DRAFT MINUTES OF THE AUDIT AND RISK COM­MIT­TEE MEET­ING of THE CAIRNGORMS NATION­AL PARK AUTHORITY

held in Don meet­ing room, CNPA HQ, Grant­own on Spey (hybrid) on 30 Septem­ber 2022 at 2pm

PRESENT

• Judith Webb (Chair)
• Elean­or Mackintosh
• Gaen­er Rodger

In Attend­ance:

• Ben Stern, Grant Thornton
• Andy L Mack, Grant Thornton
• Eliza­beth Young, Azets
• Dav­id Camer­on, Dir­ect­or of Cor­por­ate Services
• Danie Ral­ph, Fin­ance Manager
• Andy Ford, Dir­ect­or of Cli­mate and Nature Change
• Lisa MacIsaac, Gov­ernance & Cor­por­ate Per­form­ance Manager
• Mari­aan Pita, Exec­ut­ive Sup­port Manager

Apo­lo­gies:

• John Kirk
• John Lath­am
• Fiona McLean

Wel­come and Apologies

1. Judith Webb, the Chair wel­comed every­one to the meet­ing. She advised that due to a fur­ther apo­logy received this morn­ing, the meet­ing was not quor­ate. Fol­low­ing dis­cus­sions with the Dir­ect­or of Cor­por­ate Ser­vices they pro­posed to go ahead with the meet­ing and cir­cu­late the decisions in prin­ciple made after the meet­ing to absent mem­bers for rat­i­fic­a­tion. This was agreed by mem­bers present.
2. Apo­lo­gies were noted.
3. The Chair informed the Com­mit­tee that the rep­res­ent­at­ives from Grant Thornton were unable to stay for the whole of today’s meet­ing and had asked that their item on the agenda be brought for­ward. It was agreed to take Item 13 first. Some dis­cus­sion top­ics will be deferred for con­sid­er­a­tion at future meetings.

Minutes of Last Meet­ing – Approval

1. The draft Minutes of the meet­ings on 27 May 2022 were approved with no amendments.
2. The Chair provided an update on the action points arising from pre­vi­ous meet­ings. (Loc­ated in the table at the end of the document)

Declar­a­tion of Interests

1. There were no interests declared.

Extern­al Audit Update (Oral)

1. Andy Mack, Grant Thornton, provided an oral update on extern­al audit. He made the fol­low­ing points:

a) Audit has been delayed because of the firm los­ing John as Audit Man­ager togeth­er with oth­er depar­tures from the team. Grant Thornton is work­ing hard to replace them and find­ing it hard to recruit to the audit sec­tor. b) Andy Mack repor­ted he and his remain­ing staff are doing their best to work through the audit as seam­lessly, pro­fes­sion­ally, and quickly as pos­sible whilst meet­ing pro­fes­sion­al stand­ards. c) Already had dis­cus­sions with Danie Ral­ph on a work­ing on a timetable and will keep the com­mit­tee updated.

