Audit Committee Report to Court, December 2008 
 
 
1. Introduction 
 
 
The Code of Audit Practice issued by the Scottish Funding Council in 
September 1999 states that the Audit Committee should submit an annual report 
to Court.  This should include the Committee's assessment of the adequacy and 
effectiveness of the institution's internal control system and the extent to which 
the governing body can rely on that system.  This annual report summarises the 
work of the Committee for the year up to and including its meeting on 5 
November 2008. 
 
 
2 
Summary of the Year's work 
 
2.1 Financial 
accounts 
 
The Committee reviewed the University's accounts for 2007/08 and the 
commentary thereon, together with the audit results report prepared by the 
external auditor, Ernst & Young.  The audit opinion was unqualified and, for the 
third successive year, the accounts reflect a healthy operating surplus. 
 
2.2  Internal Audit Activity, 2007/08 
 
The Committee has focused most of its effort this year on the work of Internal 
Audit, a service provided by Deloittes.  At the time of last year's annual report to 
Court, the Committee expressed its concern at the high proportion of audit 
recommendations (24%) that were being categorised by Deloittes as Priority 1.  
In the course of this year, the Committee has: 
● 
reviewed the outcome of each new internal audit report and noted the 
principal areas requiring attention; 
● 
required the Director of Finance and the Secretary of Court to report to each 
meeting of the Committee on progress in implementing internal audit 
recommendations; 
● 
exceptionally, invited other University managers to attend the Committee to 
account for the action they are taking in response to significant audit 
recommendations; and 
● 
introduced a system whereby audit recommendations are identified either as 
addressing control weaknesses or as introducing process improvements. 
 
 
The outcome of this work has been positive, and there has been a demonstrable 
commitment by University management to address Internal Audit's 
recommendations.  This year's audits have included fewer (10%) Priority 1 
recommendations, and this appears to reflect that fact that, in their first year as 
internal auditors, Deloittes sought to focus their effort on the systems and 
processes that were in most need of attention. 

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2.3  Internal Audit Plan, 2008/09 
 
In 2006, the Committee introduced an additional October meeting (it now meets 
four times per annum) at which the internal audit plan for the coming year was 
considered.  For 2008/09, an internal audit plan was drafted by Deloittes in 
consultation with the Secretary of Court and Director of Finance. As with the 
plan for 2007/08, there is a strong emphasis on testing the efficiency and 
effectiveness of corporate systems, rather than simply monitoring compliance.  
The internal audit plan was approved at the Audit Committee meeting in 
October 2008. 
 
2.4 Risk 
Management 
 
Risk management workshops, at University and Faculty level, have been a 
feature of internal audit work since Deloittes took responsibility for Internal 
Audit in 2006.  The Audit Committee has encouraged this development as part 
of an ongoing programme aimed at strengthening the effectiveness of the 
University's risk management.  Members of the Committee again participated in 
the annual University risk management workshop in September 2008. 
 
 
3 
Adequacy and Effectiveness of Internal Control 
 
 
On the basis of the internal audit work undertaken in the course of the year, and 
of the comments of the external auditors on the University's financial 
statements, the Audit Committee believes that the University has, in general, an 
adequate system of internal control.  It is confident that this system has been 
strengthened over the last year through the work of Internal Audit and the 
management response to audit recommendations. However, in the context of an 
institution that allows faculty and departmental staff a large measure of 
devolved authority, there continues to be a need for more effective 
implementation of corporate systems and standards throughout the University.   
 
 
4 
Membership of the Committee 
 
 
November 2008 marked the end of Tom O'Connell's convenership of the 
Committee. Tom has been a member of the Audit Committee for 8 years, and 
convener for the last 5.  The other members of the Committee would like to 
place on record their appreciation of Tom's leadership over this period.  As 
approved by Court in October 2008, Tom will be succeeded as convener by 
Kevin Sweeney. 
 
 
In recent weeks, the Committee has been advised of the resignation of Scott 
Cairns.  There are therefore now two vacancies on the Committee, and steps are 
being taken to invite nominations with a view to recommending new 
appointments to Court at its meeting in February 2009. 
 
The continuing members of the Committee are: Kevin Sweeney (convener), 
Hamish Guthrie, Margot Manson and Elizabeth Simpson. 
DN, 28.10.08 

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