Audit Committee

Annual Report 2004-2005

November
2005

Audit Committee
Annual Report 2004-05
Date Main
Business

15 March
Audit Committee and Internal Audit - Future Shape;
2005
Internal Audit Services Unit Annual Report;
Risk Management and Corporate Governance;
Non-Academic Staff Pensions Scheme (NASPS);
Full Economic Costing;
Stafford Loans - Report by Ernst and Young
25 May 2005
Audit Planning - Report by the External Auditors;
Matter referred by SHEFC;
External Auditors Report 2003-04
External Audit Tender;
Internal Audit Services Unit; 2004-05 Monitoring Report;
Internal Audit - Audit Plan;
Software Licensing;
Safety and Environment Protection Service - Annual Report;
23 November  Review of the University’s Financial Statements for the year ending 31
2005
July 2005 including the Report of the External Auditors
Draft Accounts of the Subsidiary Companies
Internal Audit Services Annual Report 2004-05
Audit Committee Draft Annual Report
Appointment of External Auditors
Strategic Risk List
In addition the Committee met:
•  With the Secretary of Court following its meeting in February 2005
•  On its own without the External Auditors and without the University’s
officers following its meetings in May and November 2005.
3.
Review of the Effectiveness of Internal Control Systems
At its meeting held on 23 November 2005 the Committee considered the
Annual Report of the Internal Audit Service 2004-05 which stated that 11
reports had been issued arising from the 2004-05 programme of work and that
54 recommendations for changes or improvement had been made. Under the
existing scheme of classification 3 of these were Fundamental, 32 were
Significant and 19 were Merits Attention.

The Committee concurred with the view of the Head of the Internal Audit
Service that when the recommendations made in these reports were fully
implemented the system of internal control in the areas concerned would be
adequate and effective. The Committee considered that monitoring of
implementation is an integral part of the work of Internal Audit and noted that
the success of departments and Faculties in this regard will be reported to the
Committee in due course.

4.
Review of the Scope and Effectiveness of Internal Audit
The Summary Performance Indicators for the Internal Audit Service (IAS) are
set out in its Annual Report 2004-05 and, based on that information, the
Committee concluded that the IAS continued to operate efficiently and
effectively.

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Audit Committee
Annual Report 2004-05

5.
Review of the Annual Financial Statements for the Year Ending 31
July 2005

At its meeting on 23 November 2005 the Committee considered and reviewed
the Accounts for the year to 31 July 2005 together with the reports submitted
by the Director of Finance and Ernst & Young (E&Y), the University’s external
auditors. The Committee agreed to recommend the Finance Committee to
accept the Financial Statements and pass them to Court for approval. The
Committee noted that the external auditors expected to issue an unqualified
report on the University’s consolidated accounts and on the accounts of the
consolidated subsidiary companies. They were satisfied that the University
had adequate funding to enable it to continue its planned range of operations.

6.
External Audit Arrangements

In 2004-05 the Committee's involvement with Ernst & Young, the University’s
external auditor, comprised the following main elements:

•  consideration of the auditor's opinion on the annual financial statements of
the University for the year ending 31 July 2005;
•  consideration of the auditor's opinion on the annual financial statements of
subsidiary companies for the year ending 31 July 2005.

Fees paid to the external auditor in respect of the last two years are as detailed
below. These amounts are disclosed in the financial statements:

Year Ended 31 July
2004 2005

£ £
Audit Fees
Main Audit
42,330
43,285
Consolidated
Subsidiaries 7,510
11,550

49,840
54,835

Out of Pocket Expenses
800
750
Irrecoverable
VAT
7,547
7,706

58,187
63,291

Other Fees
PAYE/NIC Advice
550
-

PAYE advice GU Holdings
-
560

Non Consolidated Subsidiaries
-
1,450
Access
Statement
700
-
VAT
advice
6,383
-

Internal Audit Assistance - software
-
2,200

Secondment to GU Holdings
-
1,000

The UoG Trust
3,000
5,750

Tax Advice – disposal of Kymata
-
7,200
Tax
Advice

1,400
1,225

Audit Cttee Induction Seminar
1,250
-
US Loans Audit
-
10,450

13,283
29,835
Irrecoverable
VAT
2,325
5,221

15,608
35,056

Grand Total

73,795
98,347

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Audit Committee
Annual Report 2004-05
In addition to the above fees, audit fees of £1,700 (2004 - £1,600) were
charged in respect of the non-consolidated subsidiaries.
7. Value
for
Money
The Committee endorsed the view of the Head of Internal Audit that value for
money and regularity audit can be combined within audit exercises. It also
concurred with the view that the matter of value for money is properly
addressed within the regular reviews Internal Audit undertakes throughout the
University over a cycle authorised by Court on the advice of the Audit
Committee.

