Steve Turpie, Chair of Audit Committee David Swales, Assistant Director of Finance

Transcription

1 PRESENTED BY: PREPARED BY: DATE PREPARED: 27 June Background 1.1 The Audit Committee of West Suffolk NHS Foundation Trust is established under Board delegation with approved Terms of Reference that are in line with those set out in the NHS Audit Committee Handbook. 1.2 This report covers the year from 1 April 2012 to 31 March The Committee, which consists of 4 Non-Executive Directors, has met on five occasions during the year to discharge its responsibility for scrutinising the risks and controls that affect all aspects of the organisation s business. 1.4 The meetings have also been attended, by invitation, by the Chief Executive, the Executive Director of Resources, the Executive Chief Nurse, the Medical Director, the Trust Secretary, the Assistant Director of Finance, Internal Audit, External Audit and the Counter Fraud Service. The Chair of the Trust has also attended the Committee meetings. 1.5 The Committee focuses on all aspects of Corporate Governance and excludes clinical governance and risk management. 2 Principal Review Areas 2.1 Statement on Internal Control Steve Turpie, Chair of Audit Committee David Swales, Assistant Director of Finance SUBJECT: Audit Committee Annual Report 2012/13 PURPOSE: Information and Approval The Audit Committee reviewed the Statement on Internal Control for West Suffolk Hospitals NHS Trust for the 8 months to 30 November 2011 (NHS Trust) and the 4 months to 31 March 2012 (Foundation Trust) and confirmed that it is consistent with the view of the Committee on the Trust s system of internal control The Audit Committee received the Head of Internal Audit opinion 2011/12 and noted its conclusion that it can Based on the work undertaken in 2011/12, significant assurance can be given that there is a generally sound system of internal control, designed to meet the organisation s objectives, and that controls are generally being applied consistently. However, some weakness in the design and inconsistent application of controls put the achievement of particular objectives at risk. The key risks and issues were:- Data Quality Data Capture We considered the risk The Trust fails to receive all relevant income as patient notes do not record all key data required for accurate coding and charging of HRG. This results in financial loss for the Trust. During this audit which covered one division within the Trust we noted gaps in the completeness of data recorded.

2 2.2 Annual Accounts Approval The Committee reviewed the Annual Accounts, Annual Report and the Letter of Representation for the 8 months to 30 November 2011 (NHS Trust) and the 4 months to 31 March 2012 (Foundation Trust) and recommended these for signature by the Trust Board. 2.3 Terms of Reference The Committee is required to review its Terms of Reference (ToR) during the year A revised version of the Terms of reference was agreed at the meeting on 27 July A further review of these is due to take place at the Audit Committee meeting on 26 July Governance Documents The Committee has a duty to undertake a review of the Trust s Governance Documents on an annual basis. These comprise the Standing Orders, Standing Financial Instructions and The Scheme of Delegation These were reviewed and agreed at the Audit Committee meeting on 26 April These amendments arose following reviews undertaken by the Trust s Internal Auditors. The principal amendments were: Updates required as a result of the Bribery Act Changes required to the debt write off policy 2.5 Governance In respect of Governance the committees responsibilities are set out in the terms of reference as: The Committee shall review the establishment and maintenance of an effective system of integrated governance, risk management and internal control, across the whole of the organisation s activities (both clinical and non-clinical), that supports the achievement of the organisation s objectives. The Audit Committee will look to the Quality & Risk Committee for assurance on items of clinical quality and corporate risk, including: health & safety, research and information governance The Committee achieved this through a number of actions:- Monitor and review the Annual Governance Statement Receiving the annual Head of Internal Audit opinion Receiving the report of the External Auditors on the annual accounts Receiving the Annual Governance Report from the External Auditors Reviewing the effectiveness of the Board Assurance Framework (with support from internal audit)

3 2.6 Charitable Funds Annual Accounts The Board delegated to the Audit Committee, approval of the Charitable Fund accounts for the full year to 31 March The committee approved the accounts at its January 2013 meeting As agreed with PKF (the Charitable Funds auditors) the Charitable Funds Accounts for 2011/12 would be approved via direct approval from the Trustees of the Charitable Fund. This process has been completed and the accounts have been approved. 2.7 External Audit Plan The External Audit plan and the fee levels for the accounts for the year ended 31 March 2013 was approved at the January 2013 audit committee meeting The audit plan together with the audit fee for the 2012/13 period of accounts was reviewed and approved in January This was the second plan submitted by the external auditors, PKF It was reported at the January 2013 Audit Committee meeting that PKF were to merge with BDO. The merged firm will be called BDO. It was subsequently confirmed that the merger had occurred as noted. 2.8 Internal Audit Plan The Audit Committee held a workshop during December 2012 to identify key areas for focus within the Internal Audit Plan and for the Audit Committee. The areas identified were as follows:- Data quality, both in terms of validity of the data and its use to support effective decision making Clinical effectiveness, including how outcomes at a service level (e.g. stroke) are monitored and escalated. This area also overlaps with the proposed review of clinical audit Financial sustainability, as well as undertaking the mandated financial monitoring work to develop mechanism to review and monitor financial sustainability The Audit Committee reviewed and approved the updated Internal Audit Strategy 2011/ /14 including the detailed plan for 2012/13 prepared by RSM Tenon 3 Other work undertaken 3.1 Internal Audit The Committee received reports from the Head of Internal Audit on the progress made on audits undertaken during the year.

