ARAC minutes - 13 December 2022

Present

Chair’s welcome, apologies and declarations

The Chair welcomed everyone present to the meeting, highlighting that it was originally planned as in-person, but due to rail strikes had reverted to via Teams.  

ARAC noted that Audit Scotland external auditors will join the next meeting.  There were no apologies or declarations of interest.

Minutes of the previous meeting, matters arising and audit log

ARAC considered the draft minutes from its meeting on 6 September 2022 and approved these as an accurate record of the meeting.

ARAC considered the matters arising and audit action logs.  It noted completed work items including a review of the Board’s standing orders.  It also noted that an action point around GDPR has been superseded but agreed to keep this on the log as a prompt and that the substance will be addressed when SHR submits its records management plan to The Keeper.    

IM updated ARAC on a recent meeting with some other public bodies around external support for workforce planning and explained he is widening out discussions to a broader group and is also exploring the feasibility and value of a procured approach.  IM also explained how the outcome of the forthcoming budget announcement will dictate how next steps for workforce planning are prioritised and Management Team will consider this early in 2023.  ARAC consider the update and discussed:

• potential for sharing posts with other public bodies, noting the arrangement in place for the Data Protection Officer with Transport Scotland;
• the public sector reform agenda;
• sharing support services practice in some local authorities; and
• the importance of developing a plan, acknowledging how stretched staff already are and agreeing it would welcome progress early in 2023.

ARAC noted the updates.

Internal Audit Update

GG presented an update on Internal Audit work.  He highlighted the tabled report on Tenant Engagement, which received a substantial assurance audit opinion.   He reported that initial planning for the Cyber Security review has commenced and that he is on track to complete the full audit plan by 31 March 2023.   GG also reported that audit planning for 2023/24 is underway and flagged the risks and likely focus themes.  

GG also highlighted to ARAC for information:

• the post-meeting update from JM on corporate services;
• ongoing fraud mapping;
• data protection and an audit of compliance by the Information Commissioner’s office with a report due in January;
• Internal Audit Directorate quarterly bulletin; and
• a thought leadership paper from Ernest & Young.

ARAC considered the update and discussed concerns around the challenges highlighted around the Scottish Government’s transformation of shared services, noting that change is needed, and the assurance programme is in place to assist with risk mitigation. It noted that there are risks and Internal Audit colleagues are encouraging public bodies to have this on their risk register and keep under review.  IM reported on SHR’s participation from an operational perspective highlighting that SHR relies on Scottish Government finance and HR systems. 

ARAC also discussed fraud and asked Internal Audit to clarify if the UK Government’s Functional Standards apply to SHR.  It noted the work being developed by the Scottish Government’s Head of Counter Fraud.  IM reported that SHR  is due to review its Fraud Policy so can take any updates into account. 

GG presented Internal Audit’s report on SHR’s Tenant and Service User Engagement approach.   He explained a further version including management’s response the  recommendations would be circulated.  GG highlighted the positive nature of the report, the overall substantial assurance opinion and explained that all the recommendations are low level and focussed on promoting SHR’s work and performance.  He reported that there is evidence of proactive and effective engagement with tenants and service users and the related strategies are well thought out and embedded in SHR with effective monitoring of performance.  

IM confirmed that SHR is content with the report and recommendations and will implement these by the end of March 2023.  He explained that timing-wise the report feeds into and will inform SHR’s review of its Communications Strategy, and policy on how it involves tenants and others due in quarter four 2022/23, and it also relates to SHR’s recent communications research. 

ARAC noted the updates and thanked GG and JM. 

Actions:

• JM to provide ARAC with clarity around the application of the UK Government’s Functional Standards.
• GG to circulate report on Tenant and Service User Engagement with management response to ARAC.

Risk report

CL presented the risk register to ARAC. She explained that it was considered by Management Team on 10 November and was also provided to SHR’s Board in December. 

CL explained the historic references to Covid have been removed from the register.  She reported that MT made no changes to the scores when it considered it in November, but was mindful of the potential for disruption around shared services, SHR’s budget and the rent freeze as well as forthcoming plans and implications for the Regulatory Framework.  IM confirmed that the budget position will be clearer after 15 December and that further clarity around rent controls is expected from Scottish Government in January, all of which will be reflected in the risk register when MT next reviews it.  He also confirmed SHR Board will consider it in February 2023.  ARAC considered the register and discussed:

• Risk R1 and shared services in the light of the Internal Audit update;
• wording around Risk R6, noting SHR has provided feedback to Scottish Government as it developed emergency legislation, but it has agreed a position with SHR’s Board, which can be used if required;
• media coverage around SHR’s advice to landlords on statutory obligations to consult on rent increases;
• risk to shared services such as payroll under the forthcoming budget, noting that SHR receives the same service as Scottish Government and this is an area that is being invested in and while the change process may be disruptive the outcome should be result in improvements;
• SHR’s status as an independent regulator and the stance Internal Audit has observed some other public bodies take such as the Scottish Fiscal Commission to reinforce independence.

ARAC asked Management Team to consider its feedback when it next reviews the register during January 2023.

 Actions:  Management Team to consider ARAC feedback when it next reviews the register.

ARAC Self-Assessment

ARAC considered the results from a recent self-assessment survey.  It welcomed the largely positive results. 

ARAC discussed communications with staff, noting challenges of not meeting in SHR’s office and that there remains a standing invitation to staff to observe.  SW agreed to draft an update for all staff with IM on ARAC’s work and she and other members volunteered to come along to future staff briefings to discuss items that may interest the wider staff group. 

SW reported that induction for new members will be considered when BG is replaced, and she is discussing options with SHR’s Chair.

Actions: SW and IM to draft a message for all staff on ARAC work and members to attend all staff briefings to discuss some themes from ARAC.

Terms of Reference

CL introduced the annual review of ARAC’s terms of reference.  She confirmed that the current terms remain aligned to the Audit Committee handbook.  JM confirmed that although a review is due, any changes would be marginal and should not impact the terms of reference.   ARAC noted and agreed to propose no changes to SHR’s Board in February 2023. 

Action: SW to propose no change to ARAC’s terms of reference to SHR Board for approval in February 2023. 

Best Value

IM introduced proposals to review SHR’s approach to Best Value.  He highlighted past approaches and the proposal to develop a new section in SHR Board papers to help monitor and demonstrate SHR’s contribution and to incorporate a best value approach when the Regulatory Framework is reviewed, explaining this has previously worked well.  He explained the proposals are proportionate and can be reviewed further if required. 

ARAC discussed the proposals and welcomed the proportionate approach to demonstrate much of what SHR is already doing.  ARAC noted this will be proposed to SHR Board via the ARAC update for approval in February 2023 and to aid this it can be demonstrated via some of the papers in that Board pack. 

Action: SW to propose amendment to SHR Board’s Board paper template to accommodate Best Value.

Agenda Planner, AOB, DONMs & Effectiveness of meeting and papers

CL presented the agenda planner.  SW confirmed she will keep ARAC updated on future membership discussions.

ARAC agreed there were no new matters for decision and it did not require a private session with Internal Audit at this time.  It noted the new External Auditors will be in place by the next meeting.

SW thanked everyone for their work during 2023 and ARAC exchanged Christmas greetings with all present.

DONM

14 March 2023.