budget reports to

show actual spend against

budget. In addition, there are

budget (phased) vs actual year-

to-date reports that are

periodically provided to budget

holders for their review and

these highlight variances.

These are considered adequate

for budget monitoring

purposes.

Fully Implemented

6


Para


Agreed

Responsible

Officer

Agreed

Completion

Date


11.2

Control Account

Reconciliations

R2 Ensure that all control

account reconciliations are carried

out, reviewed and authorised on a

timely basis.

C

Missing debtors control

was a rare oversight.

Agreed

Assistant

Accountant

Accounting

Technician

Immediate

There is a quarterly

management accounts checklist

which includes the requirement

for debtors, creditors, purchase

card and payroll reconciliations.

The VAT balances are

reconciled at the time of the

quarterly VAT returns. We

sighted that the debtors,

creditors and purchase card

control account reconciliations

had been carried out at the 31

January 2016 quarter-end and

at 31 March 2016, and that the

last two VAT returns had

reconciliations of the general

ledger VAT balance.

Fully Implemented

7


Appendix III – Updated Action Plan

Internal Audit Report 2015/04 – Follow-Up Reviews

Para


Agreed

Y/N

Responsible

Officer

For Action

Agreed

Completion

Date

Progress at January

2015

Progress at April

2016

2014/03 – Publicity and Communications

2.2

Policies and

Procedures

R1 A timetable

for developing the

College Marketing

Strategy, including

internal and external

communication

strategies, should be

drawn up. The

strategy should

contain aims and

objectives that are

clearly linked to the

College’s Strategic

Plan.

B

Yes this was discussed

and agreed. The

Marketing Strategy has

been started and it

links with the Strategic

Plan of the College.

Y

JT

September

2014

This work was dependent

on the proposed re-

structuring of the College

following the

appointment of the new

Principal in August 2014.

The College Strategic

Plan is currently being

updated, along with the

Operational Plan, which

includes an action to

develop a Marketing

Strategy once the

Strategic Plan has been

agreed.

Little or no progress

made

The Strategic Plan

is currently being

worked on and

once completed a

Marketing Strategy

will be drawn up

that is linked to the

Strategic Plan’s aims

and objectives.

Revised

Completion Date:

December 2016

Little or No

Progress Made

8


Para


Agreed

Y/N

Responsible

Officer

For Action

Agreed

Completion

Date

Progress at January

2015

Progress at April

2016

2.2

R2 Ensure that

the required

policies, procedures

and guidance relating

to marketing and

publicity are drawn

up. These should be

communicated to all

staff by methods

such as being

included as part of

the induction

process,

documented in the

Staff Handbook and

made available on

the staff intranet.

B

This is currently

implemented verbally

and staff are aware of

the procedure. This

can be transferred

into a written policy.

It will be placed onto

the website and / or

intranet. Useful for

new staff.

Y

JT

July 2014

This has now been

completed however, still

to be placed on the

intranet and made

available to staff.

Partially implemented

These have still to

be placed either on

the intranet or

another more

appropriate place

for staff to access.

Revised

Completion Date:

Immediate

Partially

Implemented

9


Para


Agreed

Y/N

Responsible

Officer

For Action

Agreed

Completion

Date

Progress at January

2015

Progress at April

2016

2.3

R4 As part of

the future

development of a

Marketing Strategy a

detailed operational

plan should be

developed to

implement the

strategy. This

should be aligned

with the overall

College Strategic

Plan.

B

Link with 2.2.

Y

JT

September

2014

As R1 above.


made

As R1 above.

Revised

Completion Date:

December 2016

Little or No

Progress Made

10


Para


Agreed

Y/N

Responsible

Officer

For Action

Agreed

Completion

Date

Progress at January

2015

Progress at April

2016

2014/04 – Risk Management / Business Continuity

2.5

Business

Continuity

R1 Review the

Business Continuity

Plan (BCP) for

completeness in

conjunction with

undertaking a risk

analysis to identify

any further risks not

already included

within the BCP.

Also ensure that all

locations are

covered.

B

Review to take place

to incorporate loss of

staff – industrial action

/ pandemic.

BCP to be subject to

desk-top testing.

Agreed

Head of

Estates

31 July 14

Some discussion has been

held between the Head of

Estates and the Head of

HR to determine the

risks to the College as a

result of a significant loss

of staff. The BCP has not

however been updated to

recognise these risks and

the College’s strategy to

mitigate the impact of

such risks.

There has been no testing

of the BCP since the

recommendation was

raised.


made

This has still to be

done.

Revised

Completion Date:

September 2016

Little or No

Progress Made

11


Para


Agreed

Y/N

Responsible

Officer

For Action

Agreed

Completion

Date

Progress at January

2015

Progress at April

2016

2.7

R2 The ICT

Disaster Recovery

Plan (DRP) and

Estates BCP should

be tested on a

regular basis to

confirm that they are

robust. Although a

full rehearsal may

not be practical or

cost effective,

rehearsal of key

areas of the plans

should be

considered. This

could involve

facilitated scenario

testing followed by a

post-exercise

review. The testing

should ensure all key

staff fully understand

their role in the

recovery process

and training issues

should be addressed

if necessary.

B

Staff development

exercise will be

implemented to

ensure the processes

and roles /

responsibilities are

clearly understood.

The ITU team will be

tasked with the testing

of procedures to

ensure the reliability

of the recovery

instructions.

Agreed

Derek

Duncan

30 Sept 14

During 2014 the College

was affected by a short

power outage and a

significant flood, the latter

of which resulted in a

complete network

shutdown and full

implementation of the

ICT DRP. The DRP was

found to work well and

some lessons were

learned which will be

incorporated into a

future refresh of the

DRP. Regular testing will

be planned going forward.


The Head of

Estates agreed that

formal testing

should be

undertaken on an

annual basis, which

should

(periodically)

include some

element related to

the ICT Disaster

Recovery Plan. The

Head of Estates

advised that the

first exercise

should be

undertaken by 30

September 2016.

Revised

Completion Date:

30 September 2016

Partial

Implemented

12


Para


Agreed

Y/N

Responsible

Officer

For Action

Agreed

Completion

Date

Progress

previously

reported

Progress at April

2016

2013/03 – Debtors / Income and Cash & Bank

3.4

R5 The Financial

Procedures should be

updated to explain

how the system for

cash collection within

Hair, Beauty and

Complementary

Therapies differs out-

with term time and

staff should be

reminded of the level

of paperwork

expected.

C

This will be added to

the procedures to

consolidate current

practice

Agreed

Accounting

Technician

31/03/2013

Progress at May

2014

No Summer School

programmes have

operated since the

original

recommendation

was raised.

Procedures will be

updated in advance

of any future

Summer School

programmes.

Little or no

progress made

Progress at

January 2015

No change since May

2014.

Little or no

progress made

There are no longer any

summer schools. If this

situation changes in the

future the financial

procedures would be

updated to reflect this.

No Longer Relevant

13


Background Recommendation Priority Original College

Response

Original

Responsibility

/ Timescale

Progress previously

reported (last 2 years

only)


2010/2011 Visit 1 – Review of SAM

1. It was noted from

our review that the

SAM system does not

have full documented


We understand that

this is a work in

progress as the system

is still changing slightly.

We recommend that

SAM procedures are

completed and

implemented as soon

as possible.

