CAIRNGORMS NATION­AL PARK AUTHORITY

Approved Minutes Audit & Risk Com­mit­tee 06/09/19

Approved Minutes of Meet­ing of the Audit & Risk Com­mit­tee of THE CAIRNGORMS NATION­AL PARK AUTHORITY

held at the Cairngorms NPA Offices, Grant­own-on-Spey on 6 Septem­ber 2019

Present:

• Judith Webb (Chair)
• John Lath­am
• Peter Argyle
• Gaen­er Rodger (Vice Chair)
• Janet Hunter

In Attend­ance:

• Claire Robertson, BDO
• John Boyd, Grant Thornton
• Grant Moir, Chief Executive
• Dav­id Camer­on, Cor­por­ate Ser­vices Director
• Danie Ral­ph, Fin­ance Manager
• Alix Hark­ness, Clerk to Board
• Pippa Had­ley, Board Member

Apo­lo­gies:

• None

1. Wel­come and Apologies

The Chair wel­comed every­one to the meeting.

2. Minutes of Pre­vi­ous Meeting

The draft minutes of the 3 May 2019 meet­ing were approved with no amendments.

3. Mat­ters Arising

Dav­id Camer­on repor­ted that move­ment on the out­stand­ing actions lis­ted at the end of the 3 May 2019 Audit & Risk Com­mit­tee Minutes are:

a) Audit & Risk Com­mit­tee train­ing – In Hand – sched­uled to take place on Thursday 14^th Novem­ber 2019 1 – 4pm in Brae­mar High­land Games Centre. Open up to the remainder of the Board espe­cially those who have indic­ated an interest in tak­ing the vacant pos­i­tion in the com­mit­tee and Loch Lomond & Trossach Nation­al Park Audit & Risk Committee.

b) Com­mit­tee spe­cif­ic induc­tion pack – Open – To fol­low after train­ing has taken place.

c) Plan­ning Con­sent Com­plaint dat­ing from 2017 which had been escal­ated to the SPSO – Closed – Has been resolved and let­ter is annex to Paper 8 on today’s Agenda.

Gaen­er Rodger arrived at this point.

5. Intern­al Audit Review: LEAD­ER Admin­is­tra­tion Review (Paper 1)

Claire Robertson presen­ted a Paper which presents the intern­al auditor’s report on the LEAD­ER Admin­is­tra­tion Review.

6. The Audit & Risk Com­mit­tee made the fol­low­ing obser­va­tions and comments:

a) The Chair praised the pos­it­ive report and noted that the remain­ing con­cern sur­round­ing the LARKS sys­tem which was out with the Authority’s con­trol. Dav­id Camer­on explained the pos­i­tion on LARKS. He explained it was launched before it was fit for pur­pose, there­fore the Author­ity developed its own sys­tem which is fit for pur­pose. He added that the team have a prag­mat­ic solu­tion as pos­sible where the team work to the Scot­tish Gov­ern­ment require­ments and work our own system.

b) The Chair thanked the LEAD­ER team for such a good report giv­en the scope for things to go wrong in a European fun­ded pro­gramme. Dav­id Camer­on thanked the Chair and agreed to feed­back to the team.

Pippa Had­ley arrived at this point.

8. The Audit & Risk Com­mit­tee con­sidered the intern­al auditor’s findings.

9. Action:

i. Dav­id Camer­on to praise the LEAD­ER team on the out­come of the report on behalf of the Audit & Risk Committee.

10. Intern­al Audit Review: Risk Man­age­ment Review (Paper 2)

Claire Robertson presen­ted the intern­al aud­it­ors’ Risk Man­age­ment Review.

