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Audit and Risk Committee

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The Audit and Risk Committee (ARC) provides assurance to the Board on annual financial statements, internal audit activity, the effectiveness of internal and external audit and the effectiveness of SFC’s risk management arrangements.

Membership and Meetings

Committee Membership

SFC Board Members

Committee Clerk

Gillian Phillips
email: gphillips@sfc.ac.uk

Next Meeting Dates

  • 1 November 2024
  • 28 February 2025
  • 13 June 2025
  • 5 September 2025
  • 12 December 2025

Standing Orders

Legislation and Background

  1. The Further and Higher Education (Scotland) Act 2005 established the Scottish Further and Higher Education Funding Council. Schedule 1 of the Act makes provision for certain administrative and other matters with respect to the Board including the establishment of Committees.
  2. Schedule 1 states that:
  • The Board may establish committees for any purpose relating to its functions [section 13].
  • The Board is to determine the composition of its committees, the terms and conditions of committee membership and the procedure (including any quorum) of its committees [section 14 (1)].
  • Any of the committees of the Board may include persons who are not members of the Board [section 14 (2)].
  • The Board is to pay the members of its committees (whether or not they are also members of the Board) such allowances as the Scottish Ministers may determine [section 14 (3)].
  • The Board is to keep under review the structure of its committee and the scope of the activities of each [section 14 (4)].
  1. Schedule 1 also states that the Board may authorise any of its committees to exercise such of its functions to such an extent as it may determine [section 15 (1)]. Delegated authority for each committee is contained in the remit for each committee as agreed by the Board.
  2. At its meeting on 3 October 2005, the Board agreed to establish an Audit Committee. The remit, membership and standing orders were approved by the Board at its meeting on 19 March 2006. The remit of the committee is reviewed on an annual basis.
  3. An Audit Committee is required under the terms of the Framework Document between the Scottish Government and the SFC.

Remit of the Audit and Risk Committee

Responsibilities

  1. The Framework document[1] between the Scottish Government and SFC requires the establishment of an Audit Committee. The Audit and Risk Committee( ARC) fulfils this role and advises the Board by reviewing the comprehensiveness and reliability of assurance on governance, risk management, the control environment and the integrity of financial statements and annual report and accounts. Within this, the committee should have particular engagement with the work of internal audit, risk management, the external auditor and financial management and reporting issues.
  2. The Committee will provide assurances to the Board on the:
  • Annual financial statements, the annual report and accounts of the organisation, including the process for review of the accounts prior to submission to the Board.
  • Planned activity and results of both internal and external audit.
  • Adequacy of management response to issues identified by audit activity.
  • Effectiveness of internal audit (including that the committee will undertake an annual assessment of the effectiveness of the internal audit function) and the tendering and appointment of internal audit.
  • Effectiveness of external audit, including that the committee will make recommendations to the Board on the appointment / re appointment of the external auditor.
  • Effectiveness of the risk management and internal control environment (receiving an annual update on procurement and information management).
  • Assurances relating to the corporate governance arrangements for the organisation, secured through regular review of the risk register, through internal audit and/or committee commissioned deep dives.
  • Anti-fraud, anti-bribery and corruption and whistle-blowing policies.
  1. The Committee is an advisory body with no executive powers. However, it is authorised by the Board to investigate any activity within its terms of reference and to seek any information it requires from staff in the conduct of its enquiries. The Committee is authorised to obtain independent professional advice if it considers this necessary. The Committee should be mindful of the cost of such resources.

[1] Our governance – Scottish Funding Council (sfc.ac.uk)

Membership of the Audit and Risk Committee

  1. As set out in the Further and Higher Education (Scotland) 2005 Act, membership of the committee will be determined by the Board.
  2. Board Committees must have Board representation. The Chair, who will be determined by the Board, will be a Board member but not the Chair of the Board.
  3. The Chief Executive, although a member of the Board will not normally be a member of any committee.
  4. There will be no external members (i.e. members who are not Board members) on the Audit and Risk Committee.
  5. A Board member’s term of office on a committee will run concurrently with their Board term of office.
  6. There will also be regard to equalities issues in membership composition.
  7. A Board member may, by giving notice in writing to the Chair of the Board, resign as a member of a Committee.
  8. If the Chair of the Committee and the Chair of the Board are satisfied that a members’ attendance at meetings has been unsatisfactory or that the member is otherwise unable or unfit to discharge the functions of a member, they may by giving notice in writing to the member remove that person from the Committee.
  9. The Chair of the ARC will be a member (but not the Chair) of the Board. There will be at least two other members of the Board.
  10. The profile of the membership should include experience and expertise in the following fields:
  • Senior level experience of financial accounting/ audit and risk management.
  • Current knowledge of good governance and management practice.
  • Experience of the Scottish Tertiary education system to support understanding of the context the organisation is working in.

Proceedings of the Audit and Risk Committee

  1. Committee members should observe the same rules as those set out under the Code of Conduct for SFC Board members.[1]
  2. The validity of any proceedings of the committee is not affected by a vacancy in the membership or by any defect in the appointment of a member.

Quorum

  1. The quorum for a Risk & Audit Committee meeting is two members.

Role of the Chair in Committee Meetings

  1. It is the role of the Chair to see that committee business is conducted in an orderly fashion and to ensure that members obtain a fair hearing. Members wishing to speak shall do so through the Chair.
  2. The Chair is also responsible for leading the meeting to reach decisions. The committee will normally make decisions on the basis of agreement by consensus but where the Chair believes it to be in the interest of the progress of a debate, or where it is proposed and seconded by two members present, the Clerk may be asked to count and record a vote by a show of hands.
  3. As set out in the SFC’s Scheme of Delegation, generally committee are expected to take matters as far as appropriate before making recommendations to the Board. The Chair of the Committee will normally have responsibility for judging when it is appropriate to make recommendations to the Board: where items are routine they will stay with the committee until the final stage of decision making. Where items are novel, unusual or potentially contentious, proposals should be considered by the Board at an earlier stage.