Low

Agreed

S Cruickshank

31 March 2011

Progress at May 2014

The Financial Procedures

will be adapted to cover

relevant areas of the SAM

procedures. This has not

been done to date due to

staff resource issues.

Progress at January

2015

The Financial Procedures

are currently being

refreshed and will include

areas relevant to SAM.

Procedures have now been

put in place.

Fully Implemented

14



Response

Original

Responsibility

/ Timescale

Progress previously


only)


2008/2009 Visit 2 – VFM Commercial Activities

3. Database

Software

Background:

We note from our

review that the

College has a contact

management system

called Act 6 that will

be used as a client

database. This has

been installed but is

currently not fully

implemented.

Original

Recommendation:

We recommend that

the College fully

implements the Act 6

database system as

soon as possible.

Findings on Revisit

January 2011:

The Act 6 database

has not been taken

forward at the

moment as the

College are awaiting

news on what

system UHI will use

for their contact

management as this

could lead to an

alternative system

being proposed for

the network.

Recommendation:

We recommend that

the College ensure

that as soon as UHI

have made their final

decision on the

contact management

system that the

College review

implementation of

the chosen system.

Low

Agreed, awaiting UHI

choice of system.

Head of

Marketing &

External

Relations

UHI dependant


UHI database still being

developed. Executive Office has

been working more closely with

Academic Partners to improve

local employer engagement.

Progress at January 2015

UHI Executive Office is

currently working on

implementing the Microsoft

Dynamics cloud based

application in early 2015. Once

embedded the application will

be rolled out across the UHI

partnership later in 2015. The

use of Microsoft Dynamics is

guided by the brief for the CRM

system as noted in the UHI for

Work & Enterprise strategy

document.


Microsoft Dynamics

now in place. This

allows sharing of

contacts and

customers across the

partnership.

Fully Implemented

15



Response

Original

Responsibility

/ Timescale

Progress previously


only)

Progress at January

2015

2009/2010 Visit 2 – IT Systems

2. ICT Strategy

Background:

We note that, while

the College has an ICT

Strategy in place, it is

not split between 1, 3

and 5 year plans for IT

projects.

Original

Recommendation:

We recommend that

the College consider

splitting their ICT

Strategy into 1, 3 and

5 year projects. This

could then be used to

measure projects and

delivery of projects.

Findings on

Revisit January

2011:

Currently

Operational Plans

are developed

annually in line with

College Policy. This

recommendation will

be considered when

the ICT Strategy is

updated which is

currently taking

place therefore we

are unable to test

until the strategy is

complete.

Recommendation:

We repeat our

original

recommendation.

Low

The ICT strategy has

been delayed whilst

the outcome of the

UHI LIS Shared

Services project is

known. This project

will have a significant

influence in the

implementation of ICT

projects and the

College’s ICT strategy.

The consultant’s

report on the LIS

Shared Services

project is due in

February 2011 and

when this report is

published, the ICT

strategy will be

revised and issued.

D Duncan.

UHI dependant


The UHI LIS shared

services project has been

delayed and estimated to

be complete by 1 August

2014. A UHI-wide ICT

Strategy will be developed

by LIS and adopted at that

time.

Progress at January

2015

Further delays to the UHI

LIS shared services project

occurred in 2014. The

project is now being

progressed however there

is no estimated completion

date for this. A UHI-wide

ICT Strategy will be

developed by LIS and

adopted at that time.

Partially Implemented

There is now a UHI wide

shared ICT Strategy 2015-

20 which has been agreed.

This has a five year

investment plan setting out

what is planned to be done

each year.

Fully Implemented

16


Background Recommendation Priority

Original

College

Response

Original

Responsibility /

Timescale

Progress previously


only)

Progress at January

2015

2010/2011 Visit 2 – Sustainability

1. We note from our

review that the

current College

Strategic and

Operational Plan does

not contain any

relevant section on

environmental

sustainability.

We would

recommend that

when the plan is

next reviewed a

section is included

on environmental

sustainability at the

College.

Low

Agreed

Principal

10/11 Plan

update.


There have been no

amendments to the Strategic

Plan to include environmental

sustainability. This will be

considered during the

development of the next

Strategic Plan later in 2014.

Progress at January 2015

This is currently being

considered as part of the

development of the Strategic

Plan 2015-2017, which is

expected to be finalised in

mid-2015.

Little or no progress made

The post of Health, Safety

and Sustainability Officer

was filled in March 2016.

The Head of Estates and

the Health, Safety and

Sustainability Officer have

attended a sustainability

course.

Work on the new College

Strategic Plan is now

underway, due to be

completed in Summer 2016

and environmental

sustainability will be

considered as part of this

work.

Revised Completion

Date: Summer 2016


17


Appendix IV – Updated Action Plan

Internal Audit Report 2015/05 – Health and Safety

Para


Responsible

Officer

Agreed

Completion

Date


1.3

Policies and Procedures

R1 Copies of the health and

safety policy statement should be

displayed in prominent positions

throughout the College where

staff, students and visitors can

easily read it.

B

Policy Statement was

reviewed at the time of the

audit.

To be submitted to the H&S

Committee (01/06/15),

Building Committee

(02/06/15) & Board

(23/06/15) for ratification.

Y

Health and

Safety Officer

31/07/15

It was noted that health and

policy statements were on a

number of noticeboards

throughout the main

campus, including at the

reception.

Fully Implemented

18


Para


Responsible

Officer

Agreed

Completion

Date


1.7

R2 Revise the format of the

Short Term Health and Safety

Management and Risk Control

Systems Action Plan to ensure

that actions meet the SMART

criteria.

C

Timescales for completing

the short term action plan

are contingent on

identification, engagement

and consultation with

College Health and Safety

Coordinators.

Y

Health and

Safety Officer

01/06/15

There has been a change in

staffing (the previous Health

and Safety Officer left and a

new Health, Safety and

Sustainability Officer started

in March 2016). The

Health, Safety and

Sustainability Officer plans

for the Action Plan format

to be revised by 30

September 2016.

Revised Completion Date:

30 September 2016

Little or No Progress

Made

19


Para


Responsible

Officer

Agreed

Completion

Date


1.8

R3 Consider developing an

extended action plan which

includes all recommendations

raised in the British Safety

Council report that are not

already included in the Short

Term Health and Safety

Management and Risk Control

Systems Action Plan.

Alternatively, the review of the

Integration Plan / Road Map

should be a standing item on the

agenda of the Health and Safety

Committee meetings.

B

The Short Term Action Plan

is predicated on the BSC

report and incorporates the

Integration Plan / Road Map.

The Integration Plan will be

placed on the Health and

Safety Committee Meeting

Standing agenda.

Y

Health and

Safety Officer

liaising with

the Directors,

Head of

Sections and

Health and

Safety

Coordinators

01/06/15

The review of the

Integration Plan / Road Map

is now a standing item on

the agenda of the Health

and Safety Committee

meetings.

Fully Implemented

20


Para


Responsible

Officer

Agreed

Completion

Date


2.4

Risk Identification and

Assessment

R4 Ensure that risk

assessments for the Beechtree

restaurant kitchen and training

kitchen are reviewed, updated

and signed off as part of the

normal planning cycle prior to

the start of the academic year.