11. In dis­cus­sion the Audit & Risk Com­mit­tee made the fol­low­ing obser­va­tions and comments:

a) The Chair reques­ted that risk appetite/​management/​approaches could be covered in the train­ing. Claire agreed that she could pre­pare best prac­tise examples includ­ing the like­li­hood and impact for the train­ing. Dav­id Camer­on agreed.

b) What did the ter­min­o­logy ​‘risk matur­ity’ mean? Claire explained that it was the char­ac­ter­ist­ics of what they think is good prac­tise with a scale and it is used as a bench­mark in a very detailed spread­sheet. This is pre­pared for man­age­ment so that they can plan any devel­op­ments as they see fit and the risks with­in it may not be neces­sar­ily repor­ted to this Com­mit­tee unless they reach a cer­tain level.

c) With regards to risk appet­ite would this be looked at as a Board and as an organ­isa­tion? Dav­id Camer­on agreed that he would engin­eer a situ­ation where the two things come togeth­er; where the ambi­tion of Board ties into the ambi­tion of the Cor­por­ate Plan to have a mutu­al under­stand­ing and to avoid con­flict at the Board meet­ing. Claire added that the risk appet­ite is set by the Board but in the con­text of Cor­por­ate Plan.

d) Sug­ges­tion that there should be a wider Board dis­cus­sion on risk to give a big­ger voice on it as a group.

e) Sug­ges­tion to include in the train­ing, how things are broken down e.g. spread­sheet and benchmarks.

12. The Audit & Risk Com­mit­tee con­sidered the intern­al auditor’s fol­low up report.

13. Action:

i. Train­ing to include sec­tions on risk appet­ite and to explain the pro­cesses and meas­ures in place in the background.

14. Intern­al Audit Annu­al Report (Paper 3)

Claire Robertson presen­ted the BDO Intern­al Audit Annu­al Report for ²⁰¹⁸⁄₁₉.

15. The Chair noted that there were some recom­mend­a­tions around busi­ness continuity.

16. Dav­id Camer­on wel­comed the ongo­ing rela­tion­ship with BDO as intern­al aud­it­ors, com­ment­ing that the intern­al audit ser­vice con­tin­ued to add real value to the work of the Author­ity and its con­trol frame­work. Mem­bers noted that intern­al audit work was well tailored to the scale and cul­ture of the Author­ity. With regards to busi­ness con­tinu­ity he con­firmed that a lot of work on it remains that has been slightly delayed as a res­ult of a vacant gov­ernance post and added that they were recruit­ing for that post with inter­views tak­ing place in two weeks’ time.

17. A mem­ber asked if the dead­line of hav­ing staff trained by Feb­ru­ary 2020 had been taken into account and was still deemed as achiev­able. Dav­id Camer­on con­firmed that he was aim­ing to try and bring some­thing to next Audit & Risk Com­mit­tee meet­ing, to see if the Com­mit­tee agree that the work is pro­gress­ing in the right direction.

18. The Audit & Risk Committee:

a) Con­sidered the intern­al auditor’s annu­al report cov­er­ing their work in ²⁰¹⁸⁄₁₉;

b) Noted the intern­al auditor’s annu­al State­ment of Assur­ance as set out on page 8 of their report;

c) Agreed the report raised no new issues pri­or to the review of the final accounts doc­u­ment for ²⁰¹⁸⁄₁₉ and the Gov­ernance State­ment included in the accounts document.

19. Action:

i. Pro­gress on Busi­ness Con­tinu­ity to be brought to the next meeting.

20. ²⁰¹⁸⁄₁₉ Final Accounts (Paper 4)

Danie Ral­ph, Fin­ance Man­ager tabled a revised extern­al final report and let­ter of rep­res­ent­a­tion to accom­pany the final accounts.

21. Danie Ral­ph presen­ted and sought approv­al to the final accounts for ²⁰¹⁸⁄₁₉, pri­or to their being sub­mit­ted to Audit Scot­land for final cer­ti­fic­a­tion. Danie reminded that Com­mit­tee of its role with regards to the accounts — to sup­port the Account­able Officer with regard to their per­son­al respons­ib­il­it­ies for issues of risk, con­trol and gov­ernance through a pro­cess of con­struct­ive challenge.

