ARAC minutes - 2 March 2021

Published

09 June 2021

Updated

09 June 2021

Present

Present:

 

Siobhan White (SW)

SHR Committee Chair

Bob Gill (BG)

SHR Committee member

Ewan Fraser (EF)

SHR Committee member (item 4 – 10)

 

In attendance:

 

Jim Montgomery (JM)

Senior Internal Audit Manager, Scottish Government

Mabel Hall (MH)

Internal Audit Manager, Scottish Government

Nicola Mackenzie (NM)

External Auditor, Azets

Michael Cameron (MC)

SHR, Chief Executive (Items 1-9)

Iain Muirhead (IM)

SHR, Director of Digital and Business Support (Items 1-9)

Clare Nicolson (CN)

SHR, Business Manager (Items 1-9)

Roisin Harris (RH)

SHR, Corporate Governance Manager (Items 1-9)

Sofia Kareli (SK)

SHR, Regulation Analyst (observer for items 1-9)

Chair's welcome

The Chair welcomed everyone present to the meeting, especially SK as a staff observer.  The Committee noted that Mike Dailly recently retired from SHR Board.  It noted that Mike was also a member of ARAC and the Committee agreed that it was very grateful for his input over many years.

Apologies

Apologies were submitted from Nick Bennett, Audit Partner, Azets.

Declarations of inerest

There were no declarations of interest.

Minutes of the previous meeting, matters arising and audit log

ARAC considered the draft minutes from its meeting on 8 December 2020 and approved these as an accurate record of the meeting subject to correction of a minor typo.

ARAC considered and noted the matters arising and audit action logs.

SW reported that Audit Scotland has confirmed that it consulted with key  stakeholders on the Code of Audit Practice and hopes to publish a refreshed Code in July 2021.

CN confirmed that Best Value is now scheduled for June 2021 subject to wider operational planning priorities.

SW reported that there have been no forums for Chairs of audit committees during lockdown and that she will pick up this action when restrictions ease. 

MC reported that workforce planning will be integrated with how SHR sets itself to work through recovery and in the future.  The Committee noted the related External Audit recommendation and that this will be reviewed during the audit. 

 

Internal Audit

MH presented a progress update. She reported that work on complaints has been completed and the report was circulated by correspondence with a substantial audit opinion.   MH confirmed that she has made good progress with other audit work and an exit meeting on the statutory manager recruitment is planned for 3 March 2021, so a draft report will be ready for circulation prior to the June ARAC meeting. 

MH reported that discussions have taken place with ARAC and the staff team around the 2021/22 audit plan focusing on:

  • transition to working effectively during the pandemic including corporate decision making and staff wellbeing in the first half of the year; and
  • regulatory response to Covid-19.

ARAC considered the update and discussed:

  • potential to do advisory work as SHR transitions to exit lockdown, noting feedback from staff at a recent all staff event that BG attended;
  • the scope of internal audit work with Scottish Government this year, noting that JM will provide further information on themes and that there is an ongoing programme of corporate transformation, which will impact many of the systems used by SHR;
  • external audit plans to consider counter-fraud in the context of remote working; and
  • cyber security, noting SHR has achieved Cyber Essentials Plus and that lessons learned from other client work will be shared by Internal Audit via the quarterly updates.

JM confirmed that Internal Audit will be considering recovery strategies in other public bodies and finalising themes for Scottish Government core towards the end of March 2021. 

MH & JM reported that MH is leaving Internal Audit on a secondment and Julie Taylor will take over as SHR’s Audit Manager from 1 April 2021. JM confirmed that handover arrangements are in place and he will remain as SHR’s Senior Internal Audit Manager.   MH thanked ARAC and the staff team for their support while working with SHR.  ARAC also wished her well for the secondment. 

ARAC thanked JM and MH and noted the update and agreed the internal audit plan.  It asked MH to reflect that consultation was with the whole Committee and not just the Chair. 

Actions

  • MH to amend the audit plan to reflect consultation with ARAC.
  • JM to confirm themes of internal audit with Scottish Government.

External Audit

NM presented the External Audit plan for 2020/21.  She highlighted changes that reflect the impact of the pandemic on audit work including continued remote working and plans to again use electronic signatures on annual reports and accounts. 

NM set out the key risks considered and the impact of Covid-19 on financial statements in relation to changes in accounting standards, explaining that these are not expected to have a major impact on SHR. 

NM also set out the wider audit scope considerations and plans to focus on the appropriateness of the disclosures in the governance statement and financial sustainability in terms of SHR’s workforce strategy. 

NH reported that she will update ARAC on progress during the year and on the audit outcome in September. She explained this is similar to last year and is likely to become the standard timeframe for SHR.  NH also highlighted the audit fee as determined by Audit Scotland. 

ARAC considered the update and discussed:

  • financial sustainability highlighted the recent budget settlement;
  • timing of work with SHR staff, noting discussions are ongoing; and
  • recent Audit Scotland publications, noting these are around asset valuation and grant funding so not applicable to SHR.

ARAC thanked NM and noted the plan.

Risk Management

CN presented SHR’s risk register to the Committee.  She confirmed that the register was last considered by SHR’s Management Team on 9 February 2021 and SHR Board on 23 February 2021.   

ARAC considered the register and discussed the impact of recruitment on Risk R7 It noted that the Management Team had discussed how the budget allows SHR to consider this risk differently, but for now work pressures continue and recruitment will take a little time to work through.  It also noted that SHR has to be mindful of emerging risks to the sector that could require a regulatory response and impact on workloads. MC confirmed that the expectation is for the risk profile to change and the scores to trend down over time and agreed to follow this up with Management Team. 

ARAC noted the risk register. 

Action: MT to consider ARAC’s discussion on risk R7 when it next reviews the risk register. 

AOB - Agenda Planner

ARAC considered the agenda planner. It noted that best value is now scheduled for June subject to operational planning and business priorities .  

DONM

8 June 2021

Private meeting

ARAC held a private meeting with the Internal and External Auditors.