B

Y

Health and

Safety Officer

liaising with

the Associate

Director of

Technology

and

Humanities

01/07/15

This is ongoing with the risk

assessments for the

Beechtree restaurant

kitchen and training kitchen

in the old risk assessment

format having been gathered

in and the Health, Safety and

Sustainability Officer advised

that an Administration

Assistant will update these

onto the new forms by June

2016


June 2016


Made

21


Para


Responsible

Officer

Agreed

Completion

Date


2.4

R5 Ensure that risk

assessments are updated

timeously to reflect any changes

made to the risk environment,

including changes to procedures,

equipment and staff.

B

Y

Health and

Safety Officer

liaising with

the Directors,

Head of

Sections and

Health and

Safety

Coordinators

31/08/15

The Health, Safety and

Sustainability Officer advised

that risk assessments are

updated as required for any

changes. The

recommendation was raised

due to there being a

significant rearrangement of

the training kitchen without

any updating of the risk

assessments and there have

been no similar changes

within the College since the

original report.

Fully Implemented

2.4

R6 Ensure that a consistent

approach to completing Risk

Assessments is adopted across

the College.

C

Standardisation and

consistent approach is

contingent on identification,

engagement and

consultation with College

Health and Safety

Coordinators (work in

progress).

Y

Health and

Safety Officer

liaising with

the Directors,

Head of

Sections and

Health and

Safety

Coordinators

31/08/15

All College risk assessments

are being updated to the

latest risk assessment

format on a rolling basis.


August 2016


22


Para


Responsible

Officer

Agreed

Completion

Date


2.4

R7 Checking of risk

assessments should be added to

the Hazard Checklists used

when undertaking internal

Health and Safety inspections.

C

Y

Health and

Safety Officer

15/07/15

The checking of risk

assessments has been added

to the Hazard Checklists

used in health and safety

inspections.

Fully Implemented

23


Para


Responsible

Officer

Agreed

Completion

Date


2.4

R8 Consider establishing a

Health and Safety Working

Group consisting of Health and

Safety co-ordinators and the

Health and Safety Officer to act

as a forum for discussion of

Health and Safety arrangements

across the College and to

identify areas of good practice.

B

Work in Progress at time of

Audit. The

recommendation was

incorporated into the Draft

Health and Safety

Procedures Manual, (1)

Section 2 H & S

Organisation and

Responsibilities and (2)

Section 3 General

Arrangements for

Management and Control of

Health and Safety Systems.

To be submitted to the H&S

Committee (01/06/15)

Building Committee

(02/06/15) & Board

(23/06/15) for ratification.

The 1st Meeting requires to

be convened after 15th

August 2015 on return of

Lecturing from Summer

Break.

Y

Health and

Safety Officer

liaising with

the Directors,

Head of

Sections and

Health and

Safety

Coordinators

15/09/15

Although this has not been

implemented the

recommendation is

considered as being of

benefit to College staff

involved with health and

safety. However how this is

implemented in practice

needs to be considered.

The Head of Estates and

Health, Safety and

Sustainability Officer are

considering this but it may

be that College staff

involved in health and safety

could meet on a six monthly

basis to receive ongoing

training and to discuss any

health and safety issues.


August 2016


Made

24


Para


Responsible

Officer

Agreed

Completion

Date


5.1

Incident / Accident

Recording and Reporting

R9 Staff should be reminded

of the need to report near

misses in order that the H&S

Officer is made aware of

potential areas of risk. The use

of ‘quick’ reporting cards should

be considered.

C

Near misses are reported

using the current College

Accident / Incident Report

Form. This report should

be submitted to H&S ASAP.

The importance of reporting

Near misses to be

highlighted to all staff and

students through the

introduction of safety flashes

displayed on the College E–

Boards (Marketing), Screen

Savers (ICT) and MC Staff /

Student E-Mails.

Y

Health and

Safety Officer

liaising with

the Directors,

Head of

Sections and

Health and

Safety

Coordinators

31/08/15

The Health, Safety and

Sustainability Officer has

emailed staff reminding them

of the need to report near

misses.

The use of ‘quick’ reporting

cards was considered but it

was decided not to

implement these.

Fully Implemented

25


Appendix V – Updated Action Plan

Internal Audit Report 2015/06 – Corporate Governance

Para

Ref. Recommendation Grade Comments

Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


Vario

us

Standing Orders

Amend the College’s Standing Orders to:

R1.1 refer to the Board being collectively

responsible for setting, demonstrating and

upholding the values and ethos of the College.

(Code provision A.1)

R1.2 include that the Board must appoint one of

the independent non-executive members to be the

senior independent member to provide a sounding

board for the Chair and to serve as an

intermediary for the other board members and the

Clerk to the Board when necessary. It should also

state that the senior independent member (or

Vice-Chair) should also be available where contact

through the normal channels of Chair, Principal, or

Clerk to the Board has failed to resolve an issue or

for which such contact is inappropriate. (Code

provision A.12)

A

Recommendations

R1.1 to R1.8 are

implicit within

current practice,

but will be

incorporated into

the review of the

Standing Orders to

provide explicit

statements that

comply with the

Code of

Governance.

Y

Clerk

1 August 2015

The Standing Orders were

updated in June 2015. We

reviewed these and noted

these do not cover R1.1

adequately.

In addition, regarding R1.8 the

process for the student

elections was not set out in

the standing orders.

The Clerk to the Board has

drafted revisions to the

Standing Orders for these two

items but these still have to be

approved.


June 2016


26


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


Vario

us

Standing Orders (Continued)

R1.3 refer to the Board being accountable to

students and to other stakeholders (including the

public, employers and its local community) for the

provision of appropriate, high quality education

that enhances social and economic well-being, and

also being accountable to the Regional Strategic

Body. (Code provision C.1)

R1.4 refer to the Board being responsible for

ensuring that the college meets its ethical and legal

obligations to its staff. (Code provision C.17)

Amend the College’s Standing Orders to

R1.5 formally set out that the Board Chair is:

responsible for leadership of the Board and

ensuring its effectiveness in all aspects of its

role;

responsible for setting the Board’s agenda and

ensuring that adequate time is available for

discussion of all agenda items, particularly

strategic issues; and

Required to promote a culture of openness

and debate by encouraging the effective

contribution of all board members and

fostering constructive relations between

board members. (Code provision D.1)

See above

27


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


Vario

us

Standing Orders (Continued)

R1.6 include reference to the whole Board

being collectively responsible and accountable for

all Board decisions, and that Board members must

make decisions in the best interests of the College

as a whole rather than selectively or in the

interests of a particular group. (Code provision

D.3)

R1.7 include the role and responsibilities of the

Chair, Principal, Clerk to the Board and the

individual Board members. (Code provision D.5)

R1.8 set out that the Board is responsible for

ensuring appropriate arrangements are in place for

the conduct of student elections to select the two

student members to the Board and in the Standing

Orders, or another formal document, this process

should be formally set out. (Code provision D.18)

See above.

28


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


C.2

Accountability

R2 Ensure that the Declarations of Interest

are updated on a regular basis and that the

Register of Interests is disclosed on the College

website.

A

Declarations for

current members

are in the process

of being updated.

Y

Clerk

30 June 2015

This has yet to be undertaken

but it is planned the

Declarations of Interest form

will be sent out to Board

members before the end of

May 2016, after which the

Register of Interests will be

published on the College’s

website.