22. Dav­id Camer­on explained that this year the tar­get of break­ing even this year had been met. He added that there had been a good pro­cess between Grant Thornton and our intern­al fin­ance team. He explained that the core accounts have become com­plic­ated over past years, to accom­mod­ate large pro­jects such as the caper­cail­lie frame­work and the Tomin­toul & Glen­liv­et Part­ner­ship Pro­ject. Grant Moir referred to page 11 of the report where £4.76million had been received in Grant in Aid fund­ing and an addi­tion­al £2.23million had been sought from oth­er sources which puts the Author­ity in a good pos­i­tion going forwards.

23. In dis­cus­sion the Audit & Risk Com­mit­tee made the fol­low­ing observations:

a) Cla­ri­fic­a­tion was sought into wheth­er the Author­ity could keep under­spend? Dav­id Camer­on advised that this was one of the lim­it­ing factors, there were no arrange­ments for Non Depart­ment­al Pub­lic Bod­ies (NDPB) to retain under­spend. He explained that the Author­ity set them­selves a Key Per­form­ance Indic­at­or of 1% under­spend to 2% overspend.

b) Cla­ri­fic­a­tion sought as to the mean­ing of tax pay­ers’ equity? Dav­id Camer­on explained that is was a descrip­tion of bal­ances. Danie Ral­ph added that if we were to close down tomor­row pay cred­it­ors and liquid­ate assets tax pay­ers’ equity is the cash amount remaining.

c) How did plan­ning fees work? Dav­id Camer­on explained that the Author­ity receives 60% of plan­ning fees of the applic­a­tions that are called in with the appro­pri­ate Loc­al Author­ity retain­ing the oth­er 40%. Grant Moir added that the Scot­tish Gov­ern­ment would be Review­ing Plan­ning fees in the near future and through this review it may be pos­sible to take a look at the cur­rent system.

21. The Audit & Risk Com­mit­tee approved the final accounts pri­or to sub­mis­sion to Grant Thornton and Audit Scot­land for final certification.

22. A mem­ber recog­nised the work of the fin­ance team get­ting to this point and in par­tic­u­lar Danie Ral­ph. The Chair agreed and thanked Danie and the team for this.

23. Actions: None.

24. Final Accounts Let­ter of Rep­res­ent­a­tion (Paper 5)

John Boyd presen­ted the pro­posed revised let­ter of rep­res­ent­a­tion, high­light­ing to the Com­mit­tee that this stand­ard ele­ment of the accounts audit pro­cess sought con­firm­a­tion that all the inform­a­tion sub­mit­ted in the accounts presen­ted for audit are accur­ate and that all mater­i­al inform­a­tion has been dis­closed to the aud­it­ors. John high­lighted that the let­ter had already been reviewed and approved by Dav­id Camer­on and Danie Ralph.

25. The Audit and Risk Committee:

a) Con­sidered the revised Let­ter of Rep­res­ent­a­tion for the ²⁰¹⁸⁄₁₉ audit;

b) Reviewed and agreed that the let­ter is signed by the CEO as Account­able Officer.

26. Action: None.

27. Extern­al Audit Report (Paper 6)

John Boyd presen­ted the extern­al audit report on the ²⁰¹⁸⁄₁₉ audit, high­light­ing in par­tic­u­lar that Grant Thornton pro­posed to issue an unqual­i­fied audit opin­ion. John thanked Danie Ral­ph for a good set of work­ing papers provided accord­ing to the timetable, not­ing that the draft accounts presen­ted for audit had been presen­ted to a high stand­ard. John also thanked the fin­ance team and oth­er staff for all their assist­ance, which had con­trib­uted to the extern­al audit pro­cess mov­ing very smoothly. All audit work had been com­pleted with­in the agreed timetable.

28. John Boyd high­lighted that fin­an­cial plan­ning and gov­ernance arrange­ments had also been con­sidered as part of the audit, and that review had iden­ti­fied no issues to be raised.