8. Conclusion
As the Committee stated in last year’s annual report it has to rely on the
acceptance by Court, and the executive management of the University at all
levels, of both the importance of accountability and of audit in all its forms as
the instrument of that accountability. Only with this high degree of co-
operation, involving a willingness to respond positively and constructively
(particularly in relation to sensitive points of criticism or concern) will the Audit
Committee be able to provide the measure of comfort and reassurance
expected of it. The Committee considers that there are encouraging signs
that the University continues to move towards the establishment and
maintenance of compliance necessary for the achievement of its strategic
objectives.

UNIVERSITY OF GLASGOW
AUDIT COMMITTEE
NOVEMBER 2005

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Audit Committee
Annual Report 2004-05
Appendix 1 Remit and Membership of the Audit Committee

Remit

To oversee on behalf of the Court arrangements for external and internal
audit of the University’s financial and management systems and other
activities and processes related to such systems.

Terms of Reference

The Committee will review and report to the Court on a regular basis on items
and areas within its remit, including the following:

•  the adequacy and effectiveness of the financial and management
systems of the University;

•  the scope and effectiveness of the Internal Audit Service, including the
planning and operation of its work, particularly the annual audit plan of
work, the annual report on its activities and findings and regular reports
on its activities including the extent to which audit recommendations
have been implemented;

•  the annual financial statements and accounts before their submission
to the Court;

•  the external auditor’s report and the outcomes of its findings;

•  the nature and extent of risk to the University’s objectives and the
effectiveness of the management controls in place for avoiding or
minimising such risks;

•  the effectiveness of arrangements for:
(i)
the investigation of questions of financial irregularity or
impropriety;
(ii)
economy, efficiency and effectiveness and the achievement of
value for money in the management of the University’s
resources;
(iii)
the safeguarding of the assets of the University and of the use
of its funds, particularly funds deriving from the public sector;
(iv)
proper corporate governance if the Court considers there to be
any shortcomings in relation to it.

•  the criteria for the provision of internal audit for the University, including
services provided in-house and services which may be provided by
third parties;

•  the appointment, remuneration and scope of the work of the external
auditor;

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Audit Committee
Annual Report 2004-05
•  matters resulting in the resignation or dismissal of either the external
auditor or the internal auditor;

•  the promotion of co-ordination of the activities of the external and
internal auditors;

•  other matters such as the provision of non-audit services or specialised
internal audit services by the external auditor and any relevant findings
or recommendations arising from reports of bodies such as the
Scottish Higher Education Funding Council, Audit Scotland, the Audit
Committee of the Scottish Parliament and the House of Commons
Public Accounts Committee.

Method of Working

The Committee will submit an annual report on its work to the Court, in which
it may wish to comment on the adequacy of the resources provided to it in
order to carry out its work. All reasonable demands for such resources, which
may include the provision of externally-sourced advice, will be met by the
University Court. The Committee may communicate directly with the external
auditors, with the internal auditors and with the senior officers and managers
of the University, in both academic and non-academic areas. The Committee
is deemed to have the authority of the Court to obtain information necessary
for it and for the Internal Audit Service to fulfil its remit and role. The
Committee will also use its best endeavours to ensure compliance with any
mandatory requirements for audit arrangements set out in the Scottish Higher
Education Funding Council’s Code of Audit Practice.

Frequency of Meetings

The Committee will meet at least three times a year. It will also meet with the
External Auditor on their own at least once a year, usually at the time of its
consideration of the annual financial statement.

Membership

The Committee will consist of five lay members, either from the membership
of Court or outside.

At least one of the members will have a background in finance, accounting or
audit.

The Convener will be appointed by the Court. The members of the
Committee will appoint a Vice-Convener from among their number.

Members of the Committee will not normally also be members of the Finance
Committee, except with the express approval of the Court.

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Audit Committee
Annual Report 2004-05

The following officers will be in attendance at the meeting:

Principal
Secretary of Court
Head of the Internal Audit Service
Director of Finance

The external auditors will attend the meeting at which the annual accounts are
discussed. The external auditor may attend other meetings as are mutually
agreed between the external auditor and the Convener of the Committee.

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Document Outline

SCAN001 1.pdf
Copy 3.Audit cttee Annual report nov 2005.pdf