Audit Committee

Terms of Reference

MEMBERSHIP

The Committee shall comprise 5 members (who may or may not be members of the Corporation), including Staff Governors.  Membership should include at least one person, Governor or co-optee (up to a maximum of two co-optees), with the relevant financial/audit experience.

The Principal and other Senior Postholders may not be members of the Committee but other members of staff may sit on the Committee as Staff Governors, provided they do not have significant executive, management, financial or budgetary responsibilities.

In order to maximise the Committee’s independence and objectivity, the following people shall not be eligible to sit on the Committee:

  • those with executive responsibilities at senior level;
  • members of the College Finance Committee or equivalent;
  • the Chair of the Corporation; and
  • Governors who have significant interests in the College.

Membership of the Committee will be in line with the rules governing membership of the Board and will be reviewed annually.

EXTENT OF POWERS OF THE COMMITTEE

This Committee operates in an advisory capacity.  A report on discussions is presented by the Chair of the Committee to the full Board and any recommendations made by the Committee can only be implemented following full Board approval.

APPOINTMENT OF CHAIR

The Chair of the Committee will be selected by the Committee from amongst its members.  However, a Co-opted external member should not be appointed as Chair of Audit.

FREQUENCY OF MEETINGS

The Committee will meet at least termly.  The Internal Auditor or Financial Statements Auditor may request a meeting of the Committee if they consider that one is necessary and the Committee will endeavour to comply with such requests.  In any event, the Committee must consider a minimum number of items of business each year for it to be able to function effectively, and those items of business are currently set out in the annual Cycle of Meetings.

QUORUM

The quorum for the meetings of the Committee shall be at least 3 voting members, the majority of whom must not be members of staff or co-optees.

The Committee shall be entitled, whenever it is satisfied that it is appropriate to do so, to go into confidential session and (subject to the rules as to quoracy set out above) to exclude any, or all, participants and observers, except the Clerk to the Committee. 

The Committee shall be granted rights of access to obtain all the information it considers necessary from members of the staff and Governors of the Corporation, and to consult the Internal Audit Service (IAS), Financial Statements Auditor and Funding Auditors (where appointed), directly.

ATTENDANCE AT MEETINGS

The Internal Auditor shall be entitled to attend and speak at all meetings of the Committee (but not to vote) as shall the Financial Statements Auditor where business relevant to them is being discussed.  Senior Management should also be invited to attend meetings of the Committee, particularly where their area of responsibility is under discussion, and shall be entitled to attend and speak at such meetings, but not to vote.

The Committee may invite the Corporation’s advisers or other third parties to attend meetings of the Committee as appropriate (such persons shall not have a vote but shall be entitled to speak at the meeting).

DUTIES

The Committee will:

1. Advise the Governing Body on the adequacy and effectiveness of the Corporation’s systems of internal control and its arrangements for risk management, control and governance processes and securing economy, efficiency and effectiveness (value for money).

2. Advise the Governing Body on the appointment, reappointment, dismissal and remuneration of the Financial Statements Auditor and the IAS.

3. Advise the Governing Body on the scope and objectives of the work of the IAS, the Financial Statements Auditor - and the Funding Auditor (where appointed).

4. Ensure effective co-ordination between the IAS, Financial Statements Auditor and Funding Auditor (where appointed) including whether the latter should be relied upon by Internal Auditors.

5. Consider and advise the Governing Body on the audit strategy and annual Internal Audit plans for the IAS.

6. Advise the Governing Body on Internal Audit assignment reports and annual reports and on control issues included in the management letter of the Financial Statements Auditor and Funding Auditor (where appointed) and management’s responses to these.

7. Monitor, within an agreed timescale, the implementation of agreed recommendations relating to internal audit assignment reports, Internal Audit annual reports and the Financial Statements Auditor’s management letter.

8. Consider and advise the Governing Body on relevant reports by the NAO, the SFA, EFA or their successors, other funding bodies and, where appropriate, management’s response to these.

9. Establish, in conjunction with College 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.

10. Produce an Annual Report for the Governing Body and Accounting Officer, which should include the Committee’s advice on the effectiveness of the College’s risk management, control and governance processes, and any significant matters arising from the work of the IAS, Financial Statements Auditor and Funding Auditor (where appointed).

11. Ensure that all allegations of fraud and irregularity are properly followed up.

12. Approve and review the Fraud and Corruption Policy.

13. Monitor the strategic risk areas remitted by the Governing Body to the Committee and advise the Governing Body as appropriate.

14. Monitor and approve the College Regularity Audit self-assessment questionnaire.

15. Be informed of all additional services undertaken by the IAS, Financial Statements Auditor and Funding Auditor (where appointed), including the Regularity Audit.

REVIEW OF TERMS OF REFERENCE

The Terms of Reference for this Committee shall be reviewed every 4 years at the first meeting of the academic year, or at the first opportunity following the introduction of new or amended legislation.