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No 6493

Wednesday 31 January 2018

Vol cxlviii No 17

pp. 353–376


Report of the Council on the membership and terms of reference of the Audit Committee

The Council begs leave to report to the University as follows:

1. In this Report the Council is seeking approval for amendments to the membership provisions and terms of reference of the Audit Committee, a committee of the Council. The Audit Committee’s membership is set out in Special Ordinance A (iv), and the Committee’s terms of reference are in Chapter XIII of the Ordinances (Statutes and Ordinances, pp. 67 and 1049). The changes are consistent with the principles set out in the Higher Education Code of Good Governance and the Handbook for members of Audit Committees in Higher Education, both issued by the Committee of University Chairs.1

2. Changes to the membership of the Audit Committee in Special Ordinance A (iv) are proposed in order to align the appointment terms of Council members serving on the Committee in class (b) with their Council appointments. It is therefore recommended that the appointment duration of class (b) members of the Audit Committee be extended from three to four years, so that it is of the same duration as an appointment to the Council. It is also recommended that should Council membership cease, Audit Committee membership would also cease. It is proposed that external members of the Audit Committee in class (c) should be appointed for four years instead of three. It takes time to gain a thorough understanding of how the University operates and therefore a longer duration of appointment for class (c) members will extend the benefit of that experience; it will also be consistent with the amendment to the duration of appointment being proposed for class (b) members. It is further proposed that the wording on appointments of co-opted members should be revised to enable the Committee to determine the length of the term of co-opted members, thus enabling valuable experience to be retained. A provision has been added to limit the period of office for any member of the Committee to a maximum of eight consecutive years. As there is an overarching definition of external members included in Special Ordinance A (vii), the definition applicable to the Audit Committee membership has been removed and an amendment is being proposed to exclude the employees of University companies from that overarching definition. Finally, the Committee notes that the reference to ‘Chair of a Council of a School’ in Section 1(b) should be updated to ‘Head of a School’.

3. In 2016 the Audit Committee commissioned an external consultant to conduct an effectiveness review of the Committee. Following the recommendations made, the Committee has reviewed its terms of reference as set out in Ordinance and has proposed some amendments. These amendments constitute updates to the original wording to reflect current practices, to make some clarifications and simplifications, and to provide a more logical order to the duties of the Committee.

4. The Council recommends:

I. That the following amendments to Special Ordinance A (iv) (Statutes and Ordinances, p. 67) be approved:

(a)In Section 1(b) by replacing the words ‘Chair of a Council of a School’ with ‘Head of a School’.

(b)By amending Section 1(d) so as to read:

(d) not more than three persons co-opted by the Committee, provided that it shall not be obligatory for the Committee to co-opt any person or persons. If there are co-opted members, at least one shall be a member of the Regent House who is not a member of the Council, and, if there is more than one, there shall be either one further member of the Regent House who is not a member of the Council and/or one external member, or two external members, provided that only one of the external members may be a member of the Council in class (e) (as referred to in Statute A IV 2(e)).

(c)By amending Section 2 so as to read:

2. Members in classes (a), (b), and (c) shall be appointed in the Michaelmas Term to serve for four years from 1 January next following their appointment. In the event that Council membership ceases, Audit Committee membership will expire simultaneously. No member may serve for more than eight consecutive years. Co-opted members shall serve for such period as the Committee shall determine at the time of their co-optation.

II. That Section 6 of Special Ordinance A (vii) (Statutes and Ordinances, p. 69) be amended so as to read:

6. In any Ordinance or Regulation the term ‘external member’ shall mean any person who at the time of appointment is not qualified to be a member of the Regent House except under Statute A III 10 (a)(ii) nor is an employee of the University or any of its companies or a College.

III. That Regulation 1 of the regulations for the Audit Committee (Statutes and Ordinances, p. 1049) be rescinded and replaced with the following:

1. The Audit Committee shall meet at least once a term in each financial year. It shall be the duty of the Committee:

(a)to keep under review the University’s risk management strategy and implementation;

(b)to keep under review the effectiveness of the University’s systems of financial and other internal control;

(c)to satisfy itself that satisfactory arrangements are adopted throughout the University for promoting economy, efficiency, and effectiveness;

(d)to advise the Council on matters relating to the external auditors, including their appointment, their services, their remuneration, and any questions relating to the resignation or dismissal of auditors;

(e)to review annually with the external auditors the nature and scope of the external audit;

(f)to consider, in consultation with the external auditors, (i) any statements annexed to the annual accounts of the University, including the auditors’ report, and (ii) any statement provided by the Council on the governance of the University;

(g)to approve the approach to internal audit;

(h)to approve proposals for the programme of internal audit work put forward by the internal auditors and to ensure that sufficient resources are made available to implement the internal audit programme effectively;

(i)to consider any reports submitted by the auditors and to monitor the implementation of any recommendations made by the auditors, both external and internal;

(j)to monitor annually the performance and effectiveness of the external and internal auditors;

(k)to oversee the University’s policy on fraud and irregularity, and to ensure that the Committee is informed of any action taken under that policy;

(l)to ensure that all significant losses are properly investigated and that the internal and external auditors, and where appropriate, other authorities and regulators, are informed;

(m)to make an annual report to the Council, and to other authorities and regulators as required;

(n)to receive reports from authorities and regulators, and to advise the Council thereon;

(o)to forward minutes of the Committee’s meetings to the Council.

30 January 2018

Stephen Toope, Vice-Chancellor

David Greenaway

Michael Proctor

Ross Anderson

Nicholas Holmes

John Shakeshaft

Richard Anthony

Alice Hutchings

Susan Smith

R. Charles

Fiona Karet

Sara Weller

Stephen J. Cowley

Mark Lewisohn

Mark Wormald

Anthony Freeling

Jeremy Morris

Jocelyn Wyburd

Nicholas Gay

Susan Oosthuizen