29. Mater­i­al­ity for extern­al audit had been set at 2% of gross expendit­ure. One adjust­ments to the draft final accounts were iden­ti­fied on page 14, dur­ing course of the audit. Dav­id Camer­on explained that this adjust­ment was around the Tomin­toul & Glen­liv­et Pro­ject where there was a new rule (IFRS 15). He explained that this new rule required to recog­nise each stream of income as it comes in not as deferred income when all money comes in, in its entirety. He added that this meant that some some of the Authority’s intern­al fin­an­cial pro­cess needed to be changed.

30. Mem­bers sought cla­ri­fic­a­tion from John on this point of mater­i­al­ity, which John explained set a level for adjust­ments which, if required, would be brought expli­citly to the atten­tion of mem­bers for review, as being of a level which could have a sig­ni­fic­ant impact on the accur­acy of the Authority’s fin­an­cial reports.

31. Dav­id Camer­on advised that he was happy with the recom­mend­a­tions made mov­ing for­ward. He noted the slight delays in pro­vi­sion of inform­a­tion and noted that both the CNPA and Grant Thornton need to knuckle down and get back to each oth­er timely.

32. Mem­bers and officers expressed their thanks to the Grant Thornton team for their pro­fes­sion­al­ism and good work­ing rela­tion­ships in under­tak­ing the audit. The Chair thanked John Boyd for his clear report and present­a­tion to the Committee.

33. The Com­mit­tee noted Grant Thornton’s report on the ²⁰¹⁸⁄₁₉ audit.

34. Action: None.

35. Stra­tegic Risk Register (Paper 7)

Dav­id Camer­on presen­ted an update on the Authority’s Stra­tegic Risk Man­age­ment and a com­ment­ary on management’s review of action taken and cur­rent risk status.

36. Mem­bers made the fol­low­ing com­ments and observations:

a) Was there a need to reduce the total num­ber of risks in the register? Dav­id Camer­on advised that some that were show­ing a steady down­ward trend may be removed through the next Audit & Risk Com­mit­tee and Board meet­ing in Decem­ber 2019.

b) A mem­ber advised that she did not appre­ci­ate the cros­sov­er between gen­er­al risks and ser­vice spe­cif­ic risks in the register and asked if they two should be sep­ar­ated? Dav­id Camer­on agreed that this was dif­fi­cult to obtain from the cur­rent present­a­tion of the Risk Register and agreed to sep­ar­ate the two with a page break to make the present­a­tion clearer.

37. Mem­bers reviewed the risk register, not­ing that there were no changes war­ran­ted at this time.

38. Action:

i. Present­a­tion of the Stra­tegic Risk Register to sep­ar­ate the two cat­egor­ies of risks to be made for the next time it is presented.

39. Com­plaints Hand­ling (Paper 8)

Dav­id presen­ted an update on the Authority’s com­plaints hand­ling since the Committee’s last meet­ing in May 2019. He added that annex 2 to the paper sig­ni­fied that the com­plaint was now closed.

40. Mem­bers noted the update.

41. Audit & Risk Com­mit­tee Annu­al Report (Paper 9)

Dav­id Camer­on presen­ted the draft Audit & Risk Com­mit­tee Annu­al Report to the Board.

42. The Com­mit­tee con­sidered the report and agreed that no amend­ments were required pri­or to its cir­cu­la­tion to the Board for their meet­ing on 20^th Septem­ber 2019.

43. AOB

No items presented.

44. Date of Next Meeting

1 Novem­ber 2019, Cairngorms NPA Offices, Grantown-on-Spey.

45. Meet­ing closed 10.20 hours

Audit & Risk Com­mit­tee: Out­stand­ing Actions

Action	Status
Audit and Risk Com­mit­tee mem­ber training	Open
Audit and Risk Com­mit­tee induc­tion pack	Open
Risk mit­ig­a­tion action for LEAD­ER Account­able Body role — let­ter to Scot­tish Gov­ern­ment as out­lined in paper to Com­mit­tee 31 August 2018	Open