June 2016

Little or No Progress Made

29


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


C.3

R3 Include in the Audit Committee’s Annual

Report to the Board the information required by

its Terms of Reference, or if this is no longer

considered appropriate, then amend the Terms of

Reference.

A

Information relating

to administrative

matters will be

included in the

Audit Committee’s

annual report to

the Board.

Y

Clerk

23 June 2015

At the 23 February 2016 Audit

Committee a draft 2014/15

Audit Committee report to

the Board was discussed.

However this has not gone to

the Board and does not

provide all the information in

the Audit Committee’s Terms

of Reference.

Terms of Reference of Audit

Committee to be reviewed.

This will inform the next Audit

Committee Annual Report.


June 2016


30


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


C.3

R4 Committee Chairs should ensure that

Board committees are fulfilling their Terms of

Reference through meetings and structures, and

that each Committee should choose how to do

this. This may be through a formal schedule of

what reports will be presented to each of the

committee meetings over the course of a year or

through periodic review by the Committee of how

they are covering everything in their Terms of

Reference.

A

Matrix of reports

and documents to

be drawn up and

approved by each

Board Committee.

Y

Clerk /

Committees

1 August 2015

Work has still been done to

take this forward.


June 2016


C.7

R5 The Board should delegate to either the

Audit Committee or Finance and General Purposes

Committee the responsibility for risk management

which is set out in its Standing Orders.

A

Responsibility

regarding risk

management will be

incorporated into

the remit for the

appropriate

Committee.

Y

Clerk

1 August 2015

The Finance and General

Purposes Committee Terms

of Reference include the

requirement to consider and

advise the Board about the

College’s approach to risk

management.

Fully Implemented

31


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


C.7

R6 The Board should consider how to define

its risk appetite in conjunction with the Senior

Management Team.

A

To be defined

within the Strategic

Plan and approved

by Board.

Y

Principal

23 June 2015

This is still to be done

however it is envisaged that

this will take place either in

conjunction with developing,

or after finalising, the Strategic

Plan.


October 2016


Vari-

ous

Audit Committee Terms of Reference

Include in the Audit Committee’s Terms of

Reference:

R7.1 the requirement to provide assurance to

the Board regarding governance, internal control

and risk management and to engage with financial

reporting issues. (Code provision C.10)

R7.2 that the role of the College executive is to

attend meetings at the invitation of the Committee

Chair and to provide information for particular

agenda items and that the Chair of the Board must

not be a member. (Code provision C.11)

R7.3 that the Audit Committee may sit privately

without any non-members present for all or part

of a meeting if they so decide. (Code provision

C.12)

A

Recommendations

R7.1-R7.3 will be

defined within the

Audit Committee’s

Terms of

Reference, as in

line with existing

practice.

Y

Clerk

23 June 2015

The Audit Committee’s Terms

of Reference have been

amended to incorporate these

requirements.

Fully Implemented

32


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


C.14

Financial and Institutional Sustainability

R8 Amend the Scheme of Delegation to

ensure that approval of the College’s annual budget

is reserved for the Board.

A

The Scheme of

Delegation will be

revised to reflect

existing practice.

Y

Clerk

1 August 2015

The Scheme of Delegation has

been amended so that the

annual budget approval is

reserved for the Board.

Fully Implemented

C.14

R9 Ensure that once the Financial

Memorandum with the UHI is signed that the

College’s Financial Regulations and Finance

Procedures are updated for relevant requirements

of the Scottish Public Finance Manual.

A

The Financial

Regulations and

Finance Procedures

to be updated once

the Financial

Memorandum has

been approved.

Y

Director of

Finance

1 August 2015

The Financial Regulations and

Procedures have still to be

updated for the requirements

of the Scottish Public Finance

Manual. There is the potential

for internal audit to be

involved to assist the College

in doing this.

These will be submitted to the

Finance and General Purposes

Committee in June 2016.


June 2016


33


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


C.16

R10 Board members should receive formal

training and documentation setting out their

responsibilities under charity legislation.

A

Documentation

outlining

responsibilities

under charity

legislation to be

drawn up and

signed by Board

members.

Y

Clerk

1 August 2015

This has still to be undertaken

and will be done once the new

Board has been recruited and

inducted.


D.2

Effectiveness

R11 Draw up a detailed skills matrix based on

the skills, experience and knowledge that is

considered necessary for the Board to possess

collectively.

A

Skills matrix to be

drawn up to

identify collective

skills, experience

and knowledge.

Y

Clerk /

Nominations

Committee

1 August 2015

A list of essential, desirable

and beneficial skills has been

drawn up. However a matrix

setting out all the Board

members and their skills, and

any gaps, has yet to be

prepared.


Immediate


34


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


D.7

Principal and Chief Executive

R12 Consideration should be given to how

students and staff might contribute to the

Principal’s recruitment process.

A

Schedule for

interview process

to be investigated

with external

agencies.

Y

Clerk / Chair

1 August 2015

The Assistant Principal advised

that during the recent

appointment of the Principal

the selection process included

students and staff with

applicants being involved in

round robin groups including

senior staff, other staff and

students. Each group

completed a form to

summarise their observations

and this feedback was

considered in the

appointments process.

Fully Implemented

D.9

R13 Review the process for setting personal

performance measures for the Principal, and

monitoring, reviewing and recording these, and

provide a detailed description of how this should

be carried out within the Standing Orders. As part

of this the Board should consider how the views of

staff and students could be gathered.

A

Investigate current

practice within the

sector and draw up

procedure for

approval by the

Board which

includes

opportunity for

views of staff and

students.

Y

Clerk / Chair

1 August 2015

The Board Chair has been in

discussion with other college

Chairs and the Colleges

Development Network to

identify best practice but this

has still to be completed.


35


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


D.10

R14 Develop a more detailed formal procedure

for setting the remuneration of the Principal and

consider what information could be gathered from

staff and students which could be linked into the

Principal’s remuneration setting process.

A

Investigate current

practice within the

sector and draw up

procedure for

approval by the

Board which

includes

opportunity for

views of staff and

students.

Y

Clerk / Chair

1 August 2015

The Board Chair has been in

discussion with other college

Chairs and the Colleges

Development Network to

identify best practice but this

has still to be completed.


D.17

Board Member Appointment, Induction and

Training

R15 Develop and document a formal and open

procedure to be used for the recruitment and

selection of new non-executive board members

which incorporates relevant Ministerial and

Strategic Regional Body guidance on Board

appointments.

A

Documentation

and procedure

already developed

by UHI FE Regional

Board will be

implemented.

Y

Clerk

Complete

The UHI has prepared

requirements for the approval

of new Board members which

clearly set out the

requirements to be

undertaken. The Ministerial

Guidance on Board

Appointments is directly

referred to for any

appointments.

Fully Implemented

36


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


D.20

R16 Ensure all Board members have their

training needs discussed and identified, with follow

through to ensure appropriate training is

undertaken. The Clerk to the Board should also

keep records of training undertaken.

A

Training needs

analysis to be

undertaken for

Board members to

be undertaken and

recorded.

Y

Clerk /

Nominations

Committee

1 August 2015

This has yet to start and will

be undertaken when the new

Board are in place.


D.22

R17 Develop a robust annual self-evaluation

process for the Board and its committees.

A

Process for self-

evaluation to be

developed and

approved by Board.

