Audit Committee

Terms of Reference

1. Membership

1.1 The Committee shall comprise 7 members (who may or may not be members of the Governing Executive). This must include a co-opted external member with relevant financial or audit expertise (who should not normally be appointed as its Chair)

1.2 The internal auditor shall be entitled to attend and speak at all meetings of the Committee (but not to vote) as shall the financial statements auditor and funding auditor where business relevant to them is being discussed. Senior management should also be invited to attend meetings of the Committee, particularly where their area of responsibility is under discussion, and shall be entitled to attend and speak at such meetings but not to vote

1.3 The Committee may invite the College’s advisers or other third parties to attend meetings of the Committee as appropriate (such persons shall not have a vote but shall be entitled to speak at the meeting)

1.4 The Principal and other senior post holders may not be members of the Committee but other members of staff may sit on the Committee provided they do not have significant executive, management, financial or budgetary responsibilities

1.5 In order to maximise the Committee’s independence and objectivity, the following people shall not be eligible to sit on the Committee:

1.5.1 Those with executive responsibilities at senior level

1.5.2 Members of the college finance committee or equivalent

1.5.3 The Chair of the Governing Executive

1.5.4 Governors who have significant interests in the college

1.6 The Chair of the Committee will be selected by the Committee

1.7 The quorum for meetings of the Committee shall be 3

1.8 The Clerk to the Governors shall act as Clerk to the Committee

1.9 The Committee will meet at least 3 times per year. The internal auditor, funding auditor or financial statements auditor may request a meeting of the committee if they consider that one is necessary and the Committee will endeavour to comply with such requests. In any event, the Committee must consider a minimum number of items of business each year for it to be able to function effectively, and those items of business are currently set out in the Table attached to Supplement A to the Interim Audit Code of Practice

1.10 The Committee shall be entitled, whenever it is satisfied that it is appropriate to do so, to go into confidential session and (subject to the rules as to quoracy set out above) to exclude any, or all, participants and observers, except the clerk to the Committee

1.11 The Committee shall be granted rights of access to obtain all the information it considers necessary from members of the staff and governors and to consult the internal audit service (IAS), financial statements auditor and funding auditor directly

2. Terms of Reference

2.1 To advise the governing body on the adequacy and effectiveness of the College’s systems of internal control and its arrangements for risk management, control and governance processes, and securing economy, efficiency and effectiveness (value for money)

2.2 To advise the governing body on the appointment, reappointment, dismissal and remuneration of the financial statements auditor and the IAS

2.3 Advise the governing body on the scope and objectives of the work of the IAS, the financial statements auditor and the funding auditor

2.4 To ensure effective co-ordination between the IAS, the funding auditor and the financial statements auditor including whether the work of the funding auditor should be relied upon for internal audit purpose

2.5 To consider and advise the governing body on the audit strategy and annual internal audit plans for the IAS

2.6 To advise the governing body on internal audit assignment reports and annual reports and on control issues included in the management letters of the financial statements auditor and the funding auditor, and management’s response to these

2.7 To monitor, within an agreed timescale, the implementation of agreed recommendations relating to internal audit assignment reports, internal audit annual reports, the funding auditor’s management letter and spot-check report and the financial statements auditor’s management letter

2.8 To consider and advise the governing body on relevant reports by the NAO, the LSC, other funding bodies and where appropriate, management’s response to these

2.9 To establish, in conjunction with college management, relevant annual performance measures and indicators, and to monitor the effectiveness of the IAS and financial statements auditor through these measures and indicators and decide, based on this review, whether a competition for price and quality of the audit service is appropriate

2.10 To produce an annual report for the governing body and accounting officer, which should include the committee’s advice on the effectiveness of the college’s risk management, control and governance processes, and any significant matters arising from the work of the IAS, the funding auditors and the financial statements auditor

2.11 To ensure that all allegations of fraud and irregularity are properly followed up; and to be informed of all additional services undertaken by the IAS, the financial statements auditors and the funding auditors

2.12 To recommend, together with the Finance Committee, the annual financial statements to the governing body for approval.