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AUDIT COMMITTEE REPORT
To report to the Board on the Audit Committee meeting held on 27 September 2007.
For information only. No action required.
3.1 Following an action point from the previous meeting, Barny Todd provided a RAG status report on the Agency’s end year position. This showed a Green status for the last two financial years and forecast values with corresponding RAG status for the focal year.
3.2 Steven Ardron introduced the NAO’s Audit Completion Memorandum on the 2006-07 Accounts. This was seen as a forward looking document as much as a backward one. The need to work closely with HMRC on consolidation issues and the production of quarterly accounts, including Quarter One were discussed. It was agreed that the latter would be re-visited in February.
3.3 Steven presented the NAO’s Report to Management. This focused on system related issues. It was noted that whilst the financial audit looked at use of the accounting systems, audit work was also required to ensure the security and integrity of systems across the business. This was a key responsibility of the CIO and the NAO had already had constructive dialogue with Ian Milliken.
3.4 Steven introduced the outline plan for 2007-08. The audit had been contracted out to PwC for financial audit work and KPMG for systems audit work. This was in line with the Public Accounts Commission’s requirements for the NAO to contract out more audits. A collaborative approach would be adopted with an NAO auditor being seconded to the PwC team. This would avoid the pinch points that had happened historically with contracted out audits, where there needed to be an additional layer of NAO review.
3.5 Steven provided the NAO’s product list for external reporting to the Audit Committee. It was agreed that NAO would liaise with Internal Audit to achieve a co-ordinated approach to reports and timetables to avoid the possibility of duplication.
3.6 Steven presented the IT audit plan. This had already been discussed with Ian Milliken and covered the application and cross cutting audits that would be undertaken by a combination of the NAO and KPMG over the next two years. Work on the ERP migration controls had already commenced. The Committee thought that it would be beneficial to ask Ian to attend the November meeting.
3.7 Jayne Ripley provided an update on progress against the 2007-08 Internal Audit Plan. Some audits had been completed and a number were due for completion shortly.
3.8 Jayne provided an update on revisions to the audit plan following the regular mid-year meeting between Internal Audit and Andrew Hudson. Some additional audits had been agreed and others had been deferred as a result of these discussions. As a result of the timing of reports, there would be a higher loading in the fourth quarter, but Jayne was confident that this could be managed. It was agreed that IA would add Work-in-Progress to their 2007-08 audit programme to provide more real-time information on the degree of completion of individual reviews.
3.9 Barny Todd expanded on the timetable for production of the 2007-08 accounts. This had been prepared in collaboration with HMRC and the NAO and would involve moving from an eleven month hard close to a nine month hard close. Barny had discussed it with Margaret George shortly before the Committee meeting and Margaret was confident that PwC would be able to support the timetable.
3.10 Barny provided an update on accounting policies. There was some concern around the requirements for Modified Historic Cost Accounting (MHCA) on fixed assets and this needed to be bottomed out in discussion with the NAO. Work was also being done on preparing for International Financial Reporting Standards (IFRS) which would be introduced from 1 April 2008, in line with the Government wide move to international accounting standards, and would require comparatives to be produced for 2007-08.
3.11 Sue Townsend provided an update on the VOA’s Strategic Risk Register. One risk had dropped off the register, whilst one had increased in probability and a new risk had been added. Internal Audit have just completed a review of risk management within the Agency and would report shortly. It was agreed that tracked changes should be added to the Risk Register and that the content of the register would be reviewed taking into account the finding of the audit report. The Committee would consider the updated risk register in detail at the November meeting.
3.12 The merger with TRS and the need to share the experiences of other Departments was also discussed. Mike Pears and Nigel Williams offered to provide documentation learning from previous experiences in OGDs to assist Andrew Hudson and the senior VOA team in bringing TRS on-board.
3.13 There was no further business. It was confirmed that the next Audit Committee meeting would be held at 14.00 on 29 November 2007.
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