Y

Clerk /

Nominations

Committee

1 August 2015

Considerable work has been

undertaken on developing a

self-evaluation process and

this has to be reviewed and

approved by the Board.


June 2016


D.23

R18 Implement a formal process for evaluating

the effectiveness of the Board Chair and the Chairs

of Board committees.

A

Process for self-

evaluation to be

developed and

approved by Board.

Y

Clerk

1 August 2015

Considerable work has been

undertaken on developing an

evaluation process and this has

to be reviewed and approved

by the Board.


June 2016


37


Para


Agreed

Responsible

Officer

For Action

Agreed

Completion

Date


Secti

on6

Post-16 Education (Scotland) Act 2013

R19 Ensure the Board formally approves the

revised Board Constitution.

A

Approval of Board

Constitution to be

formally recorded.

Y

Clerk

23 June 2015

The Board approved the

revised Board Constitution at

its meeting on 23 June 2015.

Fully Implemented

38


Appendix VI – Updated Action Plan

Internal Audit Report 2015/07 – Post Project Review – Alexander Graham Bell Centre

Para


Agreed

Responsible

Officer

Agreed

Completion

Date

Update at April 2016

3.2

Key Recommendations

R1 Draw up a capital

projects framework setting out

the key governance and

management arrangements for

future large capital projects.

B

Agreed, and in particular

internal structures,

organisation and document

control.

Y

Principal

This would be

implemented as

part of next

significant capital

project.

There have been no further

capital projects which would

require this.

No Opportunity to

Implement

3.3

R2 When grant funding is

received identify the procedural

and documentation

requirements of the funders and

put in place processes, including

checking procedures, to ensure

funders requirements are

complied with and adequate

records are kept.

B

Agreed in relation to

procurement procedures, in

particular those processes

that link to ERDF or other

sources of funding.

Y

Director of

Finance

This would be set

out clearly at the

initiation stage of

the next relevant

capital project.



require this.

No Opportunity to

Implement

39


Para


Agreed

Responsible

Officer

Agreed

Completion

Date

Update at April 2016

3.4

R3 Ensure that Business

Case objectives include, as well

as qualitative measures, a set of

SMART (Specific, Measurable,

Achievable, Relevant and Time-

bound) quantitative measures.

B

Business case objectives

were developed with the

involvement of consultants,

NHS and HIE however

these changed over time,

particularly under various

funding models.

Y

Principal

This would be set

out clearly at the

initiation stage of

the next relevant

capital project.



require this.

No Opportunity to

Implement

3.4

R4 Set up robust tracking

mechanisms to measure all

targets set out in the AGBC’s

ERDF approved funding

application.

B

This is a challenge due to

targets submitted, and relies

upon planning and

monitoring by the

Alexander Graham Bell

Centre Leadership Group

comprising NHS, HIE,

College and other

stakeholders.

Tracking mechanism set up

by Project Officer but

requires greater integration

into work of Group.

Y

Principal

This is ongoing

through the life

of the project (10

years) and is the

key work of the

Alexander

Graham Bell

Centre

Leadership

Group.

A spreadsheet for recording

progress against targets has

been produced and is

updated on an ongoing basis.

Fully Implemented

40


Appendix VII – Updated Action Plan

Internal Audit Report 2015/08 – 2014/15 Student Activity Data

Para


Responsible

Officer

Agreed

Completion

Date


2.2.1

Allocation of SUMs to

Courses

R1 Ensure that claims for

infill programmes are based upon

the value of the units listed on

the discrete course record and

not based upon a default tariff.

C

The Administration Officer

undertook a review of the

infill programmes during the

SUMS Audit. The MIS

section will take on board

this recommendation and

will remove all infill

programme defaults to

ensure claim is against the

value of units.

Y

Stuart

Cruickshank

October 2015

The system defaults have

been removed so the system

only calculates these now

based on module bookings.

Fully Implemented

2.3.3

&

2.3.4

Additional Educational

Support Needs

R2 College staff should be

reminded of the importance of

ensuring that PLSPs are produced

for all DPG18 students and

contain the required information

and evidence of review during the

year.

B

The MIS section will take on

board this recommendation.

Administration Officer to

meet with course teams to

ensure all PLSPs are

produced as per the SFC

guidelines.

Y

Stuart

Cruickshank

October 2015

College staff have been

reminded of this.

Fully Implemented

University of the Highlands and Islands Moray College Annual Audit Plan 2015/16

Prepared for Moray College UHI

May 2016

Key contacts Anne MacDonald, Senior Audit Manager [email protected] Edward Stansfeld, Senior Auditor [email protected]

Audit Scotland Business Hub 15, 3rd Floor South Marischal College, Broad Street Aberdeen

AB10 1AB Telephone: 0131 625 1500 Website: www.audit-scotland.gov.uk

Audit Scotland is a statutory body set up in April 2000 under the Public Finance and Accountability (Scotland) Act 2000. We help the Auditor General for Scotland and the Accounts Commission check that organisations spending public money use it properly, efficiently and effectively (www.audit-scotland.gov.uk/about/).

Anne MacDonald, Audit Scotland is the appointed external auditor of Moray College for the period 2011/12 to 2015/16.

This report has been prepared for the use of Moray College UHI and no responsibility to any member or officer in their individual capacity or any third party is accepted.

The information in it may be used by the Auditor General in support of her wider responsibilities, including reporting to the Scottish Parliament.

Contents

Summary ................................................................. 3

Responsibilities ...................................................... 4

Audit Approach ...................................................... 5

Audit issues and risks ........................................... 8

Fees and resources ................................................ 11

Appendix 1: Planned audit outputs ..................... 13

Appendix 2: Significant audit risks ..................... 14

http://www.audit-scotland.gov.uk/

http://www.audit-scotland.gov.uk/about/

http://www.audit-scotland.gov.uk/about/

Summary

Moray College UHI Page 3

Summary Introduction 1. This report summarises the key challenges and risks facing Moray

College UHI and sets out the audit work that we propose to undertake in the 2015/16 audit. This is the final year of our five year audit appointment. The Assistant Auditor General is currently concluding a procurement process for the appointment of public sector auditors for the next five year cycle. The college is in the process of being advised about its new external auditor.

2. Our audit is focused on the identification and assessment of the risks of material misstatement and irregularity in Moray College UHI’s financial statements.

3. Our plan reflects:

the risks and priorities facing Moray College UHI

current national risks that are relevant to local circumstances

the impact of changing international auditing and accounting standards

our responsibilities under the Code of Audit Practice as approved by the Auditor General for Scotland

issues brought forward from previous audit reports.

Summary of planned audit activity 4. Our planned audit work in 2015/16 includes:

an audit of the financial statements and provision of an opinion on whether:

- they give a true and fair view of the state of affairs of Moray College UHI as at 31 July 2016 and its income and expenditure for the year then ended

- the accounts have been properly prepared in accordance with the Further and Higher Education (Scotland) Act 1992, the 2015 Statement of Recommended Practice: Accounting for Further and Higher Education, the Accounts Direction issued by the Scottish Funding Council, and the Government Financial Reporting Manual.

a review of Moray College UHI’s governance and performance arrangements in a number of key areas including: internal controls; the adequacy of internal audit; and the college’s supporting arrangements for the preparation of its annual statement of corporate governance and internal control.

