Key aspects of the Audit Committee:
The Committee shall consist of 4 members of the Board, and up to 2 co-opted members who have appropriate expertise. In accordance with the Audit Code of Practice membership of the Committee shall not include:
- Any members of the Finance and Resources Committee
- The Chair of the Board
The Chair must be a member of the Board.
The internal auditor will be invited to attend and speak at all meetings of the Committee and the financial statements auditor will be invited when business relevant to them is being discussed. They will be expected to attend only for the items that are relevant to them.
The Group Director (Commercial Strategy, Finance and Operations) and the Group Director (Planning and Performance) will be in attendance. Other staff may be invited to be in attendance for specific agenda items, with the purpose of answering questions from committee members if it is deemed appropriate.
The Director of Governance shall be in attendance and be responsible for:
- advising the committee on matters in relation to the Instruments and Articles of Government and other associated regulations;
- taking or overseeing the taking of minutes of the meetings.
Whilst the responsibility of overseeing the membership of the Group’s committee structure rests with the Chairs’ Group, this committee, in line with the Audit Code of Practice reserves the right to maintain its independence in recommending the appointment of committee members in line with the needs of carrying its responsibilities as specified within these terms of reference. In order to ensure that committee members have recent, relevant experience in risk management, finance and audit and assurance the committee will review its membership at least annually to ensure that members have an appropriate mix of skills and experience to enable the committee to discharge its duties effectively.
The Committee shall normally meet three times per year.
The quorum for meetings of the committee shall be 40% of the membership. At least two members of the Board must be present.
The Committee will meet privately without executive members present with both the external and internal auditors at least once per annum.
3. Access to Meetings
The public shall not be admitted to the meetings.
4. The Role of the Committee
The committee has the right to investigate any activity as detailed within its terms of reference and has the right to access all information and explanations it considers necessary, from whatever source, to fulfil its role.
The role of the committee is as follows:
Internal Control and risk management
- to advise the governing body on the adequacy and effectiveness of the Group’s systems of internal control and its arrangements for risk management, control and governance processes, and securing economy, efficiency and effectiveness (value for money);
- to review the statements in relation to internal control in the financial statements and recommend their approval by the governing body;
- to review procedures for the prevention and detection of fraud, corruption and irregularity, receive reports in accordance with the Group’s policies and ensure that all allegations of fraud and irregularity are properly followed up. In line with this responsibility the committee must ensure:
- the proper, proportionate and independent investigation of all allegations and instances of fraud and irregularity;
- that investigation outcomes are reported to the committee;
- that the external auditor (and internal auditor if applicable) has been informed, and that appropriate follow-up action has been planned and/or actioned;
- that all significant cases of fraud or suspected fraud or irregularity are reported to the appropriate funding body;
- to oversee the arrangements for the management and quality assurance of data to ensure their effectiveness and to include a statement within its annual report to the Corporation on the quality of data.
- to advise the governing body on the appointment, reappointment, dismissal and remuneration of the financial statements auditor and the internal audit service (IAS);
- to advise the governing body on the scope and objectives of the work of the IAS, and the financial statements auditor and any other auditors that may be appointed for special purposes;
- to monitor arrangements for coordination between the IAS, special purpose auditors (if appointed) and the financial statements auditor including in particular whether the work of the funding auditor should be relied upon for internal audit purposes;
- to consider and advise the governing body on the audit strategy and annual internal audit plans for the IAS;
- to advise the governing body on internal audit assignment reports and annual reports and on control issues included in the management letters of the financial statements auditor and any special purpose auditors (if appointed), and management’s responses to these;
- to monitor, within an agreed timescale, the implementation of agreed recommendations relating to internal audit assignment reports, internal audit annual reports, any special purpose auditor (including the funding auditor) management letter and spot-check reports) and the financial statements auditor’s management letter;
- to consider and advise the governing body on relevant reports by the National Audit Office, the Skills Funding Agency, the Education Funding Agency and other funding bodies, and where appropriate management’s response to these;
- to establish, in conjunction with the Group’s management, relevant annual performance measures and indicators, and to monitor the effectiveness of the IAS and financial statements auditor through these measures and indicators and decide, based on this review, whether a competition for price and quality of the audit service is appropriate;
- to establish with management appropriate performance measures for the Group in relation to audit matters and internal control and to produce an annual report for the Board and accounting officer, which should include the committee’s advice on the effectiveness of the Group’s risk management, control and governance processes, and any significant matters arising from the work of the IAS, any special purpose auditors (if appointed) and the financial statements auditor;
- to be informed of all additional services undertaken by the IAS, the financial statements auditors and any other auditors (if appointed). Details of any additional work must be included in the committee’s annual report to the Board.
- to discuss with management and the external auditors the accounting policies and any material judgements made in relation to the annual financial statements, including comparisons in relation to commonly accepted practice;
- to review the annual financial statements and letters of representation and recommend to the Board their approval.
- to oversee the Group’s Financial Regulations and to approve changes as recommended by the Executive;
- to review the whistleblowing policy, every three years and monitor the reporting of any matters arising under the policy;
- to review the Group’s Health and Safety Policy and to oversee the Group’s effectiveness in meeting the requirements of its Health and Safety Policy on an annual basis;
- to review with management the Group’s insurance arrangements and any significant claims or judgements;
- The Committee will regularly review its own terms of reference and effectiveness as part of its annual self-assessment review.