ARAC minutes - 14 December 2021

Published

15 March 2022

Updated

15 March 2022

Present

Present:

 

Siobhan White (SW)

SHR Committee Chair

Bob Gill (BG)

SHR Committee member

Ewan Fraser (EF)

SHR Committee member

 

In attendance:

 

Jim Montgomery (JM)

Senior Internal Audit Manager, Scottish Government

Karen Wilkinson

Internal Auditor, Scottish Government

Nicola Mackenzie (NM)

Audit Manager, Azets

Michael Cameron (MC)

SHR, Chief Executive (items 1 – 11)

Iain Muirhead (IM)

SHR, Director of Digital and Business Support (items 1 – 11)

Clare Nicolson (CN)

SHR, Business Manager (items 1 – 11)

Roisin Harris (RH)

SHR, Corporate Governance Manager (items 1 – 11)

Chair's Welcome

The Chair welcomed everyone present to the meeting.

Apologies

Nick Bennett (NB), Audit Partner Azets, Julie Taylor (JT) Scottish Government Audit Manager and SHR’s Finance Manager Fiona Johnston (FJ) submitted apologies. 

Declaration of Interest

There were no new declarations of interest.

Minutes of the previous meeting, matters arising and audit log

ARAC considered the draft minutes from its meeting on 7 September 2021 and approved these as an accurate record of the meeting subject to minor correction.

ARAC considered the matters arising and audit action logs. 

SW reported:

  • that she contacted the observers from the last ARAC meeting as they did not get the opportunity to feedback to ARAC and that they had thanked her for the opportunity and reported that it was useful; and
  • she has written on behalf of ARAC to the Director of People at Scottish Government to express concern around the impact of the recruitment delays on SHR.

SW has discussed the timing of the Best Value work with CN. CN confirmed she is planning to work on this with the FJ during quarter four and explained why the task remained at risk. 

ARAC discussed approaches to Best Value in other bodies and sectors. It noted that Internal Audit see many different approaches and the key thing is making it work for the organisation.  NM reported that Audit Scotland is revising the Code of Audit Practice and this will provide more guidance and that audit would consider work under wider scope dimensions and the categories set out in the Public Finance Manual.   IM and CN agreed to discuss opportunities to streamline SHR’s approach and to align it to assurance mapping work with NM and JM and bring it back to ARAC in June 2022.

SW highlighted that Scottish Fire and Rescue has volunteered to organise a forum for chairs of public body audit committees and that she is waiting for further information. ARAC noted there might be challenges in a broad range of organisations beyond regulators being involved.  

ARAC noted that work in relation to workforce planning remains outstanding.  CN explained that SHR has recently explored commissioning aspects or gaining input from Scottish Government HR, but that nether option was possible at this time

Actions: CM & IM to discuss approaches to Best Value work with auditors and bring back work aligned to assurance mapping to ARAC in June 2022. 

Internal Audit Update

JM reported that Internal Audit work is on track to complete by 31 March 2022.  He highlighted the report on transition to working effectively during the pandemic and reported a substantial assurance opinion and with no recommendations.   He also reported that the work on regulatory response to Covid-19 is underway.  

JM also highlighted:

  • a report for internal auditors on risk focus and hot topics for 2022 and explained that this will inform SHR’s audit planning for 2022/23;
  • Government Internal Audit Guidance note on assurance mapping; and
  • the Government Functional Standard, explaining how this is used by Internal Audit for benchmarking.

JM confirmed that SHR will continue to receive the same Internal Audit resource level in 2022/23 as now.  He explained that he will remain with SHR and that JT will be replaced by Gary Gibb, who has previously worked as Internal Audit Manager to SHR.  JM also confirmed that KW will continue to do the fieldwork and highlighted the importance of consistency.   

ARAC considered the update and discussed the report on SHR’s transition to working effectively during the pandemic, congratulating MC’s team and agreeing that the findings reflected the experience of ARAC and the Board.   It noted improvement opportunities and that Internal Audit found SHR was ahead of some other organisations in getting equipment to allow for homeworking.  It also noted Auditors encouraged SHR to continue revisiting wellbeing as working from home continues. 

MC welcomed the report and reflected on the pace of change in the early stages of responding to the pandemic, both in terms of how SHR was set up and also how it regulated.  He confirmed that lessons would be brought forward and explained that SHR had learned from a previous shutdown that meant it was easier for it to move quickly to remote working.   MC also reported that wellbeing is a priority for SHR and it is currently running a series of workshops open to all staff.  

ARAC noted the updates and thanked JM, JT and KW for their work. 

Risk Management

CN presented SHR’s risk management strategy and highlighted proposed changes around dating, clarity of wording and delegation of work to herself as Business Manager. 

ARAC considered the strategy and discussed induction of new members to SHR’s approach to managing risk, asking the staff team to connect with the new Board members to explain the context of SHR’s risk register and approach as well as connections to the Corporate, operating plans and assurance map. 