Responsibilities

Page 4 Moray College UHI

Responsibilities 5. The audit of the financial statements does not relieve management

or the Audit Committee, as the body charged with governance, of their responsibilities.

Responsibility of the appointed auditor 6. Our responsibilities, as independent auditor, are established by the

Public Finance and Accountability (Scotland) Act 2000 and the Code of Audit Practice, and guided by the auditing profession’s ethical guidance.

7. Auditors in the public sector give an independent opinion on the financial statements. We also review and report on the arrangements within the audited body to manage its performance, regularity and use of resources. In doing this, we aim to support improvement and accountability.

Responsibility of the Board of Management 8. It is the responsibility of the Board of Management for Moray

College UHI to prepare the financial statements in accordance with the Accounts Direction. This means:

acting within the law and ensuring the regularity of transactions by putting in place appropriate systems of internal control

maintaining proper accounting records

preparing financial statements timeously which give a true and fair view of the financial position of the college as at 31 July 2016 and its expenditure and income for the year then ended

preparing a report by the Board of Management (referred to as a strategic report in the 2015 SORP) to accompany the financial statements and a statement of corporate governance and internal control

confirming that the annual report and accounts taken as a whole is fair, balanced and understandable and provides the information necessary for stakeholders to assess the strategies adopted by the board, its performance and financial position.

Format of the accounts 9. The financial statements should be prepared in accordance with the

Further and Higher Education (Scotland) Act 1992, the 2015 Statement of Recommended Practice: Accounting for Further and Higher Education (the 2015 SORP), the Accounts Direction issued by the Scottish Funding Council as well as the Government Financial Reporting Manual (FReM).

10. The 2015 SORP was approved in March 2014. While 2015/16 will be the first reporting year, comparative figures for 2014/15 and a restated opening balance sheet at 1 August 2014 will be required. In addition, the new SORP changes the name and layout of the primary financial statements.

Audit Approach


Audit Approach 11. Our audit approach is based on an understanding of the

characteristics, responsibilities, principal activities, risks and governance arrangements of Moray College UHI. We also consider the key audit risks and challenges in the further education sector generally. This approach includes:

understanding the business of Moray College UHI and the associated risks which could impact on the financial statements

assessing the key systems of internal control, and establishing how weaknesses in these systems could impact on the financial statements

identifying major transaction streams, balances and areas of estimation and understanding how Moray College UHI will include these in the financial statements

assessing the risks of material misstatement in the financial statements

determining the nature, timing and extent of audit procedures necessary to provide us with sufficient audit evidence as to whether the financial statements are free of material misstatement.

12. We have also considered the sources of assurance which will make best use of our resources and allow us to focus audit testing on higher risk areas of the financial statements. The main areas of

assurance for the audit come from planned management action. Planned management action being relied on for 2015/16 includes:

early preparation of a template for the financial statements reflecting the requirements of the new SORP including restated figures, updated accounting policies and any additional disclosure notes

evidence of board members consent for disclosure of all salary information required for disclosure in the remuneration report

early discussion with the North East Scotland Pension Fund to obtain the necessary information to comply with pension accounting requirements including comparative figures.

comprehensive closedown procedures for the financial statements accompanied by a timetable setting out clear responsibilities for provision of accounts and working papers

delivery of unaudited financial statements to agreed timescales with a comprehensive working papers package

completion of the internal audit work programme for 2015/16

a letter of management representation on key areas of the financial statements.

13. Auditing standards require internal and external auditors to work closely together to make best use of available audit resources. Internal audit is provided by Henderson Loggie. We seek to rely on the work of internal audit wherever possible and, as part of our planning process, we carried out an early assessment of the internal audit function and concluded that we could place reliance on their work. Overall, we concluded that the internal audit service operates

Audit Approach


in accordance with relevant Public Sector Internal Audit Standards (PSIAS) which enables us to take assurance from their documentation and reporting procedures.

Materiality 14. Materiality can be defined as the maximum amount by which

auditors believe the financial statements could be misstated and still not be expected to affect the decisions of users of financial statements. A misstatement or omission, which would not normally be regarded as material by amount, may be important for other reasons (for example, the failure to achieve a statutory requirement or, an item contrary to law). In the event of such an item arising, its materiality has to be viewed in a narrower context; such matters would normally fall to be covered in an explanatory paragraph in the independent auditor’s report.

15. We consider materiality and its relationship with audit risk when planning the nature, timing and extent of our audit and conducting our audit programme. Specifically with regard to the financial statements, we assess the materiality of uncorrected misstatements both individually and collectively.

16. Based on our knowledge and understanding of Moray College UHI we have set our planning materiality at £125,000 (1% of gross expenditure).

17. We set a lower level, known as performance materiality, when defining our audit procedures. This is to ensure that uncorrected and undetected audit differences do not exceed our planning

materiality. This level depends on professional judgement and is informed by a number of factors including the:

extent of estimation and judgement within the financial statements

nature and extent of prior year misstatements

extent of audit testing coverage.

18. For 2015/16, performance materiality has been set at £38,000. We will report, to those charged with governance, all misstatements identified which are greater than £6,000. In line with auditing standards, amounts below this threshold need not be reported.

Reporting arrangements 19. The college is required to submit audited accounts to the Scottish

Funding Council by 31 December 2016.

20. Matters arising from our financial statements audit will be reported and discussed with management. We will provide an independent auditor's report to the Board of Management and the Auditor General that the audit of the financial statements has been completed in accordance with applicable statutory requirements.

21. After completion of the audit, we will provide the Board and the Auditor General with an annual report on the audit containing observations and recommendations on significant matters which have arisen during the course of the audit.

22. Exhibit 1 highlights the key dates for the Audit Committee taking account of submission requirements.

Audit Approach


Exhibit 1: Annual Accounts audit timetable – key dates

Key stage Proposed Dates

Planned approval of annual accounts by Audit Committee and Finance and General Purposes Committee

November 2016 (tbc)

Planned approval of audited annual accounts by the Board of Management

December 2016 (tbc)

Independent auditor’s report signed By 31 December 2016

23. Matters arising from our audit will be reported on a timely basis and will include agreed action plans. Draft management reports will be issued to the Assistant Principal to confirm factual accuracy. A copy of all final agreed reports will be sent to the Principal, Assistant Principal, Internal Audit and Audit Scotland's Performance Audit and Best Value Group.

24. All annual audit reports produced are published on Audit Scotland's website www.audit-scotland.gov.uk

25. Planned outputs for 2015/16 are summarised in appendix 1.

Quality control 26. International Standard on Quality Control (UK and Ireland) 1

(ISQC1) requires that a system of quality control is established, as part of financial audit procedures, to provide reasonable assurance that professional standards and regulatory and legal requirements

are being complied with and that the independent auditor’s report or opinion is appropriate in the circumstances. The foundation of our quality framework is our Audit Guide which incorporates the application of professional auditing, quality and ethical standards, and the Code of Audit Practice issued by Audit Scotland and approved by the Auditor General for Scotland. To ensure that we achieve the required quality standards, Audit Scotland conducts peer reviews, internal quality reviews and external quality reviews and has been subject to a programme of external reviews by the Institute of Chartered Accountants of Scotland (ICAS).

27. As part of our commitment to quality and continuous improvement, Audit Scotland will periodically seek your views on the quality of our service provision. We do, however, welcome feedback at any time and this may be directed to the engagement lead, Anne MacDonald.

