ARAC minutes - 1 March 2022

Present

Chair’s welcome, apologies and declarations

The Chair welcomed everyone present to the meeting. ARAC noted apologies from SHR Business Manager - Clare Nicolson. There were no declarations of interest.

Minutes of the previous meeting, matters arising and audit log

ARAC considered the draft minutes from its meeting on 14 December 2021 and approved these as an accurate record of the meeting.

ARAC considered the matters arising and audit action logs.  SW reported:

• that SHR Board considered the risk strategy and the ARAC Terms of Reference updates on 22 February 2022; and
• that the two new SHR Board members will observe ARAC in June and that thereafter, she will discuss ARAC membership with SHR’s Chair;

ARAC discussed progress in workforce planning noting this featured in SHR’s original operating plan for 2021/22, but it was not able to resource it due to competing priorities around the pandemic. 

IM explained that:

• work is ongoing to develop a new operating plan for 2022/23 to present to SHR Board for approval in March 2022;
• specialist expertise will need to resource workforce planning and ARAC noted that SHR has already tried to source this via Scottish Government HR and Framework Agreements, neither of which were fruitful so it is now exploring expertise from other public bodies; and
• some short notice staff turnover in the Digital and Business Support Group with will impact on capacity.

MC explained some of the work that has gone on around workforce planning including:

• the Regulation Group fitting recruitment to anticipated and planned staff changes;
• development of SHR’s future approach to working;
• preparation with the Scottish Government mapping out SHR’s staff requirement and the resourced needed both for the most recent spending review and five year funding arrangements;
• progress made with recruitment, explaining that SHR is now moving towards managing normal turnover; and
• development work on the 2022/23 operating plan proposals and a new Corporate Strategy from 2022.

NM confirmed that she is seeking assurance around the strategic workforce strategy linked to SHR’s financial sustainability.  She highlighted that SHR has achieved the funding it sought from Scottish Government, but due to HR issues was unable to fully utilise this in 2021/22. 

ARAC considered the updates and discussed:

• a possible deep dive on the risks associated with workforce planning to help articulate the work done for it and SHR’s Board;
• the work going on behind the scenes to inform workforce management and planning; and
• the relative risks, noting the ease by which the Director of Regulation was replaced agreeing the risk to SHR is more around sudden departures.

ARAC noted the matters arising and audit action logs. 

Internal Audit Update

JT reported that Internal Audit work is on track to complete by 31 March 2022, despite some delays to fieldwork unrelated to SHR. She confirmed that the final audit report will be presented to the next ARAC meeting. JT also highlighted the wider strategic reports that Internal Audit has provided for information within the update report for ARAC. 

JM also highlighted proposals for the internal audit plan 2022/23, reporting that fieldwork will focus on cyber security and tenant engagement. SW confirmed she had discussed this with Internal Audit and the SHR team. 

ARAC noted the update and approved the internal audit plan for 2022/23.

External Audit Update

NM presented the audit plan for 2021/22 advising this was likely to the last one delivered by Azets and that Audit Scotland would advise of new appointments shortly. She explained that currently the planning to carry out fieldwork remotely and use electronic signatures. 

NM set out the scope of the audit, highlighting Audit Scotland’s direction to look at the BestValue theme of fairness and equality.  NM confirmed the approach to this would be proportionate to the reduced scope status applied to SHR, the audit fee and will focus on the support framework SHR has in place. 

NM reported that plans are in place to allow the audit timeframes to return to reporting to ARAC in June and provision of financial statements to SHR Board in August subject to no further pandemic restrictions.  Finally, she highlighted the audit fee is set at the expected level in line with previous years.

IM confirmed that he and CN met and discussed the plan with NM in advance of ARAC.

ARAC noted the audit plan.

Risk Management

IM presented SHR’s risk register to ARAC.  He reported that the register was last considered by SHR’s Board on 22 February 2022. IM clarified that a missing arrow at R4 should indicate no change.    

ARAC considered the risk register and discussed the additional impact that the crisis in Ukraine may have on existing cost pressures for tenants and therefore on arrears and RSL financial sustainability.  ARAC noted this may impact R6 around problems that emerge beyond regulation, but could still be perceived as a fault of regulation.  MC highlighted that if there was significant sector failure, this would impact R2 and explained that the Regulation Group is working hard to highlight the challenges and risks in the outcome of the current risk assessment. 

ARAC discussed the recent national media coverage around the quality of social housing stock in England.  MC commented that there have also been some instances of media coverage of social housing quality in Scotland. He explained that the maturity of the Scottish Social Housing Charter and clear route for tenants in Scotland to raise concerns and be involved are important contextual factors in Scotland.

MC also confirmed that SHR is engaged in the Scottish Government’s shared serviced transformation through the Scottish Delivery Bodies and wider briefings.  He explained that the scale of change is challenging due to SHR’s small size, but it is keeping informed, although not driving change and that this means there are times when new processes and systems have to be learned.  IM also explained that unlike some public bodies SHR is already closely aligned to and is utilising Scottish Government services. 

ARAC asked Management Team to take account of its discussion when it next considers the risk register. 

Action:

• IM to highlight ARAC’s discussion to MT for consideration when it next reviews the risk register.  

AOB

Agenda Planner

ARAC considered the agenda planner.  It noted that June is very busy, while September is quieter.  ARAC agreed to retain the current agenda plans as many items are needed for or relate to year-end.  It welcomed that the new SHR Board members would get to observe a wide range of activities in June. 

 ARAC thanked JT, noting this is her last meeting with SHR and wished her well for the future.

DONM

21 June 2022.

Private Session

ARAC members held a private session with SHR’s Auditors.