1. The Audit and Risk Com­mit­tee dis­cussed the update and made the fol­low­ing com­ments and observations:

a) The Chair said that the norm would be that an extern­al audit pres­ence would be expec­ted for each meet­ing for the whole meet­ing but mak­ing an excep­tion today – AM agreed. b) The Deputy Chief Exec­ut­ive com­men­ted that he under­stood the pres­sures on resourcing and the need to pri­or­it­ise the pub­lic bod­ies that are in the port­fo­lio for Grant Thornton that have earli­er stat­utory report­ing dead­lines. He remains extremely con­cerned about the scope to com­plete the Cairngorms NPA audit by our stat­utory report­ing dead­line. He had not cheeked yet when Scot­tish Par­lia­ment rises before the Christ­mas break. He noted that even if there was scope to lay accounts until 31 Decem­ber it’s not that far away from the begin­ning of audit and there­fore doesn’t seem to be any con­tin­gency space. Hope­ful that it will be straight­for­ward giv­en our accounts are not com­plic­ated and we don’t have any assets or com­plex­ity of account­ing. c) The Deputy Chief Exec­ut­ive was most con­cerned if the extern­al audit starts around mid-Novem­ber there are only 5 weeks to go from start to fin­ish with any real expect­a­tion of staff avail­ab­il­ity from organ­isa­tions con­cerned. That time­frame includes get­ting Audit Scot­land approv­ing the accounts and get­ting them laid in front of Par­lia­ment pos­sibly before par­lia­ment rises. That’s going to be a hugely accel­er­ated pro­cess which will put a lot of pres­sure on our fin­ance teams as well as Grant Thornton, and at a time when Park Author­ity staff are try­ing to man­age the cur­rent year’s budget while also look­ing to devel­op next year’s budget. The Deputy Chief Exec­ut­ive con­cluded that from a fin­an­cial man­age­ment point of view the planned timetable is pos­sibly the worst time for an extern­al audit to take place. How do we ensure get accounts laid before par­lia­ment with­in the stat­utory report­ing dead­lines? And what can we do to get chunks of audit work out of the way earli­er if we can? Con­cerned about the level of dis­clos­ure notes that must be con­sidered by the time we come to sign the accounts, which will be 9 months after the bal­ance sheet date. Over­all, he con­cluded he is left with sig­ni­fic­ant con­cerns. d) Andy Mack com­men­ted that look­ing back on pre­vi­ous years audits the timetable should be fine but not guar­an­teed. Andy Mack sug­ges­ted the firm would seek to under­take earli­er sample selec­tions and test clar­ity of work­ing papers, and should any issues appear, he will flag them with seni­or staff and the Com­mit­tee, going through nor­mal hier­arch­ies as early as pos­sible. He agreed there is a risk and a pres­sure on staff but will be sure to try and min­im­ise that as much as pos­sibly can. e) A mem­ber com­men­ted that their con­cerns were mostly covered by the Deputy Chief Executive’s com­ments, and asked what are the reper­cus­sions for us if they are late and who should we be flag­ging this up to as a warn­ing that this might be the case? The Chair was also con­scious about report­ing to board on this mat­ter. The Deputy Chief Exec­ut­ive respon­ded that we do need to flag to board the pos­i­tion of annu­al accounts audit and risks dis­cussed today. The Park Author­ity also needs to flag the pos­i­tion to Audit Scot­land and has already been in touch with our spon­sor team, hav­ing been exper­i­en­cing delays to ori­gin­al agreed timetable. Fol­low­ing this meet­ing he will update the Spon­sor Team again. f) A mem­ber com­men­ted that this is an unfor­tu­nate pos­i­tion and asked about steps to take to pre­vent it hap­pen­ing again. The mem­ber reflec­ted on the stress on staff which is quite sig­ni­fic­ant and sought to con­firm that the delay is with aud­it­ors not staff. The Deputy Chief Exec­ut­ive con­firmed that we were ready for audit in July, and that all con­trol steps are in place on extern­al audit time­tabling. There­fore, this seems to be a one-off situ­ation around the resourcing of the firm. g) Andy Mack replied that Grant Thornton rated John Boyd highly and it was a big blow to the firm los­ing him. He added the firm has lost anoth­er couple of man­agers too. Last thing Grant Thornton want is caus­ing stress and undue pres­sure and will seek to make it an effi­cient and high-qual­ity audit. h) The Chair con­cluded that addi­tion­al pres­sure on our staff and three routes of escal­a­tion are noted; high­lighted that we are deal­ing with uncer­tain times and noted assur­ance on the con­duct of the audit. The Chair hoped this is an excep­tion­al year, and if more delays over and above cur­rent sched­ules are encountered asked for early flag­ging of those. Reas­sur­ance on this was provided by Andy Mack on behalf of Grant Thornton.

Andy Mack, Bern Stern and Daniel Ral­ph left the meeting.

1. The Audit & Risk Com­mit­tee noted the update.

2. Action Points arising: Deputy Chief Exec­ut­ive to provide updates on extern­al audit status to Audit Scot­land and Spon­sor Team. Chair to provide update on extern­al audit status to board fol­low­ing draft update to be provided by Deputy Chief Executive.

Intern­al Audit: Peat­land ACTION Pro­gramme Set Up (Paper 1)

1. Eliza­beth Young intro­duced the paper which presents the review of the Cairngorms NPA’s estab­lish­ment of the Cairngorms Peat­land ACTION Pro­gramme and design and imple­ment­a­tion of arrange­ments to sup­port the oper­a­tion of that pro­gramme. In intro­du­cing the paper, Eliza­beth high­lighted the following

a) The audit was under­taken at an early stage of the devel­op­ment of this pro­gramme and recom­mend­a­tions were inten­ded to help shape the pro­cesses and con­trols in read­i­ness for the pro­gramme to move to an open call for pro­jects and funds. As such, it was to be expec­ted that there is a high­er than typ­ic­al num­ber of recom­mend­a­tions for action raised.