Independence and objectivity 28. Auditors appointed by Audit Scotland must comply with the Code of

Audit Practice. When auditing the financial statements auditors must also comply with professional standards issued by the Financial Reporting Council and those of the professional accountancy bodies. These standards impose stringent rules to ensure the independence and objectivity of auditors. Audit Scotland has in place robust arrangements to ensure compliance with these standards including an annual ‘fit and proper’ declaration for all members of staff. The arrangements are overseen by the Assistant Auditor General, who serves as Audit Scotland’s Ethics Partner.

http://www.audit-scotland.gov.uk/

Audit issues and risks


29. Auditing and ethical standards require the appointed auditor to communicate any relationships that may affect the independence and objectivity of audit staff. In significant cases we would change the audit team, however where there are potential issues that are not fundamental to the delivery of the audit, we advise the senior finance officer of the circumstances and of the steps we have taken to manage this. We are not aware of any such relationships pertaining to the audit of Moray College UHI.

Audit issues and risks 30. Based on our knowledge, discussions with staff, attendance at

committee meetings and a review of supporting information we have identified the following main risk areas for Moray College UHI. We have categorised these risks into financial statement issues and risks and wider dimension risks. The risks which require specific audit testing are detailed below and summarised in Appendix 2.

Financial statement issues and risks 31. 2015 SORP: The 2015 Statement of Recommended Practice

applies to colleges from 2015/16. While 2015/16 is the first reporting year, comparative figures for 2014/15 and a restated opening balance sheet at 1 August 2014 will be required. Some of the significant presentation changes arising from implementation of the new SORP are summarised below:

The SORP brings college accounts into line with International Financial Reporting Standards and consequently, there are significant changes in the primary statements. These include the combining of the income and expenditure account and the statement of total recognised gains and losses into a single statement of comprehensive income, and changes to the cash flow statement.

The Operating and Financial Review will be replaced by the Strategic Review which should present a realistic appraisal of the college’s financial position and forward plans.

Fees and resources


Fixed assets will change their name and be known as property, plant and equipment, with separate disclosure of assets held for sale and investment property.

revenue recognition rules will result in most capital grants being credited to the statement of comprehensive income rather than to deferred capital grants on the balance sheet. Deferred capital grants were previously recorded on the balance sheet and their subsequent release to the income and expenditure account will no longer occur. Grants will be treated under three categories, each potentially with its own accounting policy i.e. capital grants for land, other capital grants and revenue grants..

Financial instruments, such as cash holdings, debtors, creditors and loans and their associated risks, should be analysed and described more fully in new disclosure notes.

A holiday pay accrual is required, using the methodology developed last year, and based on accurate holiday data to be gathered at the year end.

Pension fund accounting has changed, with removal of the exemption from full disclosure for multi-employer schemes, such as the Local Government Pension Scheme (LGPS) (see para 35).

The related party definition is wider and includes transactions with institutions on which senior staff hold posts.

32. There is a risk that the college’s financial statements will not comply with the requirements of the new SORP. We will therefore work with the Assistant Principal and her team to confirm that the changes required by the new SORP are implemented accordingly.

33. Remuneration Report: Following reclassification and the application of FReM from 1 April 2014, colleges were required to include a remuneration report in their financial statements for the first time. Across the sector, remuneration reports were generally submitted for audit after the financial statements and required several iterations before they were concluded appropriately. Moray College UHI made use of an exemption provided in the Accounts Direction which enabled the board to withhold its consent to disclose certain salary information in the remuneration report, the only college to do so. It is uncertain if the exemption will be available this year.

34. While the second year should be more straightforward, if planning is not conducted at an early stage, a risk remains that the remuneration report will not be prepared in accordance with SFC guidance and may require significant changes during the audit process. We will confirm that the remuneration report is adequately built into the final accounts timetable.

35. Pension fund accounting: The college has previously accounted for pension contributions to the LGPS as if it were a defined contribution scheme. This means that the liability to pay for future pensions of current staff is not recognised on the balance sheet as required by FRS 102.

Audit issues and risks


36. Our previous Annual Audit Reports have highlighted that the pension fund actuaries are now generally providing values for assets and liabilities by employer and consequently, the college should implement accounting for pension costs in line with FRS17. So far this has not been done but full compliance is required this year in accordance with the new SORP. There is a risk the audit opinion will be qualified if the college fails to comply with accounting standards.

37. Fair Value Measurement: FReM requires organisations to account for fair value measurement of assets and liabilities in accordance with International Financial Reporting Standard (IFRS) 13. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Examples of assets to which fair value measurement applies include surplus assets, investments held for sale and investment property. The college will require to consider if its existing practices need any adjustment in light of the new standard. We will review valuations to confirm the requirements have been applied accordingly.

38. Fraud Risk: Auditing standards (ISA 240 The auditor’s responsibility to consider fraud in an audit of financial statements) require auditors to consider the possibility of control override to meet financial targets or misrepresent the financial outturn. We have identified that some areas of the college’s financial statements have an element of fraud risk attached, for example:

Income: While Moray College UHI receives a significant amount of funding from the Scottish Funding Council via the regional board, last year it was not easy to agree the annual totals to funding awards. There are also a range of other sources including tuition fees. The complexity of income means there is an inherent risk that it could be materially misstated. The ISA requires auditors to evaluate which types of revenue and grant transactions give rise to such risks. We will therefore design and perform audit procedures to address these matters.

Management override of controls: ISA 240 requires auditors to consider, on all audits, management’s ability to manipulate accounting records and prepare fraudulent or biased financial statements by overriding controls that otherwise appear to be operating effectively. We will therefore design and perform audit procedures which are responsive to the risks identified.

Wider dimension issues and risks 39. Budget savings and financial pressures: The college is

operating in a funding environment which is anticipated to remain tight for some time. There has been close budget monitoring during the year to meet the funding shortfall and minimise the risk of the college having to report another deficit this year. Additional expenditure will however be required following the implementation of pay awards through national collective bargaining.

40. Financial sustainability concerns whether the college has the financial resources to meet current and future operational needs. There are risks that planned income will not be realised and in

Fees and resources


addition, there is currently an absence of senior financial expertise to lead the college through these financial difficulties. It is likely that the college will continue to depend on the UHI Further Education Regional Board’s (FERB) support to provide assurance on its financial sustainability.

41. Code of Good Governance for Scotland’s Colleges: A requirement of the college’s funding agreement is that a Financial Memorandum exists with the FERB. The memorandum covering the new relationship with UHI has yet to be agreed. One of the conditions within the memorandum is that colleges are expected to comply with the principles of good governance as set out in the 2014 Code of Good Governance for Scotland’s Colleges. There is a risk that the Code is breached putting funding at risk. We will review the extent of the college’s compliance with the Code as part of our consideration of the completeness of the statement of corporate governance and internal control.

National performance audit studies 42. Audit Scotland’s Performance Audit and Best Value Group

undertake a programme of studies on behalf of the Auditor General and Accounts Commission.

43. As a matter of routine, we complete an annual data return which is used to inform the content of the annual overview report on Scotland’s colleges published by the Auditor General.

