ARAC minutes - 21 June 2022

Present

Chair’s welcome, apologies and declarations

The Chair welcomed everyone present to the meeting, highlighting this was the first meeting for GG and MS and observers MD and LP.  ARAC noted apologies from - Jim Montgomery (JM) - Senior Internal Audit Manager, Scottish Government, Nick Bennet (NB) Audit Manager, Azets, and Michael Cameron (MC) – SHR Chief Executive.  

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 1 March 2022 and approved these as an accurate record of the meeting.

ARAC considered the matters arising and audit action logs.  IM confirmed that:

• MT considered ARAC feedback when it last reviewed the risk register;
• he had provided an update by email on key staff changes in the Digital and Business Support Group and reported this will impact how work is prioritised during the remainder of the year, with completion of the audit being the immediate priority; and
• he had also circulated a workface planning position paper setting out the range of activities that SHR has done around this, highlighting the connection to the previous audit recommendation, which remains, and explaining the work now needed to meet the outcome of the five year spending review.

ARAC considered the updates and discussed:

• the likely impact on the resource situation on work around Best Value, but agreed that SHR continues to retain a more general Best Value focus throughout its work planning;
• how SHR will approach workforce planning, noting the timing is helpful now the outcome of the spending review is known, which gives a longer-term financial planning window and SHR can reflect on work patterns and what it wants to achieve; and
• GDPR, noting work plans are incorporated in SHR’s operating plan.

Internal Audit Update

4.1 Progress Report

GG introduced himself as SHR’s new Internal Audit Manager for SHR and outlined his experience, including a previous assignment to SHR.  GG presented the progress report, explaining that planning for the tenant engagement review has commenced.  He reported that a shared services programme business case was recently approved by Scottish Ministers and finally highlighted the Audit Strategy and Charter included in ARAC papers for information.  

SW reported she and MC discussed shared services when they recently met with the Head of Internal Audit.  GG confirmed that there should be ongoing communications with SHR and that he will feedback back on any insights via ARAC as well as keeping SHR’s external auditors updated. ARAC noted the updates.

4.2 Audit Report: Regulatory Response to Covid

GG presented the review of SHRs’ response to Covid 19 and reported this was very positive with a substantial audit opinion and only one low level recommendation.  He reported that SHR had responded well, adapting and revising plans and approaches and that a range of responses had been seen though the public sector.  He explained that there was evidence of discussion and a robust audit trail for restating the Corporate Plan as well as good communications with stakeholders and that SHR had been transparent and consistent. 

ARAC considered the review.  It welcomed the findings and noted that the recommendation will be absorbed into ongoing work around the future approach to regulation. ARAC thanked GG and the previous Audit team.

4.3 SHR 2021-22 Annual Assurance Opinion

GG presented the annual assurance opinion for 2021-22.  He set out that SHR has achieved substantial assurance and set out for comparison and context the performance of other public bodies and Scottish Government.

ARAC welcomed the audit opinion and thanked GG and the rest of the Internal Audit team. 

External Audit

5.1 Annual Audit Report

NM presented Azets last Annual Audit Report for SHR covering 2021/22.  She highlighted the unqualified audit opinion.  NM explained that some work is outstanding as there is information due on pension benefits and Audit Scotland’s review of Scottish Government systems, but that both aspects are expected to be completed to allow for signing of SHR’s annual report and accounts in August 2022.

NM guided ARAC through the report sections, highlighting an auditor judgement that sets out scope for improvement on one aspect of financial sustainability around workforce planning. ARAC discussed how this was presented and NM agreed it could be open to misinterpretation and that she would clarify presentation in the final report in August.   NM also reported that work is ongoing around fairness and equality. 

Finally, she thanked the SHR team for a positive and smooth audit this year and for the previous years. 

ARAC considered the report and discussed:

• the higher profile now being given to workforce planning; and
• asset life review, noting this is connected to IT rather than intangible assets and this sits with MS to progress.

ARAC thanked NH, the SHR staff team, noting and thanking input from MS and previously his colleagues. 

5.2 Draft SHR 2021 – 22 Annual Report and accounts

ARAC considered the draft SHR 2021/22 Annual report and accounts. It discussed the timeline for final input and production, noting the opportunities to date for SHR Board to consider earlier drafts. 

ARAC agreed to recommend SHR’s 2021/22 annual report for signing by MC as Accountable Officer following the SHR Board meeting on 23 August 2022. 

Annual Report on fraud, security and whistleblowing

CN presented the annual report on fraud, security and whistleblowing to ARAC. She reported that there has been no fraud or whistleblowing and highlighted the data compliance summary. CN explained that there was one breach during 2021/22, but that as the Data Protection Compliance Monitoring Report covers a calendar year so make reference to two events in the previous year.   CN confirmed that SHR’s Information Management Group is taking forward the recommendation from the Data Protection Officer.  ARAC noted that cyber related work has been detailed in SHR’s work plans for 2021/22.  It also noted that SHR Board will consider updates to the related policies during 2022/23. 

IM confirmed he is planning to bring an update on the work that SHR has been doing around cyber and is discussing if that will be to the full Board or ARAC in the first instance with SHR’s Chair.  

GG reported that Scottish Government has recently appointed a Head of Counter Fraud in Internal Audit Directorate and he has responsibilities across public bodies.   

ARAC noted the annual report and associated updates.

ARAC statement to SHR Board

CN presented a draft statement of assurance from ARAC to SHR Board and Accountable Officer.  ARAC considered the report and asked CN to add a reference around assurance sources to the report from SHR’s Data Protection Officer.

ARAC approved the statement for presentation to SHR’s Board and Accountable Officer in August 2022.

Action: CN to update the statement to take account of ARAC’s feedback before presentation by SW to SHR Board in August 2022. 

Risk report

CN presented the risk register to ARAC. She explained that that this version is the same as that reported to SHR Board in May 2022 and that Management Team agreed to postpone further consideration until after the June Board strategy workshop so it could take it and the outcome of the spending review into account.   IM also explained that the register will come back to the full SHR Board in August 2022 and for that, some now historical detail will be removed.

ARAC considered the risk register and discussed:

• risk R7 and the potential impact on SHR’s budget of high inflation, low grant settlements and the proportion of SHR’s budget that relates to salaries and the potential for strike action, noting these are among the issues that Management Team wishes to consider at the next review; and
• risks to stakeholder support if SHR is able to do less.

ARAC noted that in August the updated register will be appended to the Quarter One Corporate performance Report, providing the Board with an opportunity to discuss both.  It noted the update.

Agenda Planner and AOB

ARAC discussed maternity cover arrangements being put in place for CN, noting this should be in place from mid-July to allow for some handover.   It also discussed agenda items planned for September including Assurance Mapping and Best Value.  IM confirmed that at the very least, updates on these themes will be provided to ARAC in September and reported that recruitment in business support is a current priority.

GG confirmed he should be in a position to give an update on the review on tenant engagement in September. 

ARAC considered and agreed that there were no new matters for consideration for audit activity. 

ARAC thanked the staff team for their work on the annual report and accounts. 

MD and LP fed back to ARAC on their observations. 

DONM

6 September 2022

Private Session

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