Andy Ford joined the meeting

b) There are a few sig­ni­fic­ant issues raised and recom­men­ded to take a full review of the pro­gramme for CNPA to under­stand all the risks and implic­a­tions of that approach. c) Recom­mend­a­tion 2.1 on pg. 7 was high­lighted which recog­nised that the ini­tial dir­ec­tion of get­ting fund­ing out as grants to applic­ants was quickly evolving to the need for a much more involved role in many instances by the Park Authority’s exper­i­enced and know­ledge­able staff. There is a need to ensure decisions are taken with full con­sid­er­a­tions of all implic­a­tions and this is doc­u­mented in appro­pri­ate agree­ments to estab­lish clar­ity of all par­ti­cipants’ respons­ib­il­it­ies. d) Anoth­er recom­mend­a­tion high­lighted is 4.1 on pg. 15 that fol­lows on from the pre­vi­ous recom­mend­a­tion 2.1 where Azets are high­light­ing the need to make sure that there is a con­sist­ent set of doc­u­ment­a­tion to under­pin the pro­cess and recom­men­ded a review of these doc­u­ments to make sure they are con­sist­ent and com­pre­hens­ive. e) The remainder of the report looked at more spe­cif­ic aspects around how fund is oper­ated and how issues are raised with con­tract awards or applic­a­tion apprais­als. At a more stra­tegic level it was recom­men­ded to have a com­mu­nic­a­tions plan for the framework.

1. The Audit and Risk Com­mit­tee dis­cussed the paper and made the fol­low­ing com­ments and observations:

a) Deputy Chief Exec­ut­ive provided an over­view, con­firm­ing this audit was com­mis­sioned by man­age­ment in recog­ni­tion we inher­ited pro­ced­ures that had been used so far on peat­land action and those were char­ac­ter­ised as a typ­ic­ally tra­di­tion­al grant pro­gramme. it didn’t take long as a man­age­ment group to recog­nise that what was needed in the Cairngorms went much fur­ther than a tra­di­tion­al grant pro­gramme. A lot of work needed to be done with land man­agers, draw­ing our teams into more work than grant appraisers and award­ers. Recog­nised the pro­gramme was evolving bey­ond that grant pro­gramme to a fuller ser­vice deliv­ery for land man­agers. The Man­age­ment Team there­fore looked to intern­al aud­it­or to give us some advice on the required focus of work and to seek assur­ance that our think­ing was appro­pri­ate. As such the man­age­ment team have found that report incred­ibly help­ful. b) Deputy Chief Exec­ut­ive high­lighted in terms of work already happened, the Park Author­ity has restruc­tured the team have put addi­tion­al man­age­ment resources; have split the team in dis­crete ways to look at deliv­ery and sep­ar­ately pro­cess and pro­ced­ures; com­mis­sioned leg­al advice to get an agree­ment drawn up to be used with land man­agers to give an over­view of whole ser­vice level agree­ment pos­i­tion to be put in place to cov­er a num­ber of the intern­al audit find­ings. We have also recog­nised in our pro­cesses the recom­mend­a­tion of ensur­ing we have a con­tract in place that is awar­ded by a land man­ager to a con­tract­or, to make sure it is expli­cit what the rel­ev­ant respons­ib­il­it­ies of work are when it comes to com­mis­sion­ing work on the ground. c) Andy Ford, the Dir­ect­or of Nature, and Cli­mate rein­forced the imple­ment­a­tion of changes already made in response to recom­mend­a­tions: estab­lish­ment of a pro­gramme man­ager and oper­a­tions man­ager; segreg­a­tion on duties; devel­op­ment of pro­cess flow charts; and get­ting leg­al advice on devel­op­ment of appro­pri­ate leg­al agree­ments. He con­firmed that man­age­ment had there­fore star­ted on ensur­ing the right struc­ture is in place to take on recom­mend­a­tions. d) The Chair noted that a lot of points have been raised in recom­mend­a­tions., The Chair reflec­ted that the response to deal­ing with those, will help us role out future sig­ni­fic­ant pro­grammes of work: not just pro­cesses and safe­guards for peat­land work but also learn­ing could be reapplied in future and hold res­on­ance to oth­er projects/​pro­grammes. e) A mem­ber asked for assur­ance on pri­or noti­fic­a­tions and pos­sible plan­ning author­it­ies’ con­flict of interest, in con­text of park author­ity sub­mit­ting them on behalf of landown­ers and us absorb­ing cost of that. Andy Ford con­firmed would check that to ensure appro­pri­ate sys­tem design. f) Deputy Chief Exec­ut­ive con­firmed this is a good point regard­ing recog­ni­tion of risk of con­flict of interest, and the sys­tem will need to ensure the clar­ity of sep­ar­a­tion of respons­ib­il­ity. g) The Chair asked to note that there are a lot of a short time scales for action and note the capa­city resource asso­ci­ated with that.

