Action/Decision Assurance Information X. The paper provides information on: Internal Audit work External Audit work Local Counter Fraud issues

Transcription

1 Agenda Item 10.1 Meeting / Committee Board of Directors Meeting Date 30 October 2012 This paper is for Action/Decision Assurance Information X Title Minutes of an audit committee meeting held on 19 July 2012 Purpose The purpose of this report is to inform Board members of the debate held at a recent audit committee. Summary The paper provides information on: Internal Audit work External Audit work Local Counter Fraud issues Prepared by David Kirby Sally McMaster Presented by David Kirby Recommendation The Board of Directors is asked to note the attached minutes, which were approved by the audit committee on 27 September Implications Legal Financial Safety & Quality Strategic Risk & Assurance X X X

2 PRESENT MINUTES OF THE AUDIT COMMITTEE MEETING HELD ON THURSDAY 19 JULY 2012 AT 9:30 AM IN THE BOARD ROOM, THE JAMES COOK UNIVERSITY HOSPITAL Mr D Kirby - non-executive director (committee chair) Ms H Wallace - non-executive director Mr H Lang - non-executive director IN ATTENDANCE Mr R Auty - engagement manager - PwC Mr L Dobbing - audit manager Audit North Miss K Douglas - senior manager - PwC Mr I Fuller - head of corporate finance Ms R James - deputy director of healthcare governance and quality Mrs S McMaster - senior administration officer Mr C Newton - director of finance Mrs A Smith - Assistant director of nursing / children s champion (agenda item 8) Mr J Whitehouse - director of audit - Audit North 1 APOLOGIES FOR ABSENCE Apologies for absence were received from Dr G Ewart OBE, non-executive director;mr S Fallowfield, assistant director of audit Audit North; Mrs C Parnell, company secretary/executive assistant to the chief executive and Mr G Thompson, assistant director of audit 2 MINUTES OF THE MEETING HELD ON 24 MAY 2012 Decision 19Jul12 No01 The minutes were agreed and accepted as a true and correct record, subject to the following amendments being made: Internal Audit Annual Report 2011/12 There had been a duplication of words in this section. 6.1 Internal Audit progress report to 30 April 2012 Mr Fallowfield also gave an update on progress with recommendations in relation to the Homecare Companies report ref. 23/10. The Committee expressed concern that progress on this matter had not been made, and requested, if possible, internal audit provide additional support to help progress this matter. The word not had been omitted from the unconfirmed minutes. 1

3 3 MATTERS ARISING FROM THE 24 MAY MEETING, NOT INCLUDED ON AGENDA 3.1 Matters arising There were no matters arising. Decision 19Jul12 No Action Plan The action plan would be updated to reflect the following decisions:- Minute Ref 04Oct11 No24 Business Plan Ref Item A centralised rostering project South Tees NHS Foundation Trust Audit Committee Action Point Detailed discussion took place around these two papers and accompanying presentation. Members noted Alison Smith that planning annual leave was a significant element of managing rostering and that the trust should give consideration to ensuring this also applied to other staff groups. It was agreed that Mrs Smith would be invited to attend a future audit committee meeting to present an update paper on e rostering benefits realised. Lead Expected date of completion When appropriate status following 19 July 2012 meeting completed outstanding next meeting 22Mar12 No20 09Nov11 No16 24May12 No07 24May12 No17 24May12 No19 Local Counter Fraud - Progress Report Mr Whitehouse to report back on publicity for redress/sanctions. John Whitehouse Jul-12 update following discussion at risk and assurance committee (corporate risk register) PwC Management Letter on the Trust accounts 2011/12 The chairman acknowledged the work that had been undertaken in relation to the risk register and invited Ruth Ruth James James to return to the audit committee in six months time to give feedback on how valuable the exercise had been. It was noted that the audit of Charitable Funds was on-going and these would be brought to the July meeting. PwC Jul-12 Internal Audit progress report to 30 April A summary of the findings from the IM&T ICT User Satisfaction Survey and the Healthcare Records Survey Stuart Fallowfield 2012 would be provided for a future meeting. Annual Counter Fraud Plan 2012/13 Mr Fuller agreed to bring a paper to a future meeting to explain the process for companies changing bank Iain Fuller accounts and how to confirm that payments have been made to a valid company and to the correct bank account. Jul-12 Jul-12 Jul-12 19Apr12 No16 24May12 No21 24May12 No15 Any other business Mr Newton informed the committee that he would wish to bring the trust finance director analysis arising from Chris Newton the PwC stepping up report, to the July meeting Counter Fraud Annual Report 2011/12 Mr Thompson would produce a table showing Trust data in relation to types of fraud being reported, Graham Thompson compared with those being reported nationally. Review of Annual Financial Statements It was agreed that discussions would take place outside the meeting with the chairman, PwC colleagues and David Kirby including full set of accounts 1 April Mr Newton to discuss planning schedules for 2012/13. Chris Newton 2011 to 31 March 2012 PwC Jul-12 Jul-12 When appropriate Outstanding Outstanding Decision 19Jul12 No03 2

