Transparency data

DfE Audit and Risk Assurance Committee: terms of reference

Published 3 November 2021

Applies to England

Introduction

The board of the Department for Education (DfE) established an Audit and Risk Committee (ARC) as a sub-committee of the board. The role of the ARC is to support the board by providing independent scrutiny and challenge of the department’s arrangements for:

• governance
• risk management
• internal control

ARC advises the Permanent Secretary (as Principal Accounting Officer) and the board on the adequacy and effectiveness of these arrangements and on the reliability and integrity of assurances used to inform the governance statement. The ARC also advises the Permanent Secretary on the structure and presentation of the department’s annual accounts.

ARC fulfils this function at DfE group level. It acts as the audit committee for the Teaching Regulation Agency (TRA) and The Standards and Testing Agency (STA) who are executive agencies of the department that do not have a separate audit committee. It also acts for the Teachers’ Pensions Scheme.

Responsibilities

ARC advises the board and Principal Accounting Officer on :

• the adequacy and effectiveness of the department’s systems for internal control and risk management
• the reliability, integrity and scope of assurances used to inform the governance statement, and any significant control issues that should be disclosed
• the accounting policies, the accounts and the annual report of the DfE Group and the sector annual report and accounts
• the planned activity and results of both internal and external audit, including the executive agencies
• oversight of the internal audit service provided to the department by the Government Internal Audit Agency
• the adequacy of management response to issues identified by internal and external audit activity, including external audit’s management letter and National Audit Office (NAO) value for money reports, and with a focus in relation to internal audit on management actions in respect of red and amber reports
• the effectiveness of the working relationships between Internal Audit, the NAO, the department and its agencies
• anti-fraud policies, whistle-blowing processes and arrangements for special investigations

This includes the Teachers’ Pension Scheme Resource Accounts and the accounts of the TRA and STA.

Reporting

ARC reports in writing to the board and Accounting Officer ahead of each board meeting.

ARC provides the board and Accounting Officer with an annual report to support the finalisation of the accounts and governance statement. It summarises conclusions from the work it has done during the year.

Membership and attendance

The members of ARC are:

• Chair (also a Non-Executive Member of the DfE board)
• independent members
• Chair of the ESFA Audit and Risk Committee
• Chair of the SLC Audit and Risk Committee

The following officers are normally invited to attend ARC:

• Permanent Secretary
• Director General, Insight, Resources and Transformation
• Director, Operational Finance
• Head of Internal Audit
• NAO representative
• senior representatives of the department’s executive agencies, as required
• board secretariat

Other DfE officials are invited to attend and report on their areas of responsibility as appropriate.

The Head of Internal Audit and the NAO representative have free and confidential access to the Chair of ARC and meet in private annually.

The ARC may ask non-members to withdraw in order to facilitate free discussion of particular matters.

ARC is deemed quorate when attended by at least 2 of the full membership. The chair should be available for all meetings but may, if necessary, appoint a deputy from the membership. A meeting cannot proceed if it is inquorate. Where this occurs, the secretariat will make alternative arrangements.

Conflicts of interest

On appointment, and whenever circumstances change, members will provide the secretariat with a written note of any external interests, including, but not limited to:

• personal financial interests
• social and professional activities
• family members’ interests that might give risk to a real or apparent conflict of interest with matters considered by the committee

At the start of each meeting, members declare any new or changed interests relevant to the agenda. Where a potential conflict of interest is identified, members will not be involved in discussions or decisions on the matter in question.

Frequency and length of meetings

ARC meets at least 4 times a year.

Role of the secretariat

Secretariat for ARC is provided by the board secretariat. ARC minutes are drafted by the board secretariat and circulated to members once approved by the chair.

Information requirements

To meet its responsibilities, ARC will be provided with the following information:

• a progress report from the head of internal audit, summarising:
  • work performed (and a comparison with work planned)
  • key issues emerging from the work of internal audit
  • management response to audit recommendations
  • changes to the agreed internal audit plan
  • any resourcing issues affecting the delivery of the objectives of internal audit
• a progress report from the NAO representative summarising work completed and underway, emerging findings and value for money reports
• a report summarising any significant changes to the organisation’s strategic risks and a copy of the high level risk register
• reports on the management of major incidents, near misses and lessons learned when appropriate
• proposals for the internal audit charter
• the internal audit strategy
• the head of internal audit’s annual opinion and report
• quality assurance reports on the internal audit function
• all internal audit reports where the opinion is red or amber
• proposals for action in response to advice or direction from HM Treasury’s internal audit and assurance group
• NAO value for money reports
• reports on plans for and progress with the implementation of recommendations from PAC reports and NAO value for money reports
• reports from the TRA and STA on audit and risk issues
• the draft accounts and annual reports of the TRA, STA and the Teachers’ Pensions Scheme
• the DfE group accounts and annual report – at 9 month, draft and final stages
• the draft governance statement
• critical accounting policies and reports on any changes to these policies, including those of the TRA and STA
• external audit’s management letter, including the plans for managing the current audit
• a report on co-operation between internal and external audit
• the risk management strategies and the systems and processes for monitoring and managing them of the DfE group
• reports on arrangements for the prevention of fraud and error and their operation
• reports on whistle-blowing policies and their operation

Evaluation

ARC periodically reviews its own effectiveness and reports the results to the board.