The Learning and Skills Councils Annual Report and Accounts for ...

18. Risk matters were co-ordinated
centrally and there was regular
monthly reporting with all
key risks being considered by
the Management Group. A
Performance and Risk Report was
developed which was the means
by which business performance
was recorded; there was no
separate ‘risk register’. The report
showed both actual and forecast
performance, as well as the risks
to that performance, with details
on how these risks were being
mitigated and a forecast of the
probable outcome. The report was
shared and discussed with the
Management Group, the National
Council, sponsor department
officials and ministers.
19. The risk management process
was supported by the provision
of weekly horizon-scanning
templates completed at national
and regional levels by all directors.
These were co-ordinated centrally,
reported to the Chief Executive
and shared weekly with key senior
managers as well as the Chairman.
The horizon-scanning process was
a means of early identification
of emerging issues and risks.
Action could be taken quickly if
needed; otherwise the risk was
monitored by the Management
Group by means of the monthly
Performance and Risk Report.
20. Risk management is too often
viewed as mainly a reporting
process. To embed the process of
identification and management
of risk into the fabric of how the
business operated in that final
and very risky year, bonuses of
the Management Group and all
directors were directly linked to
identifying and managing risks
effectively. Any risks graded red
or red/amber at year end, or any
failure to identify a significant
risk, would result in 30% of the
possible bonus being nil. The
National Audit Committee was
the arbiter of risk ratings and the
Chief Internal Auditor’s views were
also considered. In the event, of
the many red risks that we started
with, only one remained at the
end of the year. As a consequence,
all management and directors’
bonuses were nil for the risk
element of their bonus.
21. During the year, the reporting
line of the Chief Internal Auditor
was changed so that he reported
directly to the Chief Executive,
with an additional right and
obligation for him to report any
matters of concern to the Chair of
the National Audit Committee.
22. The following sections describe
some of the key elements of the
risk and control framework.
Audit Committee
23. A duly constituted Audit
Committee operated through the
year and its terms of reference
reflected best practice. It consisted
of National Council members,
regional audit committee
members and co-opted members
required for their expertise; all
were non-executives.
24. In order to strengthen the
National Audit Committee,
three regional audit committee
chairs were appointed in April
2009, bringing the overall total
membership, including the Chair,
up to nine. The Audit Committee
met regularly and considered
reports from Internal Audit on
the system of internal control,
risk management and governance;
from the Provider Financial
Assurance team on providers’
systems of internal control; and
from the National Audit Office.
The Audit Committee also took
evidence from senior managers
when deemed appropriate.
Within the LSC, each region
had a duly constituted regional
audit committee which provided
scrutiny and challenge to regional
operations. A particular strength
of these arrangements was that all
regional audit committees were
required to review and advise on
each regional director’s personal
Statement on Internal Control.
In recognition of the heightened
risk level, the Audit Committee
increased the frequency of its
meetings during the year.
25. The process changed during
the year due to Machinery of
Government changes and the
move to the shadow structures of
the YPLA and the Skills Funding
Agency and the impact on regions,
groups and regional directors’
accountabilities. Regional audit
committees signed off the regional
Statements on Internal Control
from April 2009 up to the end
of September/November 2009.
Arrangements were made for
regional directors to provide
supporting statements to the end
of March 2010.
26. While the National Audit
Committee was no longer in
existence after 31 March 2010,
former members met informally
to support me in considering the
accounts and this Statement on
Internal Control in June 2010.
Management Group
27. Owing to Machinery of
Government changes and the
need for parallel transition
arrangements, the membership
of the Management Group had
increased from 15 to 20 members
by the end of 2008–09.
Leadership and Governance
LSC Annual Report and Accounts 2009–10 35