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                              REVISED MINUTES – 24 JULY 2008

Attendance: Philip Mussared (Chair), Mark Pellowe, Peter Connelly, Martina Nightingale, Charlie
Sherlock, Peter Whitehead, Bill Middleton, Noel Kean, John Holmes, Greg Byrne, Heather Watson

Other attendees: Kent Broadhead (DPC Performance Review Unit), Nadia Theore (Committee
Secretary), Yasmin Parekh (NSW Treasury)

Apologies: Stephen Horne, Ross Tyler

The Chair welcomed Heather Watson to her first meeting.

1. Record of Meeting – 28 May 2008

The Committee members endorsed the minutes from the meeting held on 28 May 2008.

2. Feedback on June CEO’s Network Briefing

The Steering Committee noted the briefing to the CEO’s Network meeting held in June was well


      The Chair recommended that the Committee consider public communication
       on the implementation program when the timing is right. Committee members
       are encouraged to raise any ideas on further communication initiatives under
       a new standing item of “Communication Strategy”.

3. Status Report – Strengthened NSW policy for internal audit and risk management: Mark

Mark Pellowe advised that the IAB has submitted a revised proposal to work on the guidelines. This
revised proposal has been provided to meet the financial constraint for the project.

Three levels of output are proposed:
       Level 1 – high level overview suitable for Boards/CEO (6 – 10 pages);
       Level 2 – guidelines for Audit and Risk Committee members and chairs and a best practice
                   Audit and Risk Committee model; and
       Level 3 – detailed Internal Audit practitioner’s guidelines.

The preparation of a risk management framework/guidelines has been removed from the project
scope, at this stage, because of budget constraints and pending consideration of alternative delivery
The Committee agreed that a Reference Group should be established to provide feedback to the
project and to consider how existing guidelines in the public sector could be drawn on for a new,
best practice guideline.

Charlie Sherlock, Peter Whitehead, Bill Middleton, Noel Kean, John Holmes, Greg Byrne and
Heather Watson agreed to participate in the Reference Group.


      Mark Pellowe to convene the Reference Group and arrange a meeting as soon
       as possible.
      The IAB proposal will not to be agreed to/signed off until the Reference Group
       has a first meeting.

4. Status Report – Establishment of pre-qualification scheme

Peter Connelly tabled papers and verbally updated the Committee on resolution of a number of
issues with the Department of Commerce and the State Contracts Control Board which have delayed
the process.

It is anticipated that 20-30 people will apply, some of whom are already serving on Committees.

It is proposed that applications will be assessed by a panel convened by the Department of
Commerce. The panel will also include representatives from NSW Treasury and the Department of
Premier and Cabinet (DPC). Discussions are underway with other organisations regarding their
participation on the panel.

A letter has been sent by the Director General of DPC to the Statutory and Other Offices Review
Tribunal (SOORT) to formally request a determination on remuneration for independent Chairs and
members of Audit and Risk Committees.

There was a question as to whether the pre-qualification scheme is a resource to assist agencies or a
mandatory requirement. The Committee agreed that the intention was that the qualification scheme
would be a resource for agencies to use. However, there may be uncertainty about how a SOORT
determination will impact.


      DPC to clarify if existing independent members and Chairs of Internal Audit
       and Risk Committees need to register/apply for pre-qualification.
      DPC to enquire as to whether a SOORT determination on remuneration for
       independent Chairs and members of Audit and Risk Committees will impact
       the remuneration of existing independent members and Chairs.
5. Status Report – Internal audit compliance assurance

Heather Watson advised that the new framework and guidelines for NSW internal audit and risk
management will impact the compliance assurance regime. Therefore, the details of the proposed
compliance assurance regime cannot be determined until the framework is in place and the Audit
Office would like to be involved in establishing the framework to ensure that it forms appropriate
criteria for a compliance engagement.

There will be a need to scope the work and consider questions such should the compliance of all
agencies be checked or a sample group? Is self assessment another alternative supported by spot
audits? There are also different levels of possible assurance, with cost an important consideration.

Heather also indicated that consideration will need to be given to who pays for the compliance
checks and what the reporting arrangements are – will they report the results to the Government, a
central agency, the audited Agency or the Internal Audit and Risk Committee?

Ms Watson advised the Committee that in 2008 the Audit Office was surveying approximately the
top 50 agencies on their governance arrangements. The survey included, for example asking each
agency if they have established an Audit and Risk Committee with an external Chair.

At this stage there is no formal compliance audit program for 2008-09 or 2009-10.

6. Status Report – Establishment of pilot agency cluster

Peter Connelly distributed a paper providing a proposal to hold a forum in August 2008 with a range
of target agencies and stakeholders.

7. Status Report – Improved better practice guidelines

This relates to the update of policy and guidance on internal audit and was covered as part of Item 3.

8. Status Report – Internal audit and risk management practitioners’ network

Stephen Horne was not in attendance. However, the Committee reviewed the papers submitted for
the item and noted the current overall membership of 72 people compared to the Review finding of
400 people in the field in the NSW public sector.

The Committee agreed to consider additional avenues to advertise the network and attract a larger


      Committee members to consider other additional avenues to advertise the
       network for further discussion at the next meeting.
9. Status Report - Strategy for access and use of internal audit technology

Charlie Sherlock distributed a paper on progress with the development of a strategy for better use of
technology. It was indicated that there were many different programs currently in use, including
many ‘home grown’ products. A more detailed update will be provided at the next meeting of the
Steering Committee.


      Committee members to provide ongoing feedback on review and potential use
       of existing internal audit technology.

10. Status Report - Internal audit and risk management human resource development

Martina Nightingale circulated the Minutes of the Internal Audit HR Steering Committee meeting
from 25 June 2008.

The Committee noted that:
   - the capability framework was almost complete and would come back to the Committee for
   - existing position descriptions had been distributed;
   - sharing of eligibility list(s), recruitment processes and resources is being considered; and
   - that the Internal Audit HR Steering Committee was implementing initiatives as they are
      discussed and dealt with.

The Committee agreed that the approach that the Internal Audit HR Steering Committee was taking
was appropriate and encouraged the Committee to roll things out as they are identified rather than
reporting back to the Internal Audit Implementation Steering Committee for approval.

The Committee agreed that there should be a designated employee within each Agency who is
responsible for ensuring management reporting to the Audit and Risk Committee on issues raised by
reviews and liaising with the Audit Office.

11. Communications Strategy

Philip Mussared introduced this item as a new standing item for Committee members to raise any
ideas in the future on communications strategies regarding the implementation program.

12. Other business

The Chair requested that all papers for consideration at future Committee meetings should be
provided to the Secretary by close of business at least two days prior to each meeting.
It was agreed that work should be undertaken in the future on the role of contract labour in providing
internal audit services.


        The Committee agreed to providing papers by close of business at least two
         days prior to each meeting.

13. Date and time of the next meeting

The next meeting of the Internal Audit Implementation Steering Committee is scheduled as follows:

Date –          Tuesday, 2 September 2008

Time –          9.30 – 11.00 am

Location –      NSW Treasury
                Conference Room, Level 27,
                Governor Macquarie Tower, 1 Farrer Place, Sydney

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