ARAC agreed it was content with the proposed updates and approved them. 

CN presented SHR’s risk register to ARAC.  She confirmed that the register was last considered by SHR’s Board on 7 December 2021 and that SHR’s Management Team will next consider the register in January. 

ARAC considered the risk register and discussed if the next review by Management Team should take place prior to January given the evolving circumstances around Covid-19.  MC reported that Management Team agree that all risks are already captured on the register. He confirmed that it recognises the uncertain and volatile context, so is focussed on resilience to respond in an agile way and is alert to change, especially those that may impact how landlords operate. 

ARAC welcomed an offer from JM to provide further information on Internal Audit’s risk assessment exercise. It noted this normally informs audit planning discussions at the start of the year and draws from Audit Scotland work and Scottish Government’s risk register. 

ARAC thanked CN and noted the risk register. 

Action:

  • IM/CN/RH to update new SHR Board members on SHR’s approach to risk management.
  • CN to update the risk management strategy as per approved proposals.
  • JM to share Internal Audit’s risk assessment work.

Assurance Mapping

CN presented SHR’s Assurance map.  She highlighted that she had a useful meeting with JT to discuss approaches and reported how she used that, plus previous feedback from ARAC, to update the map. CN explained she has added in reference to risk seven and added a review deadline.  She explained that she is now seeking a steer from ARAC on how further development to inform the next version for consideration in June 2022. 

CN confirmed proposals include seeking assurance updates from Management Team ahead of ARAC and applying a line-by-line red/amber/green coding with a summary at the end of categories to make it easier to highlight issues. 

ARAC considered the proposals and discussed:

  • heading categories, noting one is required around first line controls;
  • the lines of defence approach used by some organisations, noting this can be bulkier and more resourceful to update, noting issues with SHR’s aim to make the map more accessible; and
  • the importance of the relationship between assurance mapping, best value and certificates of assurance.

ARAC noted the changes to SHR’s assurance map made by CN.  It also noted plans for developing assurance mapping and that it would consider these in June 2022.  

Action: CN to continue to develop SHR’s approach to assurance mapping for ARAC to consider in June 2022.

ARAC Terms of Reference

CN presented ARAC’s terms of reference, she reported that she had mapped these against the Scottish Government’s model, which SHR aligned to in 2020 and that she was not proposing any further changes.   ARAC considered the terms of reference and discussed:

  • future revisions, noting one is expected later in December, but Internal Audit expects any updates to be minimal. It asked JM to seek clarity on the updates when issued, so as to save the need for document comparison;
  • observers, noting that this is allowed for in the terms; and
  • ARAC membership, agreeing to discuss plans with SHR’s Chair.

ARAC approved the terms of reference.

Actions: SW to discuss ARAC membership plans with SHR’s Chair. 

Self-Assessment Review

CN presented ARAC’s self-assessment review, explaining that in line with best practice the review alternates between a survey and discussion questions, which is the approach ARAC agreed for 2021.  She also explained that the questions are drawn from the Audit Committee handbook.  ARAC considered these and discussed:

  • interaction with staff, noting Management Team representation at each meeting as well as some staff observers. It noted that its minutes are provided to SHR Board.  SW agreed to send an end of year update to all staff and thank them for the work, especially the recent Internal Audit report.  ARAC agreed that remote working made engagement more restrictive;
  • communication with auditors, agreeing this was going well and noting that the auditors also felt it was effective;
  • risk management, welcoming that Management Team takes account of feedback from ARAC and that it can see evidence of this in the register;
  • governance and fraud, agreeing its work on the risk register, assurance mapping and annual fraud reports, which are proportionate to SHR’s activities make its oversight effective;
  • meeting arrangements, membership, agenda and the Chair, agreeing the Chair is effective and is fully supported by members and noting the previously agreed action to discuss membership plans with SHR’s Chair;
  • its duties, agreeing that ARAC is fulfilling all of these and these are fully understood by members. It agreed that while ARAC has worked remotely it has continued to operate effectively throughout the pandemic and noted that no related issues had been raised by auditors; and
  • development, welcoming the information papers about the broader audit and risk environment supplied by auditors.

Action: SW to issue end of year message to SHR staff.

AOB

Agenda Planner: ARAC considered the agenda planner. It discussed:

  • timing of the accounts and noted that External Audit will discuss planning further with SHR, but that it is currently assuming that fieldwork will be remote and so June may be too early for it. ARAC noted the operational issues that this presents to the SHR team, given its other work plans and priorities; and
  • Best Value, noting this will be moved to June so ARAC can consider it alongside assurance mapping.

ARAC thanked all present and the wider staff team and the Chair wished everyone well for Christmas and 2022. 

Action: CN to update Agenda Planner.

DONM

1 March 2022.

Private Session

ARAC members held a private session with SHR’s Auditors.