4 3.1.2 The Committee received the RSM Tenon Annual Report of the Internal Audit Service 2011/ The Committee monitored progress made on recommendations made in Internal Audit reports. The process for monitoring these was updated to a more robust system and it was noted that this was working effectively The Committee received a report on the Board assurance Framework deep dive review. It was reported that the Trust had robust assurance processes which had been greatly strengthened since the report the previous year Other matters discussed with Internal Audit included:- 3.2 External Audit Business continuity plans audit report RSM client briefings and how these are followed up through the Trust Network security audit report The Committee received the following reports from the External Auditors:- o 2011/12 Report to those charged with governance (IAS 260) (May 2012); o Audit opinion for the 8 months to 30 November 2011 financial statements, incorporating the conclusion on use of resources (May 2012); o Audit opinion for the 4 months to 31 March 2012 financial statements, incorporating the conclusion on use of resources (May 2012); o Quality Accounts Audit Report (July 2012) o Annual Audit Letter (October 2012). o Annual Audit Plan 2012/13 (Jan 2013) The Committee monitored progress made on recommendations made in External Audit reports through the same system as internal audit recommendations The Trust undertook a market testing exercise for External Audit services. Following a formal tender process including a supplier evaluation day the Committee recommended to the Board of Governors that PKF (subsequently BDO) be appointed. This recommendation was approved by the Board of Governors 3.3 Counter Fraud The Committee approved the Counter Fraud plan from RSM Tenon for 2012/13 at the April 2012 meeting The Committee received regular update reports from the Counter Fraud Service on any issues found during the course of the work The Committee received the 2011/12 Annual Report of the Counter Fraud Service on 26 April 2012.

5 3.3.4 Other matters discussed with Counter Fraud included:- Counter fraud survey and benchmarking of counter fraud Bribery Act implementation Local proactive exercise on declaration of gifts, hospitality and interests Specific fraud investigation reports 3.4 Sub Committee Minutes Throughout the year the Committee received and discussed the minutes of the Quality and Risk Committee Any matters of concern were referred back to the committee for further clarification or work. Any matters that required escalation or action by other committees were raised at the appropriate committee. 4 Self Assessment Checklist The Audit Committee completed the Audit Committee: Self Assessment Checklist. The purpose of this checklist is to self assess the Committee and its work. The checklist lists issues that are relevant to Audit Committees. The issues are graded 1. 1 Must do 2. 2 Should do 3. 3 Could do All the members of the Audit Committee reviewed the checklist and a combined response was derived. Responses were also sought from Internal and External Audit to provide an independent external view. The checklist is shown in appendix A. The results of this for members of the Audit Committee are as follows:- Yes No N/A Total Status 1 Must do Status 2 Should do Status 3 Could do Where any member of the committee indicates that a requirement is not met it is recorded as a no The table shows a total of 8 items that were not being met; however all of the items were noted as being met by the majority of Audit Committee members As a result of these responses a supplementary report has been produced that examines these 8 items in more detail. This report will seek to provide assurance that the measure is in place or whether an action point is required. The report is shown in Appendix B.

6 4.1.5 Internal and External Audit were asked to complete the assessment to be an independent view on the workings of the Committee. The following were raised:- There was no formal charter between the Trust and Internal Audit. This is a separate item to be agreed by the Audit Committee. The cost of the committee this is addressed in Appendix B The process to raise material objections on the Internal audit plan this is addressed in Appendix B Does the Committee review the draft accounts before the start of the audit given the timescales this is difficult to achieve, however the Trust Board receives a report of the financial position at its April Meeting 5 Audit Committee Responsibilities performance As part of its responsibilities the Committee should assess its performance against its terms of reference. To demonstrate it has met this responsibility a comparison of the Committee s terms of reference to its minutes has been undertaken. Appendix C shows the results of this work This review demonstrates that the Committee has discharged its responsibilities under the current terms of reference. 6 Audit Committee Impact It is important that the Audit Committee makes an impact on the Trust, particularly around ensuring the robustness of the Governance Structure In assessing this, it is important to note that the main reports submitted to he Committee by External and Internal Audit supported the robustness of the Governance structure There were a number of specific areas where the Committee undertook action to address issues or where specific items were raised and discussed amongst these were The Committee received a paper on the process for monitoring supply chain risk. The process was agreed and a monitoring system was put in place to assure the committee that this was working as prescribed. The Committee received reports on losses and special payments at each meeting. Where levels of pharmacy exceeded the tolerance of 0.3% of issues a more detailed analysis was undertaken. The level of losses exceeded the tolerance in two separate months and reports were provided giving further details and explanations. The majority of other losses related to bad debts and patient property. Bad debts generally related to emergency treatment for overseas visitors where payment could not be obtained before treatment and was nor recovered subsequently. The Committee received reports on waivers. The report was updated to incorporate details of how VFM was considered as part of the procurement process. The updated report was well received by the committee. The Committee requested that to assist members of the Committee two files of information should be produced. The first file to contain standing data such as SFIs and ToR and guidance issued by Monitor, the HFMA and the Audit Commission. The second file will contain information that will support

7 the completion of the annual checklist and the Audit Committee duties. These files were received on 24 April The committee received a report on the Trust Accounting Policies. Discussions took place concerning Income Recognition, critical judgements and accounting for early retirements The above items reflect that the Committee has had a positive impact on the governance arrangements of the Trust 7 Conclusion 7.1 This report highlights the main areas of work undertaken by the Audit Committee during the period. It demonstrates that the Committee operated effectively and had a positive impact on the Trust. 7.2 The Committee is asked to review the report, make any changes and approve a final version for submission to the Trust Board.