ARAC minutes - 8 September 2020

Published

09 December 2020

Updated

09 December 2020

Present

Present:  
Siobhan White (SW) SHR Committee Chair (items 1-13)
Bob Gill (BG) SHR Commitee member (items 1-13)
Ewan Fraser (EF) SHR Committee member (items 1-13)
In attendance:  
Jim Montgomery (JM)

Senior Internal Audit Manager, Scottish Government (items 1 – 13)

Mabel Hall (MH)

Internal Audit Manager, Scottish Government (items 1 – 13)

Nicola Mackenzie (NM)

External Auditor, Azets (items 1 – 13)

Michael Cameron (MC)

SHR, Chief Executive (Items 1-12)

Iain Muirhead (IM)

SHR, Director of Digital and Business Support(Items 1-12)

Clare Nicolson (CN)

SHR, Business Manager (Items 1-12)

Roisin Harris (RH)

SHR, Corporate Governance Manager(Items 1-12)

Chair's welcome

The Chair welcomed everyone present to the meeting.

Apologies

Apologies were submitted from Mike Dailly, SHR Committee member and Nick Bennett, Audit Partner, Azets. 

Declarations 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 23 June 2020.  It noted an update from JM: since June 14 public bodies received reasonable assurance and only 1 received a limited assurance rating.  ARAC agreed to update the draft minutes to reflect the up-to-date figures.   

ARAC approved the minutes subject to the agreed amendments.

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

SW has confirmed the current code of audit practice will apply this year and Audit Scotland will engage with stakeholders around a revised code which it is aiming to publish in 2021. 

Internal Audit

MH presented a progress update, she highlighted the advisory work on statutory interventions is completed and that planning for work on complaints has started. MH explained that following a review, Internal Audit policy is now to only follow up on medium and high level audit recommendations at the point of the last recommendation due date.

MH also highlighted Audit Scotland’s overview of Internal Audit.  She reported it found that improvements to the standard of audit work were maintained in 2019/20.  MH explained that alongside some areas for improvement identified there were also positives such as the appointment of an external co-source partner that provides access to expertise and training.

MH presented the advisory work on statutory intervention.  She highlighted that she found effective operation of delegated authorities and that decisions are made by staff with a wealth of appropriate experience.  MH explained two recommendations for SHR to consider, with the aim of enhancing performance reporting and the process for appointing of members to appeal panels. 

The Committee considered the recommendations around statutory interventions, noting these are advisory, and discussed:

  • the process for appointing to appeal panels, noting a rotational basis would be challenging for SHR due to the small number of Board members, the importance of utilising areas of expertise and ability to effectively manage potential conflicts;
  • if SHR Board needs to provide more of a framework for officials around value for money and proportionality when considering the use of statutory powers;
  • the importance of costs saved through intervention over time, noting these cannot easily be compared with the monetary costs associated with an intervention and that there are also potential costs if a required intervention does not proceed; and
  • that the size of an organisation does not always change the work needed during an intervention and the costs that can be associated with this work.

The Committee noted that SHR Board is considering the advisory work further at the Board meeting on 15 September 2020. 

JM highlighted that the Director of Internal Audit has contacted SHR to explain how resources have been allocated in response the pandemic, but that any impact on SHR’s audit programme is expected to be minimal. 

ARAC thanked MH and JM and noted the updates.

Risk Management

CN presented SHR’s risk register to the Committee.  She highlighted that the register was last considered by the Board on 25 August and by Management Team on 4 August 2020.  CN also highlighted that SHR has received certificates of assurance from Scottish Government around areas of shared services.  CN explained changes to the register since the last ARAC meeting in June 2020. 

JM and MC confirmed arrangements for providing certificates of assurance to MC as Accountable Officer from within SHR and from the Scottish Government departments that provide SHR with services. 

IM updated ARAC on Scottish Government work around investment in corporate systems and forthcoming meetings.  JM confirmed the need for investment was covered under Internal Audit’s overall ‘reasonable’ opinion provided on Scottish Government’s corporate systems, and noted that other public bodies had escalated related concerns through the Scottish Government’s Director of Internal Audit. 

