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To provide the Board with the annual report on the Audit Committee’s activity in 2006-07
For the Board to review and comment on the report, and if content sign-off.
Margaret Devlin chaired the VOA Audit Committee until May 2006 and Dawn Johnson took over as Chair in June. The Committee met in May 2006, November 2006 and February 2007, in line with the Agency’s normal practice. No ad-hoc meetings were considered necessary or called. The following report provides a brief summary of the main areas and issues that were considered by the Committee during the financial year. Mike Pears joined the Committee in August 2006 as an independent risk expert, replacing John Bone, who stood down in February 2006.
3.2 The final report on 2005-06 was considered at the November 2006 meeting. All outstanding action points were being taken forward. It was agreed that the 2006-07 report would be presented to the Committee at its May 2007 meeting.
3.3 The Audit Plan for 2006-07 was agreed at the start of the year and updated at Ian Orpwood’s mid year meeting with the Accounting Officer. All 750 allocated ‘audit’ days were used in the year. The overall Audit opinion was that the Agency was managing its risks well.
3.4 The NAO took the audit of the Agency’s accounts back in-house after five years of contracting out to Deloitte.
3.5 The accounts were produced based on an 11 month hard-close and the Annual Report and Accounts were completed a month earlier than in previous years, in line with the target to achieve faster-closing. The accounts were unqualified and the NAO’s Management Letter contained four issues, none of which was declared as a Priority One issue. This followed the practice of continuous improvement on previous years in terms of the number and severity of Management Letter issues.
3.6 The code of good practice for corporate governance in central government departments was issued in 2005. As a result of this, the Agency produced a matrix of requirements and reviewed its compliance against that matrix. That was in turn reviewed by Internal Audit.
3.7 The Agency was largely compliant with the Code, but non-compliant in a number of areas. Steps were taken during the year to ensure that we achieved full compliance. This was completed successfully and resulted in a ‘Green’ Audit opinion when Internal Audit came back to review progress a year later.
3.8 The Agency’s risk register has been regularly reviewed and updated throughout the year. The Committee remains satisfied that this adequately reflects the significant risks that the Agency is exposed to and their likely impact, along with the risk management action that has been taken.
3.9 A new audit committee handbook was issued in 2006. As a result of this, the Committee revised and updated its Terms of Reference in February 2007.
3.10 It was agreed that the Committee would publish the reports on its meetings on the VOA’s website. The first report will be published this summer.
3.11 The Committee considered the Enterprise Resource Planning (ERP) programme and was satisfied that it was progressing in line with plan.
3.12 The Committee also noted that from 2008-09, the VOA, along with other central government organisations would adopt International Accounting Standards (IAS) for financial reporting purposes. This would involve a familiarisation programme and the need to produce IAS comparatives for 2007-08.
3.13 The Audit Committee remained satisfied with the Agency’s control, risk and governance positions in 2006-07.
Dawn Johnson
Audit Committee Chairman
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