ARAC Minutes - 18 September 2023

Present

Chair’s welcome, apologies and declarations

The Chair welcomed everyone present to the meeting.  ARAC noted apologies from Internal Audit Manager, Gary Gibb.

There were no declarations of interest.

Minutes of the previous meeting, matters arising and audit log

ARAC considered and approved the minutes from its meeting on 13 June 2023 as an accurate record of the meeting. 

ARAC considered the matters arising and audit action logs.

IM confirmed that actions SHR Board requested in connection with presentation of the accounts have been completed and he thanked LY for her assistance.  IM explained that plans are in place to lay and publish the annual report and accounts.  

ARAC noted the matters arising items covered by the meeting agenda and welcomed the progress made in the audit action log.

Internal Audit Update

JM presented an update on Internal Audit work.  He reported that the 2023/24 work programme is on course to be completed.  JM highlighted the work on de-registration and the substantial assurance opinion for the review.  He reported on one recommendation, which SHR Management Team has accepted.  ARAC noted that the Internal Audit quarterly bulletin and report are also available on Connect for members to reference. 

JM updated ARAC on the shared service transformation programme, reporting that the go live dates for HR and finance systems have been updated since the ARAC pack was produced.  ARAC considered the update and discussed:

• the report on de-registration, welcoming the audit opinion;
• how audit opinions are formed, noting the wide range of evidence and intelligence that inputs to help form the professional judgement;
• references to certificates of assurance, noting that MC as accountable officer for SHR receives these from his Directors and from Scottish Government shared services;
• reference to compassionate leadership in the bulletin, asking JM to share a related article link with ARAC;
• emphasis on tone at the top and kind leadership, noting the view that improvement is about leadership and the alignment with Scottish Government values around kindness; and
• Scottish Government’s internal audit opinion, noting this is reasonable, which Jim advises is a solid opinion in the current climate given funding, increased risk appetite and challenges across the public sector.

IM introduced AM to ARAC.  He reported that the current plans for the Scottish Government’s new IT and HR shared service systems to go live is April 2024 and that the HR element has slipped from October 2023. MC confirmed that confidence levels reported to him from Scottish Government are high for delivery in April 2024.    

ARAC noted the updates and thanked JM and his team.

Actions: JM to provide ARAC with a link to the article on compassionate leadership.

Risk Management

IM presented the risk register to ARAC. He reported on Management Team risk discussions around Scottish Government systems, sector and world pressures as well as SHR’s office situation.  He also highlighted a reduction in the likelihood score for risk R7 from 6 to 5.  IM explained that this reflects recruitment to date, but also recognises that future retirements are expected, and some internal promotion has led to gaps.  

IM also set out plans to review SHR’s risk management strategy.  He explained that there will be an initial discussion with SHR Board at its workshop in November, he will then bring a proposal to ARAC in December and / or March depending on the outcome of the Board discussions.  

ARAC noted the update and risk register.  It discussed:

• previous reduction to the risk score around resources in January to reflect SHR’s budget settlement and welcomed that Management Team continues to monitor and review this closely.
• Management Team discussions, welcoming the updates on these from IM and noting it gave a sense of risk appetite; and
• SHR’s risk management strategy review plans, welcoming the opportunity for the whole Board to have an initial discussion that ARAC can then reflect on. ARAC agreed that the current strategy worked well, and it was important to continue with a simple approach that works well for SHR and is proportionate.

ARAC noted the update.

ARAC Self Assessment

IM presented proposals for ARAC’s annual self assessment. He outlined practice to date, explaining how ARAC’s approach for several years has been to alternate between a survey and a focussed discussion.  IM set out proposals for a focussed discussion in December 2023.  

ARAC noted the provision for self assessment set out in the Audit Committee handbook.  JM confirmed that the handbook is not prescriptive on format and that SHR’s approach to date has aligned with it. 

ARAC approved the proposals and welcomed the opportunity for a focussed discussion.  It noted that this would be the first opportunity for LP to participate.

Action: IM to prepare material for ARAC to hold a focussed self assessment discussion at its December meeting.

Assurance Mapping

IM presented an update on assurance mapping to ARAC.  He set out discussion with Management Team on presentation and the use of a traffic light or shading summary.  IM explained that Management Team agreed a traffic light system was challenging particularly as levels of assurance that may be needed are not universal across all areas.

ARAC considered the updated assurance map and new summary.  It discussed:

• if it had become too technical and if the summary was meaningful;
• if a count of assurances could give a false impression, noting that aside from the presentation of the map and summary Management Team is satisfied that SHR has appropriate levels of assurance in place;
• issues summary when printed or viewed on an iPad;
• future Internal Audit work planned around assurance mapping including a forthcoming bulletin in October profiling different public body approaches;
• the importance of a read across with the SHR’s strategy and risk register;
• accessibility for SHR’s Board, noting the assurance it will take from ARAC and that the map is also published;
• potential to use a ‘controls confidence code’ approach, welcoming the opportunity for JM and IM to discuss this further; and
• forthcoming changes to SHR’s strategy and approach to risk management that will directly impact the assurance map, agreeing that it would be sensible to wait until these are in place before bringing back to ARAC in June 2024.

Actions: IM to:

• take account of ARAC feedback, consider the future Internal Audit bulletin around assurance and discuss approaches further with JM;
• align the map to SHR’s reviewed approach to risk management and new strategy which will both be in place by March 2024; and
• bring an updated assurance map to ARAC in June 2024.

Agenda Planner, AOB, DONMs

Agenda Planner

ARAC noted the agenda planner and approved meeting dates for 2024.

IM reported that the planner will be amended to show that as agreed Assurance Mapping will come to ARAC in June 2024.

JM confirmed that Internal Audit work plans for 2024/25 will be proposed to ARAC March 2024.

AOB

SW updated ARAC on a new role she will commence in December. 

DONM – 19 December 2023