Fees and resources Audit fee 44. In determining the audit fee we have taken account of the risk

exposure of Moray College UHI, the management assurances in place, and the level of reliance we plan to take from the work of internal audit. We have assumed receipt of a complete set of unaudited financial statements and comprehensive working papers package by 26 Septembet (tbc).

45. The proposed audit fee for planning, delivering and reporting on the 2015/16 audit of Moray College UHI is £19,200 (2014/15 £14,980). The 2015/16 proposed audit fee reflects the additional audit work planned this year as a result of:

the requirements of the new SORP including the restatement of prior year balances

accounting for pension costs in accordance with accounting standards

the adverse financial position reported by the college at 31 July 2015 and the subsequent actions to improve the 2015/16 financial position and the college’s overall financial sustainability. This will include a review of financial reporting to the board, progress against financial targets at 31 March 2016, verification of additional income sources and actions taken by the college to improve controls and reduce expenditure.

Fees and resources


the role of the UHI FERB in providing grant funding to the college and in monitoring/challenging the college’s ongoing financial position.

46. Where our audit cannot proceed as planned through, for example, late receipt of unaudited financial statements or inadequate working papers, a supplementary fee may be levied. An additional fee may also be required in relation to any work or other significant exercises outwith our planned audit activity.

Audit team 47. Anne MacDonald, Senior Audit Manager, Audit Services is your

appointed auditor and your primary contact. Details of the experience and skills of our team are provided in Exhibit 2.

Exhibit 2: Audit team

Name Experience

Anne MacDonald CA, Senior Audit Manager (and certifying auditor)

Anne has many years of public sector experience mainly in local government financial audit.

Edward Stansfeld FCA, Senior ICT Auditor

Edward trained as an auditor in private practice in the early 90s, and then worked in industry for five years. He joined Audit Scotland in 2001 as an IT audit specialist.

Adebayo Ladejobi, Professional Trainee

Adebayo joined Audit Scotland's graduate training programme in October 2015 and is currently working towards his ICAS qualification.

Appendix 1: Planned audit outputs


Appendix 1: Planned audit outputs Planned outputs Date of Audit and Risk

Committee /Board Submission date

for returns to Audit Scotland

Performance Audit

Further Education Sector Overview Report – Data Return N/A By 31 December 2016

Financial statements

Report to Audit Committee – Communication of audit matters to those charged with governance - Annual Report to the Board on the 2015/16 audit

Audit Committee - November 2016 (tbc)

Board – 5 December 2016

By 31 December 2016

Independent auditor's report on the financial statements Audit Committee - November 2016 (tbc)

Board – December 2016 (tbc)

By 31 December 2016

Appendix 2: Significant audit risks


Appendix 2: Significant audit risks The table below sets out the key audit risks, the related sources of assurance received and the audit work we propose to undertake to address the risks during our audit work. No Audit Risk Management source of assurance Audit assurance procedure

Financial statement issues and risks

1 2015 SORP The new SORP brings college accounts into line with International Financial Reporting Standards (IFRS). There will be changes in the primary statements and a restatement of prior year figures including an opening balance sheet at 1 August 2014.

Key areas for review include the treatment of pensions and deferred capital grants. There will also be changes to accounting policies and the disclosure requirements for financial instruments.

There is a risk that the new requirements are not met.

Early planning meeting with Assistant Principal to confirm expectations from new financial reporting requirements

Early preparation of a template for the financial statements reflecting the requirements of the new SORP including restated figures, updated accounting policies and any additional disclosure notes.

Regular contact with finance department

Update of our working papers checklist highlighting new requirements and ‘problem’ areas from the previous year

Review of revised template for accounts

Agreed timetable for delivery of draft annual accounts.



No Audit Risk Management source of assurance Audit assurance procedure

2 Remuneration Report With 2014/15 the first year a remuneration report was required to be included in the college’s accounts, there were a number of iterations before the information was complete. Unless there is early planning in respect of 2015/16, there is a risk that similar delays may recur.

Early planning meeting with Assistant Principal to confirm expectations

evidence of board members consent for disclosure of all salary information required for disclosure in the remuneration report

Timely liaison with actuaries/pension funds to provide figures.



3 Pension fund accounting The new SORP makes it mandatory to show potential future pension liabilities on the balance sheet in line with accounting standards. The college should hold early discussions with the North East Scotland Pension Fund to ensure that appropriate disclosures can be made. There is a risk of qualification if the college fails to comply with accounting standards.

Early planning meeting with Assistant Principal to confirm expectations for pension fund accounting

Early discussion with the North East Scotland Pension Fund to obtain the necessary information to comply with pension accounting requirements including comparative figures and an opening position at 31 July 2014.


Review of FRS 102 calculations provided by the actuary of the LGPS.

4 Fair value measurement The FReM/SORP requires fair value measurement of assets and liabilities in accordance with IFRS 13. There is a risk that valuations are not carried out per the requirements and therefore the value of assets and liabilities are misstated.

Early planning meeting held with Assistant Principal to confirm expectations from new financial reporting requirements.






5 Income Grant income sources are complex, with awards from the SFC made via the FERB. There is a risk that total grant income for the year cannot be reconciled to award letters, leading to uncertainty over the correct amount of income to be disclosed.

There are also a number of other sources of income, relating to tuition fees and trading activities. The extent and complexity of income means there is an inherent risk of misstatement in accordance with ISA240.

Award letters issued by the SFC and the UHI Regional Board which state the totals for annual capital and revenue grants and funding awards

Internal audit reviews which assist in providing an opinion on governance arrangements

There are a range of policies and procedures in place to prevent and detect fraud including standing orders and financial regulations

Arrangements for clearing sales ledger control and trading accounts.

We will agree grant income to funding award letters

Detailed substantive testing of income transactions including cut off arrangements

Analytical procedures on weekly, monthly and annual receipts.

6 Management override of controls As stated in ISA240, management in all entities is in a unique position to perpetrate fraud because of its ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively.

Internal audit reviews which assist in providing an opinion on governance arrangements

Regular reconciliations of bank accounts and sub-ledger control accounts with the main ledger

Segregation of duties between those preparing and processing journals

Evidence of regular review of debtor and creditor balances.

Assurances from work carried out by internal audit

Confirmation of purchase ledger balances with suppliers

Testing of journal entries and review accounting estimates for bias

Review of use of control accounts, suspense accounts and deferred income accounts.




Wider dimension issues and risks

7 Budget savings and financial pressures The college has identified funding shortfalls in respect of 2016/17 and beyond. There is a risk that the necessary efficiencies are not secured to maintain financial sustainability. This could undermine the assumption of going concern and lead to inadequate disclosures in the accounts.

Management Accounts and cash forecasts

Reports to the Board of Management

Compliance with the Code of Good Governance

Scrutiny of financial information by the FERB and compliance with the Financial Memorandum.

On-going monitoring of financial plans, assumptions and estimates with a commentary in our Annual Audit Report.

Review and evaluation of actions taken by the college to improve its financial position.

8 Code of Good Governance A condition of the Financial Memorandum with the SFC is the college’s on-going compliance with the Code of Good Governance for Scotland’s Colleges. There is a risk that if the Code is breached, grant conditions and the requirements of funders will not be met.

Updated Governance Manual

Assurances provided by the work of internal audit.

Review of arrangements in place against the Code including self-evaluation work undertaken by the college.

board of management meeting of audit committee · audit committee requires at least one member to...

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