Audit and Risk Committee

Purpose

The Board of Governors has established an Audit and Risk Committee in line with the Board of Governors’ Regulations (paragraph 48) and the requirements of the Office for Students (OfS). These terms of reference are in line with the CUC Higher Education Audit Committees Code of Practice.

It is the role of the Audit Committee to advise and assist the governing body in respect of the entire assurance and control environment of the University. Specifically, its role is to:

• a) review and recommend to the governing body for approval the annual consolidated financial statements of the institution, including consideration of the external auditors’ management letter and management responses to it;
• b) seek appropriate assurances in order that it can advise the governing body on the effectiveness of the HE provider’s arrangements for governance and internal control;
• c) receive and consider the annual Head of Internal Audit report
• d) undertake duties assigned to it under the terms of reference below.

Terms of reference

1. To advise the Board of Governors on the adoption of an appropriate Standing Orders for the Committee;

2. To advise the Board of Governors on the appointment of the external auditors, the audit fee, the provision of any non-audit services by the external auditors and any questions of resignation or dismissal;

3. To discuss with the external auditor, before the audit begins, the nature and scope of the audit;

4. To discuss with the external auditors problems and reservations arising from the interim and final audits, including a review of the management letter incorporating management responses, and any other matters the external auditors may wish to discuss (in the absence of management where necessary) approving and monitoring the resultant management action plans;

5. To consider and advise the Board of Governors on the appointment and terms of engagement of the internal audit service (and the head of internal audit if applicable), the audit fee, the provision of any non-audit services by the internal auditors and any questions of resignation or dismissal of the internal auditors;

6. To approve the internal auditors’ audit risk assessment, strategy and internal audit plan; consider major findings of internal audit investigations and management response. The Committee will ensure that the resources made available for internal audit are enough to meet the institution’s needs (or make a recommendation to the governing body as appropriate);

7. To promote co-ordination between the internal and external auditors;

8. To keep under review the effectiveness of the University’s risk management, culture, control and governance arrangements, and review the external auditors’ management letter, the internal auditors’ annual report, and management responses;

9. To monitor the implementation of agreed audit-based recommendations, from whatever source;

10. To ensure that all significant losses have been thoroughly and properly investigated and that the internal and external auditors, and where appropriate the OfS accounting officer, have been informed;

11. To oversee the University’s policy on fraud and irregularity and to receive immediate notification of action taken under the policy and ensure that such action is appropriate and timely;

12. To satisfy itself that satisfactory arrangements are in place to ensure the sustainability of the institution and to promote economy, efficiency and effectiveness, value for money for students and the tax payer. This may also include consideration of arrangements that:

• a. support the culture and behaviour that is prevalent within the institution;
• b. ensure the effective management of conflicts of interest; and
• c. enable the appointment of ‘fit and proper persons’ to the governing body and senior executive positions.

13. To satisfy itself that effective arrangements are in place to ensure appropriate and accurate data returns are made to external stakeholders and regulatory bodies.

14. To receive any relevant reports from the National Audit Office, OfS and other organisations;

15. To monitor annually the performance and effectiveness of the external and internal auditors, including any matters affecting their objectivity, and to make recommendations to the Board of Governors concerning their reappointment, where appropriate;

16. To monitor other relevant sources of assurance, for example other external reviews;

17. To consider elements of the annual financial statements in the presence of the external auditors, including the auditors’ formal opinion, the statement of members’ responsibilities and the statement of internal control, in accordance with OfS’s Accounts Directions;

18. In the event of the merger or dissolution of the University, to ensure that the necessary actions are completed, including arranging for a final set of financial statement to be completed and signed;

19. To advise the Board of Governors of any significant problems or reservations arising from the reports of the Internal Auditor, External Auditor, OfS or the national Audit Office, or any other matters which the Committee feel ought to be brought to the attention of the Board;

20. To receive reports of all disclosures under the Public Interest Disclosure Policy or Fraud or material irregularity and of any subsequent actions;

21. To review reports on quality assurance process and outcomes to inform Governors’ assurances on quality and standards as part of the University’s OfS Registration;

22. To review periodic reports on the implementation of the Competition and Markets Authority Guidance to ensure that this is in line with the University’s OfS Registration;

23. To keep under review the University’s compliance with legislation in relation to Data Protection, Health and Safety and the Prevent Duty.

24. To oversee the implementation of the University’s Code of Ethics.

Reporting requirements

The minutes (or a report) of meetings of the Audit Committee will be circulated to all members of the governing body.

The Committee will prepare an annual report to the Board of Governors and the Vice Chancellor covering the University’s financial year, summarising the activity for the year and any significant issues up to the date of preparing the report, and giving the Committee’s opinion, based on the information presented to it, on the adequacy and effectiveness of the University’s arrangements for the following:

• i) risk management, control and governance (the risk management element includes the accuracy of the statement of internal control included with the annual statement of accounts);
• ii) sustainability, economy, efficiency and effectiveness.

The Committee will review the audit aspects of the draft annual accounts and will advise the Board of Governors on:

• i) the external audit opinion;
• ii) the statement of members’ responsibilities;
• iii) the statement on Corporate Governance;
• iv) the statement of internal control systems; and
• v) any relevant issues raised in the external auditors’ management letter.

Direct authority The Board of Governors has authorised the Audit and Risk Committee to:

• i) investigate any activity within its terms of reference;
• ii) seek any information it requires from any employee, and all employees are directed to co-operate with any request made by the Committee; and
• iii) obtain outside legal or other independent professional advice and to secure attendance of non-members with relevant experience and expertise if it considers this necessary normally in consultation with the Vice Chancellor and the Chair of the Board. The Committee may not, however, incur direct expenditure in this respect in excess of £25,000 without prior approval of the Board of Governors.

Composition and membership

All members of the Audit Committee and its Chair shall be appointed by the governing body, from among its own members, and must consist of members with no executive responsibility for the management of the institution.

There shall be no fewer than three members. The Chair of the governing body and Chair of the Finance Committee should not be members of the Audit Committee. Members should not have significant interests in the institution. At least one member should have recent relevant experience in finance, accounting or auditing.

The Committee may, if it considers it necessary or desirable, co-opt members with relevant expertise.

Composition members

• At least three Governors
  • Mr Steve Fowler (Chair)
  • Ms Kim Ansell
  • Vacant
• At least one but not more than two co-opted members
  • Ms Nicola Arnold
  • Ms Jo Croft

A Deputy Chair will be appointed from one of the Governors who will chair the meetings in the Chair’s absence.

Quorum

Quorum is two members and must include one Governor.

Attendance at meetings

The Vice-Chancellor is expected to attend at least annually and may attend more frequently. The Chief Financial Officer and University Secretary are usually expected to be in attendance at each meeting. Other officers may be required to attend when appropriate.

The head of internal audit and a representative of the external auditors shall normally attend meetings where business relevant to them is to be discussed.

The Committee has the right, whenever it is satisfied that this is appropriate, to go into confidential session and exclude any or all other participants and observers other than the Audit Committee Secretary.

Frequency of meetings

Meetings shall normally be held four times each financial year.

The external auditors or head of internal audit may request additional meetings if they consider it necessary.

At least once a year the Committee will meet with the external and internal auditors without any other officers present.

Clerking arrangements

The clerk to the Audit and Risk Committee will be the Secretary to the Board of Governors.

Review

The Audit Committee should periodically (and at a minimum of every four years) undertake a review of its terms of reference and its own effectiveness and recommend any necessary changes to the governing body.