1. The Audit and Risk Committee:

a) Con­sidered the intern­al aud­it­ors report and find­ings. b) Endorsed the man­age­ment responses to recom­mend­a­tions for future action and sys­tem improvements.

1. Action Points Arising: None

Andy Ford left the meeting

Intern­al Audit: Per­form­ance Man­age­ment (Paper 2)

1. Eliza­beth Young, Azets intro­duced Paper 2 which presents the review of the Cairngorms NPA’s approaches to per­form­ance man­age­ment. The review has been under­taken as part of the agreed Intern­al Audit Plan for ²⁰²²⁄₂₃.

2. The Audit and Risk Com­mit­tee dis­cussed the paper and made the fol­low­ing com­ments and observations:

a) Deputy Chief exec­ut­ive com­men­ted that the report is help­ful and tim­ing has been per­fect in terms of look­ing at per­form­ance man­age­ment in for the next Cor­por­ate Plan structure.

1. The Audit and Risk Committee:

a) Con­sidered the intern­al aud­it­ors report and find­ings. b) Endorsed the man­age­ment responses to recom­mend­a­tions for future action and sys­tem improvements.

1. Action Points Arising: None

Intern­al Audit: Work­force Man­age­ment and Plan­ning (Paper 3)

1. Eliza­beth Young, Azets intro­duced Paper 3 which presents the review of the Cairngorms NPA’s approaches to work­force man­age­ment and plan­ning for work­force require­ments. The review has been under­taken as part of the agreed Intern­al Audit Plan for ²⁰²²⁄₂₃.

2. The Audit and Risk Com­mit­tee dis­cussed the paper and made the fol­low­ing com­ments and observations:

a) Deputy Chief Exec­ut­ive reflec­ted that suc­ces­sion plan­ning require­ments is recog­nised as an organ­isa­tion, while dif­fi­cult to imple­ment with­in wider require­ments on recruit­ment and equal­it­ies. The focus adop­ted was more around con­tin­gency arrange­ments around key ser­vice areas, with the under­ly­ing point to try to mit­ig­ate key ser­vice areas fall­ing away if people leave. Identi­fy what the key ser­vice areas are and con­tin­gency plans are in the event of turnover of one or two posts. He recog­nised the Work­force Man­age­ment strategy hasn’t been revised in this respect and this has been rightly raised.

1. The Audit & Risk Committee:

a) Con­sidered the intern­al aud­it­ors report and find­ings. b) Endorsed the man­age­ment responses to recom­mend­a­tions for future action and sys­tem improvements.

1. Action Points arising: None

Intern­al Audit: LEAD­ER Pro­gramme (Paper 4)

1. Eliza­beth Young, Azets intro­duced Paper 4 which presents the review of the Cairngorms NPA’s cov­er­age of respons­ib­il­it­ies as Account­able Body for the Cairngorms LEAD­ER Pro­gramme as estab­lished in the Ser­vice Level Agree­ment estab­lished with Scot­tish Gov­ern­ment. The review has been under­taken as part of the agreed Intern­al Audit Plan for ²⁰²²⁄₂₃.

2. The Audit and Risk Com­mit­tee dis­cussed the paper and made the fol­low­ing com­ments and observations:

a) The Chair com­men­ted it was nice to see pos­it­ive report, very pleased to see such a good report and thanks to Deputy Chief Exec­ut­ive and the team. b) Deputy Chief Exec­ut­ive high­lighted the report shows the great work team and LEAD­ER has done over past 6 years, and it is help­ful to look at LEAD­ER exper­i­ence and see recom­mend­a­tions that are for­ward look­ing. He com­men­ted that while one recom­mend­a­tion fits with cur­rent grants pro­gramme man­ager, the oth­er sits more with future busi­ness con­tinu­ity work, and he is happy with dir­ec­tion taken in this audit work.

1. The Audit & Risk Committee:

a) Con­sidered the intern­al aud­it­ors report and find­ings. b) Endorsed the man­age­ment responses to recom­mend­a­tions for future action and sys­tem improvements.