4 4 AUDIT COMMITTEE BUSINESS PLAN The audit committee business plan would be updated to reflect discussions and actions completed at the meeting. ToR Ref Audit Committee Terms of Reference Status 11.0 Ensure appropriate development and training of committee members b Review statement on trust compliance policies Annual review by the committee of the performance of the external auditor How the work of other committees supports the Audit Committee Decision 19Jul12 No Members annual declaration of training needs In accordance with the Audit Committee Terms of Reference, committee members are required to make an annual declaration of training needs, to ensure appropriate development and training. Audit Committee members had identified the following areas for further development and/or training:- Topic Reference costs and other issues related to tariff Service Line Management Financial Risk Ratings and Prudential Borrowing Private practice arrangements and scope for development plus other commercial opportunities To be provided by Simon Gregory Head of Costing and Contracting Iain Fuller Head of Corporate Finance Investment Committee Type of requirement Audit Committee Workshop Audit Committee Workshop General learning opportunity Mr Kirby s paper stated that development sessions are provided on an ongoing basis, in order to address the training and development needs of audit committee members. Suitable conference and training opportunities would continue to be identified on an ad hoc basis to ensure that members remain current with national thinking. The committee were asked to consider and approve the above training plan for Audit Committee members. Decision 19Jul12 No05 The committee considered and approvedthe training plan for Audit Committee members. 3

5 4.2 Review statement of Trust Compliance Policies and Processes Ms James had prepared this paper to provide the Committee with an update on current regulatory requirements and the processes and policies, which provide assurance that these are being met. CQC and Monitor had provided an overarching framework for assessment of compliance with regulatory requirements supported by the NHSLA risk management rating. The Trust s processes to support on-going compliance were well embedded and had been tested through a number of routine inspections. Trust policies were being reviewed to ensure that they were applicable across acute and community services and those relating to the NHSLA risk management standards had been aligned as a priority and would be assessed by the NHSLA in August Members discussed the position of any non-compliance with bodies where such non-compliance would not affect CQC registration. It was agreed that this was a matter for the Integrated Governance Committee (IGC), to establish the assurance process and this would be revisited by the Audit Committee in its next review. The Committee were requested to receive the report and support that appropriate assurance was given. Decision 19Jul12 No06 The Committee received the report and supported that appropriate assurance was given. Decision 19Jul12 No07 The IGC established the assurance process for those bodies where noncompliance does not affect CQC registration. 4.3 Annual review by the committee of the performance of the external auditor The Director of Finance and his senior team had discussed the audit team added value and self-assessment statement with PwC, and broadly concurred with their comments. In particular the Director of Finance endorsed the quality of the content of PwC reports and their answering of queries in a timely and helpful manner. He flagged his hope that there would be continuity in approach from their team despite the inevitable changes in its membership since the 2011/12 audit cycle. In accordance with the contract for the provision of external audit services, a copy of this report would also be presented to the Council of Governors. Decision 19Jul12 No08 4

