Terms of Reference - updated June 2013
1.1 The Committee shall comprise seven members (some of whom may be members of the Governing Executive). This must include a co-opted external member with relevant financial and recent audit expertise (who should not normally be appointed as the Committee’s Chair).
1.2 Anyone appointed to advise the Committee shall be entitled to attend and speak at all meetings of the Committee (but not to vote) as shall the financial statements auditor and funding auditor where business relevant to them is being discussed. Senior management should also be invited to attend meetings of the Committee, particularly where their areas of responsibility are under discussion, and shall be entitled to attend and speak at such meetings but not to vote. The Principal will not normally attend meetings but may be asked to be present.
1.3 The Principal, the chair of General Executive and other senior post holders may not be members of the Committee but other members of staff may sit on the Committee provided they do not have significant executive, management, financial or budgetary responsibilities.
1.4 The Governing Executive will appoint the members of the Audit Committee, following advice from the Search Committee.
1.5 In order to maximise the Committee’s independence and objectivity, the following people shall not be eligible to sit on the Committee:
1.5.1 Those with executive responsibilities at senior level
1.5.2 Members of the college finance committee or equivalent;
1.5.3 The Chair of the Governing Executive and
1.5.4 Governors who have significant interests in the college.
1.6 The Chair of the Committee will be appointed annually at the first meeting of the autumn term by and from among the Committee. The initial appointment will be for a minimum of two years. In the absence of the Chair at any meeting, those members present may choose a Chair for that meeting from their own.
1.7 There are no limits on the terms of office for Committee members as decided by the Governing Executive of Ruskin College.
1.8 The quorum for meetings of the Committee shall be three. In the event of a shortfall in this number, the Committee may meet but it is unable to make or ratify decisions, although it may make recommendations to a future meeting of the Committee.
1.9 Special meetings of the Committee must be convened at the request of any two members or on the receipt of a request from the financial statements auditor, such requests are to be to the Chair and Clerk.
1.10 The Clerk to the Committee will normally be the Clerk to the Governors.
1.11 The Committee will meet at least three times per year. The funding auditor and the financial statements auditor may separately request a meeting of the committee if they consider that one is necessary and the Committee will endeavour to comply with such a request. 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 Joint Audit Code of Practice;
1.12 The Committee is to make sure that all its members receive appropriate training the better to be able to carry out their functions on the Committee. The cost of such training is to be borne by the College.
1.13 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.
1.14 The Committee shall be granted rights of access to obtain all the information it considers necessary from members of the staff and governors and to consult the internal audit service (IAS), financial statements auditor and funding auditor directly.
1.15 The agenda and all supporting papers must be circulated in time for receipt by members at least six working days before the scheduled meeting. Members should be invited at least two weeks before a meeting to add items to the draft agenda.
2. Terms of Reference
2.1 To advise the governing body on the comprehensiveness and effectiveness of the College’s assurance framework, its systems of internal control and its arrangements for risk management, control and governance processes, and securing economy, efficiency and effectiveness;
2.2 To receive reports on the regularity and propriety of transactions proposed or effected;
2.3 To advise the governing body on the appointment, reappointment, dismissal and remuneration of the financial statements auditor and any other advisers that the Committee chooses to appoint or that the Governing Executive decrees shall be appointed with a requirement that the advisers report to the Audit Committee.
2.4 To agree the auditor’s Letter of Engagement and confirm that it is in accordance with ISA 210 and to ensure that it includes the mandatory paragraphs appearing in Annex A of the JACOP and to confirm that the financial statements auditor does not enjoy a limitation on its liability in respect of their True and Fair opinion on the financial statements. Where a limitation is proposed to be applied to any other assignment then the Committee will ensure any limitation of liability is commensurate to the funds at risk
2.5 To make known to the Governing Executive the method(s) used to appoint advisers and to explain how independence and objectivity have been safeguarded;
2.6 To establish that all assurance providers adhere to relevant professional standards;
2.7 To ensure that, in general, the financial statements auditor is not also appointed to provide assurance on the internal audit function;
2.8 To advise the governing body on the scope and objectives of the work of the financial statements auditor and the funding auditor and of any persons or bodies appointed to carry out an internal audit function, in its widest interpretation;
2.9 To ensure effective co-ordination between advisers appointed by the Committee, the funding auditor and the financial statements auditor including whether the work of the funding auditor should be relied upon as advice on the systems of internal control;
2.10 To consider and advise the governing body on the audit strategy and plans to ensure that the College is ever mindful of the need to secure efficiency, effectiveness and economy in its long, medium and short term strategy ;
2.11 To advise the governing body on reports from those charged with ascertaining the internal audit function reporting on control issues included in the management letters of the financial statements auditor and the funding auditor, and management’s responses to these;
2.12 To investigate any activity within its terms of reference;
2.13 To review processes around financial planning, budgetary control and financial monitoring systems;
2.14 To review the security of computer systems and applications including the protection of personal data and backup provision;
2.15 To review annually the performance of the financial statements auditor;
2.16 To obtain by right information and explanations it considers necessary, from whatever source, to fulfil its remit;
2.17 To consider the relevance of the accounting policies and the appropriateness of judgements and to review significant adjustments arising from the audit;
2.18 To monitor, within an agreed timescale, the implementation of agreed recommendations relating to internal audit function reports, the funding auditor’s management letter and spot-check report and the financial statements auditor’s management letter;
2.19 To consider and advise the governing body on relevant reports by the NAO, the FE funding bodies, other funding bodies and, where appropriate, management’s response to these;
2.20 To establish, in conjunction with college management, relevant annual performance measures and indicators, and to monitor the effectiveness of advisers reviewing the internal audit 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;
2.21 To 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, the College’s framework of governance, risk management and control and its processes for securing economy, efficiency and effectiveness and any significant matters drawn to the attention of the Committee by those that report to it and to include the audit committee’s view of its own effectiveness and how it has fulfilled its terms of reference
2.22 To be informed of the nature of and fees charged for all additional services undertaken by the financial statements auditors.
2.23 To oversee and report on the College’s policies on fraud, irregularity and whistleblowing and ensure the proper, proportionate and independent investigation of all allegations of fraud and irregularity;
2.24 To obtain specialist ad hoc advice (usually, but not limited to be, from lawyers) in the event that it needs such advice..
2.25 To make recommendations to management and to the Governing Executive but it has no authority to impose these recommendations on either party. If, however, management or the Governing Executive choose not to implement recommendations from the Audit Committee, the Audit Committee has the right to refer such matters to the Chief Executive of Skills Funding;
2.26 With the exception of any confidential items, to publish the agreed or amended minutes of the Audit Committee on the College’s website;