Collective Responsibility

  1. Committee members should be encouraged to express any differing views within the Committee’s internal decision-making process.  If a member has a reservation regarding a particular decision, they may ask for their dissent to be formally recorded in the minute. Once a decision has been reached, all members should support it.

Nomination of a Vice-Chair

  1. The Chair may nominate a Vice-Chair to act as deputy in the absence of the Chair at Committee meetings. This nomination will be subject to the approval of the committee.

Clerk to the Committee

  1. The Clerk to the Committee will advise the Chair on the conduct of Committee business and agenda planning.  The Clerk will also advise Committee members on formal matters relating to the Committee.

External and Internal Auditors

  1. SFC’s external and internal auditors will receive a copy of all papers. Both the external auditors and the internal auditors will have confidential access to the Chair of the Committee.

Register of Interests

  1. All members are required to complete a register of interests form on appointment (Board members complete this form on appointment to the Board) and must notify the Clerk when any changes need to be made. Members’ registers of interest will be made publicly available on the Scottish Finding Council website.
  2. If any member has, or could be perceived to have, an interest in a matter that is being considered by the Committee, then it is their duty to declare that interest at the start of the meeting or as soon as they become aware of it, whether or not that interest has already been recorded in their register of interests.  This declaration will be recorded in the minutes by the Clerk. As set out in the Board Code of Conduct, members will not remain in the meeting nor participate in any way in those parts of meetings where they have declared an interest.
  3. Whilst individual members have a responsibility to consider their position with regards to any registration of interest, prior to the meeting the Clerk will consider the agenda in the context of the register of members’ interests and advise the Chair accordingly.

Attendance at Meetings

  1. Meetings will normally be attended by the Chief Executive in their role as Accountable Officer; the Deputy Director of Governance & Planning; the Head of Internal Audit or a representative and a representative of external audit.
  2. In addition, other members of SFC’s staff of may attend meetings as required for agenda items for which they are presenting information, to be available to respond to questions on matters arising from papers, to hear the debate where the Committee’s discussion will inform their work, or as part of their on-going professional development.They may not take part in Committee decisions.
  3. As set out in the legislation, a representative of the Scottish Ministers is entitled to participate in any deliberations (but not in decisions) of any committee of the Board [section 16 of Schedule 1].However, following the 2022 Ryan Review Scottish Government representatives only attend SFC’s Research Committee.

Observers

  1. Any member of the Board has the right to attend committee meetings as an observer by agreement with the Chair of the Committee.
  2. External observers may be invited to attend committee meetings at the discretion of the Chair of the Committee. External observes invited to be in attendance will receive copies of papers that do not contain commercially sensitive and/or confidential information. Observers will be asked to leave the meeting for agenda items which relate to commercially sensitive and/or confidential items.
  3. Observers are encouraged to take part in discussions, but may not take part in decisions.

Timing of Meetings

Scheduled (or ordinary) meetings

  1. The Committee will meet on an appropriate number of occasions in a year to carry out its duties effectively but will meet at least three times per year.
  2. The schedule of meetings for each year will be agreed by the Committee in the previous year, following consultation with the Chair by the Clerk and taking into account the dates of Board.

Extra (or special) meetings

  1. The Chair may convene additional meetings as they deem necessary. The Accountable Officer may also ask the committee to convene further meetings to discuss particular issues on which they wants the Committee’s advice.

Agenda and papers

Agenda items

  1. Any member can, by contacting the Clerk to the Committee, suggest items of business. The agenda and designation of business will be decided by the Chair.
  2. Items for endorsement or for noting will be starred (*) on the agenda and the Chair will ask at the start of the meeting whether members wish to discuss any of the starred items.  (Members should notify the Clerk to the Committee of this wish in advance of the meeting.)  Unless members specifically ask to discuss these items, the Chair will assume that they have been endorsed or noted.

Distribution of agenda and papers

  1. The agenda of business and accompanying papers will normally be distributed no later than one week before a scheduled meeting of the committee.

Freedom of Information

  1. In some cases, particular documents may be subject to disclosure exemptions under the terms of the Freedom of Information (Scotland) Act 2002.  Where this applies, the particular exemption(s) will be stated.

Approval of minutes of Committee Meetings

  1. Minutes of a Committee meeting will be submitted to the Chair for preliminary approval, and thereafter to the subsequent meeting of the Committee for formal approval.

Reporting to the Board

  1. The approved minutes of each committee meeting will be reported to the Board at the next scheduled Board meeting for noting.
  2. At each Board meeting, there will be an opportunity for the Chair to raise verbally matters that they think the Board needs to be aware of.
  3. The Committee will also conduct an annual self-evaluation and produce an annual report for consideration by the Board.

Review

  1. The committee remit and membership will be reviewed annually and proposed changes submitted to the Board for approval. It will also conduct an annual effectiveness review and report the outcomes to the Board. This should be informed by good practice such as the National Audit Office’s Audit and Risk Effectiveness tool[2] and Scottish Government guidance.[3]

 

[1] Our governance – Scottish Funding Council (sfc.ac.uk)

[2]  Audit and Risk Assurance Committee effectiveness tool (nao.org.uk)

[3] Supporting documents – Audit and Assurance committee handbook – gov.scot (www.gov.scot)

SFC Strategic Plan 2022-27

Building a connected, agile, sustainable tertiary education and research system for Scotland.

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