6 4.4 How the work of other committees supports the Audit Committee It was noted that the work of the Integrated Governance Committee and its sub-groups had their own distinct roles but also supported the role of the Audit Committee. The purpose of this report was to demonstrate that the duties described in the terms of reference of these supporting groups had been met. Each of the supporting groups had produced an annual report describing the work undertaken in 2011/12 to deliver the duties described in their terms of reference. The Integrated Governance Committee annual report for 2011/12 incorporated a summary of the sub group s annual reports and was approved by the Board of Directors in May The Committee was asked to consider the conclusion that the committee structure supported the work of the Audit Committee and that the annual reports provided evidence that duties of the relevant groups within the committee structure had been carried out during 2011/12. The committee structure, which was shown on at appendix 1 of this report, showed the Audit Committee as being a sub-committee of the Board of Directors. Following discussion Mr Whitehouse suggested that the chart be revised to show the Audit Committee as being the senior sub-committee of the Board, being the only one constituted by Non-Executive Directors. Decision 19Jul12 No09 5 AUDIT NORTH 5.1 Internal Audit progress report to 31 May 2012 The audit committee were requested to note progress in relation to the 2011/12 Internal Audit Plan. Specifically; Thirteen outputs had been completed since the last progress report, with four reports awaiting responses from management. Outstanding recommendations continued to be closely monitored and the overall number of high priority actions had reduced since the previous period of reporting. Medium grade recommendations had also reduced. There were 7 high recommendations that had not been fully implemented, 5 medium and 5 low. The report showed that the following assignments were now complete:- 34/12 - Homecare Companies IM&T Networks Continuous Testing Q4 24/12 - Prime Contracts follow up. Section 2 - Assignment summaries Mr Whitehouse ran through this section, which summarised audit North s objectives and the issues that had arisen for all assignments issued in the period. Healthcare Records File Structure- Ref 11/12 5

7 The chairman requested the inclusion of a summary in the next progress report, to show the selection process for the sample of patient Healthcare records for this survey. Community Services Healthcare Governance Medical Devices Training - Ref. 20/12 Community Services - Annual Leave Records Follow Up - Ref. 39/12 Community Services - Professional Registration and Employment Checks - Ref. 40/12 Compliance terms of Authorisation - Ref. 06/12 Mr Fuller expressed a view that incorrect information was included in relation to the recognition of income for over performance on healthcare contracts as reported to the Board. The Chairman requested feedback from Audit North at the next meeting on the audit / governance arrangements for clinical research networks where the Trust was involved. Patient Tracking and Patients Management Process- Ref. 07/12 Charitable Funds - Ref. 16/12 Infection Control previous reports - Ref. 35/12 Section 3 Performance. A table showing Management Satisfaction Surveys (June 2011 to May 2012) indicated good client feedback on the large majority of audit assignments undertaken. Section 4.1 This section indicated actions for the trust and community services, which were currently overdue for completion. Section 4.2 This section addressed areas where Audit North were seeking approval for changes to the Annual Plan for 2011/12 and 2012/13:- Capital Project Management and PFI Soft FM Services Review of Recruitment Process The Director of HR had requested a specific review of the recruitment process, following concerns expressed by a member of the public. A discussion would take place with Executive Directorsto ascertain which audit assignment can be substituted this review for within the current 2012/13 Internal Audit plan. The Committee were requested to note that an audit of Registration Authority had been omitted from the 2012/13 Audit Plan in error. A request was made for the approval to include this additional review in the plan for completion during 2012/ Prime Contracts Follow-up. As part of the 2011/12 internal audit plan a follow up review had been completed of the Prime Contracts report issued in 2010/ Summary of Responses to Surveys. Appendix 3, included a summary of 6

8 the key conclusions from two electronic surveys conducted on behalf of the Trust: ICT User Satisfaction Survey; Healthcare Records Survey. Sections 4.5 and 4.6 covered issues in relation to continuous testing. As part of the programme of continuous testing, Audit North had reviewed and refreshed their approach to this work and the individual tests. Appendix 1 included the Annual Plan Schedule. Appendix 2 included a summary of outstanding high priority recommendations for the Trust at 31 May /10 Use of Homecare Companies 03/12 Theatres General Controls Review MRCCS 08/11 Review of Professional Registration and CRB monitoring. Progress would continue to be monitored and reported back to future audit committee meetings. Note the content of the report and progress to date. Review and approve proposed changes to the Internal Audit plan. Decision 19Jul12 No010 Members noted the content of the report and progress to date. Decision 19Jul12 No011 Changes to Annual Plan for 2011/12 and 2012/13 in relation to Capital Project Management and PFI Soft FM Services and also the Review of Recruitment Process were approved. Decision 19Jul12 No012 Healthcare Records File Structure - Ref 11/12 - The chairman requested the inclusion of a summary in the next progress report, to show the selection process for the sample of patient Healthcare records for this survey. Decision 19Jul12 No013 The Chairman requested feedback from Audit North at the next meeting on the audit / governance arrangements for clinical research networks where the Trust was involved. 6 LOCAL COUNTER FRAUD 7