1. Action Points arising: None

Assur­ance Map­ping (Paper 5)

1. The Audit and Risk Com­mit­tee agreed to defer the dis­cus­sion on this paper until the next meeting.

Intern­al Audit Pro­gress Report (Oral)

1. Eliza­beth Young, Azets intro­duced this item which presents the intern­al audit pro­gress report. Azets have made good pro­gress in deliv­ery of the intern­al audit plan, with first 3 reports now con­sidered and a fur­ther 2 audits sub­stant­ively com­plete. Azets were on track to com­plete by end of the year and noth­ing to high­light to committee.

2. The Audit & Risk Com­mit­tee noted the update.

Action on Audit Recom­mend­a­tions (Paper 6)

1. Dav­id Camer­on, Deputy Chief Exec­ut­ive intro­duced Paper 6 which presents an update to the Com­mit­tee on action taken to imple­ment con­trol improve­ments high­lighted by intern­al audit work. In not­ing that for some mem­bers the report was not easy to read if not adap­ted for font size online, the Com­mit­tee agreed to defer con­sid­er­a­tion of this item.

2. The Audit & Risk Com­mit­tee agreed to defer con­sid­er­a­tion of this item of business:

3. Action Points arising: None

Audit & Risk Com­mit­tee Draft Annu­al Report to the Board (Paper 7)

1. Dav­id Camer­on, Deputy Chief Exec­ut­ive presen­ted Paper 7 which presents the draft Audit and Risk Committee’s Report to the Board.

2. The Audit & Risk Com­mit­tee con­sidered the report and made the fol­low­ing com­ments and observations:

a) Eliza­beth Young for Azets con­firmed there is no com­ments from their per­spect­ive: it’s very stand­ard con­tent with a good sum­mary and cov­er­ing all the areas that are expec­ted. b) The Chair high­lighted we do have to make sure Board are fully aware of the extern­al audit and the situ­ation that we are in. c) A mem­ber wanted to cla­ri­fy why timeline for annu­al report is August. Deputy Chief Exec­ut­ive con­firmed that this reflects the timeline driv­en by the changes of the com­mit­tee struc­ture that came into effect August 2021, that is why it is done in the mid-year. d) A mem­ber wanted to know if Grant Thornton has been writ­ten to form­ally to com­plain which DC con­firmed that this has been done by email with no dir­ect response. She wanted to know if someone from the board could do some­thing. The Chair con­firmed that she will liaise with Deputy Chief Exec­ut­ive and inform board, she will also con­tact Grant Thornton and audit Scot­land and Spon­sor team. e) The Chair com­men­ted that this is very thor­ough report and cap­tur­ing of business

1. The Audit & Risk Com­mit­tee agreed sub­mis­sion of the draft report to the board without changes:

2. Action Points arising:

i. Work with DC that a let­ter goes on behalf of ARC to Grant Thornton, audit Scot­land and the Spon­sor team regard­ing the dis­sat­is­fac­tion of the delay in extern­al audit.

AOCB

1. There were no items raised.

Date of Next Meeting

1. The next sched­uled Audit and Risk Com­mit­tee meet­ing will take place on Monday the 5^th of Decem­ber 2022. (Date agreed sub­sequently to meeting.)

2. The pub­lic meet­ing fin­ished at 15.35 hours.

Action Points

Ref	Action Detail	Who	When	Status
10/09/2021	Ongo­ing Dis­cus­sion at Board and Gov­ernance Com­mit­tee on risk appet­ite. Dis­cus­sions are to be had with intern­al audit on sup­port­ing this work.	Dav­id Camer­on / Intern­al Auditors	Sched­uled late Q3 or Q4 22⁄23	In Hand
29/10/2021	Bring les­sons learned on LEAD­ER back as Agenda item to a future AR Committee.	Dav­id Cameron	After the pro­gramme had finished	Open
29/10/2021	Pri­or­ity to be giv­en to com­plete a detailed VAT review dur­ing the remainder of 2021 – 22.		By end March 2023	In Hand
29/10/2021	Provide AR Com­mit­tee with timetable for for­ward plan­ning of meetings.	Dav­id Cameron	First meet­ing in 2023	Open
11/02/22	Extern­al Aud­it­or to com­plete audit with tar­geted sign off	John Boyd	by end of Septem­ber 2022	Open
11/02/22	Stand­ard­isa­tion of pro­ject man­age­ment pro­ced­ures and ter­min­o­logy. This to be brought back to the ARC to ensure the appro­pri­ate lan­guage was used.	Lisa MacIsaac	On com­ple­tion of intern­al review of process	Open
30/09/2022	Let­ter to be sent to Grant Thornton, Audit Scot­land, and Spon­sor team with update to board on behalf of ARC regard­ing delay in audit	Judith Webb	Before next meeting	Com­plete