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City of Glasgow College Annual Report & Accounts 2019-20

External Audit

The External Auditor's (EA) report for 2018-19 was

presented to the Committee in November 2019, for the

year ended 31 July 2019, and was included in the College's

Annual Report 2018-19. The report provided an unqualified

audit opinion on the financial statements, and on the

regularity of transactions, as well as "other prescribed

matters" as required under the Public Finance and

Accountability (Scotland) Act 2000.

The Wider Scope Audit within the report noted the following:

• Financial Sustainability "The College is one of the few

colleges in the sector forecasting a small operating

surplus position in each of the next 5 years." While

all such reporting in the sector is superseded by the

coronavirus crisis, this at least demonstrates the relative

strength of the College leading into the crisis period.

• Financial Management - The Report highlighted

theunderlying operating surplus of £1.2 million with

significant cash balances, which provide a level of

sustainability not typical within the sector. The report also

indicated the fraud which the College had identified to a

value of £517k (excl. VAT).

• Governance and Transparency - While acknowledging

delays in reporting of the fraud to the Executive

Leadership Team, the report points out that "The College

is considered well managed and well governed overall."

• Value for Money - "The College has a framework in place

to ensure value for money is achieved."

The Report makes several references to the fraud, however,

the Report also concludes that: "Whilst any fraud in a

public body is serious, for the purposes of the annual

accounts audit we note that the value of the identified fraud

is not material in the year under audit or in total. We have

confirmed that the college has made adequate disclosures

within the annual report and accounts to ensure reporting of

fraud issues are sufficiently transparent. As a result, we have

not modified our audit report in respect of the matter."

(EA Annual Audit Report 18-19; p9)

External Audit 2019-20

The External Auditor's report for 2019-20 is presented at

section below (p42)

Other Audit Committee Activities

In addition to the work of the Internal and External Auditors,

In addition to the work of the Internal and External Auditors,

the Committee considered a range of other matters

including:

• Fraud

In 2018-19, the College had identified an extensive fraud,

which was the subject of a series of investigations and

reviews throughout 2019-20, as well as a full police

investigation (current as at June 2020). The internal auditor

undertook a forensic investigation following the discovery of

the fraud, and provided a detailed report to the Committee,

with the GCRB Audit Chair in attendance. A number

of recommendations were provided, all of which were

actioned. All available steps were taken to recover losses

incurred, with progress ongoing. The Principal provided

regular reports on the progress of investigations, reviews,

and recovery, including the External Audit 'fit for purpose'

reviews of Finance and IT.

• Auditor General Report: Section 22

The Committee noted that an Auditor General Section

22 Report had been received in relation to the fraud

investigation. The report noted that for the purposes of

the annual accounts audit, the value of the identified fraud

is not material in the year under audit or in total. The

subsequent review and actions taken by the College were

also recognised.

The External Auditor informed the Committee that the matter

will be kept under review and a further report is anticipated

once legal proceedings are concluded. A copy of the

Internal Audit forensic report has been provided to Audit

Scotland. Further detail is provided in the Accountability

Report below.

• Asset Verification

The Committee received a report on the asset verification

conducted over the summer 2019 period. It was noted

that a comprehensive single asset register has now been

produced and all relevant processes and internal controls

have been

reviewed. Some weaknesses were identified with various

changes implemented. Physical verification of all College

assets is to be conducted annually with local managers

additionally verifying assets within their responsibility at least

twice a year.

• Assurance Framework

A new Assurance Framework was agreed by the

Committee. This includes a grid, mapping all College

assurances within the Three Lines of Defence Model, and

the College's Strategic Themes. These in turn are mapped

against the College's strategic risks. This provides a

coherent and complete reference point for the Committee

to assess assurance strengths and areas for further

development.

• Committee Development

Committee members attended an all-day training event

for Audit Committee members in December 2019, which

included guidance on the development and implementation

of an Assurance Framework, as per the recommendation

from the External Audit Report for 2018-19.

• Terms of Reference

The Committee Terms of Reference were updated in

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