NM reported that Audit Scotland also provides an opinion on Scottish Government controls, which has been delayed this year, but is normally reported around June. 

ARAC considered the Covid-19 Internal Control and Risk assessment checklist provided by Internal Audit.  It noted this follows on from similar checklists guidance for audit and risk committees from Whitehall and Audit Scotland.  ARAC noted the extensive range of available material that SHR could draw on to report how it has responded to the pandemic and that this would be primarily be reported via the 2020/21 annual report & accounts and to the Local Government and Communities Committee.  It noted the checklists include elements that are not relevant to SHR. 

ARAC noted the update on risk management. 

External Audit - Draft annual audit report & SHR Annual Report & Accounts

NM presented the 2019/20 Annual Audit Report to ARAC.  She reported an unqualified opinion and that there are no matters to report by exception.

NM noted one adjustment relating to depreciation which is reportable but not material. She also highlighted that the team was unable to review six invoices because they are in SHR’s offices. These are not material.

NM highlighted the challenges around SHR’s budget, with a projected deficit for 2020/21. She reported that uncertainty is being experienced throughout the public sector and will be an area of audit focus in 2020/21

NM explained that Scott Moncrieff became part of Azets on 8 September 2020 and that all references should be amended in SHR’s annual report to reflect this. 

ARAC thanked NM and her colleagues for their work on the audit and noted the report. 

CN presented SHR’s draft annual report and accounts for 2019/20.   The Committee considered these and discussed:

  • SHR’s projected budget deficit position for 2020/21,
  • the challenges of the 2019/20 audit, including the absence of SHR’s Finance Officer and that the audit took place virtually due to the pandemic, thanking all involved;
  • the completion of the audit, noting recent progress, and
  • website accessibility regulations, noting work to prepare a web version of the report and accounts.

ARAC thanked all involved the preparation of the annual report and accounts and agreed it would recommend that these are signed by MC as accountable officer at the SHR Board meeting on 6 October 2020. 

Actions:

  • CN to updated the annual report and accounts to reflect the name change from Scott Moncrieff to Azets.
  • SW to recommend that the account report and accounts are signed by the accountable officer at the SHR Board meeting on 6 October 2020.  

2019/20 Statement of Assurance from ARAC to SHR Board and Accountable Officer

CN presented a draft statement of assurance for 2019/20 from ARAC to SHR Board and Accountable Officer.  CN confirmed that report covers ARAC work up to its meeting in March, so prior to the Pandemic which will be more of a feature when reporting on 2020/21 work. 

ARAC approved the statement and agreed SW should present this to SHR’s Board and Accountable Officer on 6 October 2020. 

 Action: SW to present the 2019/20 Statement of Assurance from ARAC to SHR Board & Accountable Officer at the SHR Board meeting on 6 October 2020. 

Annual report on Fraud, Security & Whistleblowing

CN presented a report to the Committee on any incidents of fraud, security breaches and whistleblowing during 2019/20.  She highlighted that there are no fraud cases, information or security breaches or whistleblowing reports in 2019/20.  IM confirmed arrangements for the shared Data Protection Officer with Transport Scotland continue to work very well. 

The Committee noted the report.

Approach to ARAC Self-Assessment

SW set out the mixed approach to self-assessment taken by ARAC that alternates between a survey and a discussion.  ARAC agreed it was content to continue this approach, noting the survey can be carried out online. It agreed to cover all the questions presented in the Committee paper and that it would complete the survey during October for discussion at the December ARAC. 

ARAC agreed that, as requested, Internal and External Auditors would not participate in the self-assessment exercise. 

Action: CN to issue self-assessment survey to ARAC members.

AOB - Agenda Planner

ARAC considered the agenda planner. It noted that CN is working towards providing a Best Value update to it in December, but the timescales for this could change if she is diverted to pandemic-related recovery work. 

MH reported that she intends to report on the review of complaints to ARAC in December 2020. 

Action: CN to update the agenda planner.

DONM

Date of next meeting - 8 December 2020

Private meeting

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