9 6.1 Counter Fraud Update July 2012 Mr Whitehouse presented this report to inform the committee of counter fraud activity for the period April to June The update report outlined all Local Counter Fraud Service work, both proactive and reactive, undertaken by Audit North in the period April 2012 to June 2012 and reflected the following: Revised NHS Protect Strategy Revised Plan and approach Positive acceptance by the Director of Finance and Director of HR about closer integrated working attempting to raise awareness of fraud risk throughout the organisation. Mr Whitehouse informed the committee of the details in relation to five referrals which had been received during this reporting period. The committee were also updated on an on-going investigation and the likely financial implications for the Trust which may result from this incident. Debate took place around on-going and planned activity to prevent and deter fraudulent acts within or against the Trust and how awareness through publicity and other means could be best used to achieve increased awareness. An update report would be brought to a future meeting. The committee were asked to note the contents of the report. Decision 19Jul12 No014 An update report would be brought to a future meeting. 7 MANAGEMENT LETTER ON THE CHARITABLE FUNDS AUDIT The Chairman suggested that this item should be deferred until the 27 September meeting, when the Charitable Funds accounts would also be presented. Decision 19Jul12 No015 It was agreed that this item be deferred until the 27 September meeting. 8 BENEFITS REALISATION E ROSTERING Mrs Smith presented this follow up report, which summarised the tangible benefits that have been realised from the introduction of E-Rostering into the organisation to date. An update in relation to Centralised Roster production project was provided, along with a summary of avoidable costs to the organisation. Future implementations and plans were detailed within the report and it was noted that further areas for improvement in roster management were proposed. Key issues:- 8

10 Actual savings which were identified from the pilot of centralised rostering. Potential avoidable costs were highlighted and therefore potential further cost savings were highlighted. Roster management post production was an issue which had impacted on potential further savings. Annual leave management remained a concern to the organisation and was reported to be leading to over and under rostering and creation of additional duties at an additional cost to the organisation. A performance management approach would be undertaken in the organisation in relation to roster management. Options for consideration and recommendations were provided in the report. Lengthy discussion took place around the report, with particular emphasis on ensuring the Trust realised the financial benefits available. Members were keen to see that e rostering reduced the need for agency staff provision, thereby reducing cost and improving quality through better use of Trust employed staff. Audit committee were asked to review the report and note findings. Decision 19Jul12 No016 The committee reviewed the report and noted the findings. Decision 19Jul12 No017 Mrs Smith would be invited to attend future Audit Committee meetings as appropriate to provide on-going updates. 9 DIRECTOR OF FINANCE S REPORT This report set out details of current issues relevant to the audit committee. Request for change in vendor bank details Following an investigation at a local trust relating to a change in vendor bank details, a review of procedures had been undertaken in conjunction with Internal Audit. Whilst there was no evidence of fraud, opportunities were identified to further improve internal controls. A copy of the revised procedures was attached for information. 'Above the Parapet' This document was published on 3 July, following PwCs Stepping-up report. The publication emphasised the importance of the role and leadership of the finance function and the increasing pressures faced to cut expenditure. Mr Newton ran through the trust finance director analysis arising from the stepping up report. In the main Mr Newton s responses appeared to be in line with the report. Members were keen to see greater emphasis on financial planning and forecasting. 9

11 The categories covered in the report led to debate amongst Audit Committee members about what they would want to see included in routine finance reports. Links to the followingpublications / were also attached for information: - - Monitor FT Bulletins published on 18 May and 25 June An Introduction to Monitor s future role, published on 20 June Members were requested to note the contents of the report. Decision 19Jul12 No CORPORATE RISK REGISTER UPDATE Ms James gave a verbal update on the position in relation to the Corporate Risk Register. The Committee asked to be kept updated on risks. Decision 19Jul12 No019 Ms James would provide on-going updates at future Audit Committee meetings as appropriate. 11 REFERENCE COSTS Mr Fuller presented this paper for information in accordance with the Reference Costs Guidance for 2011/12. The aim of reference costs is to give comparable information across Trusts. A copy of a reference costs presentation was attached, which showed how South Tees compared to other northern trusts against the reference costs index for 2009/10 and 2010/11. A third graph showed the South Tees index value for 1997 to A further table was circulated which showed the different elements which make up the Trusts overall reference cost index e.g. in-patients, out-patients etc. For each trust a Market Forces Factors (MFF) adjustment is made to the reference cost index to allow a like for like comparison between trusts to be made. This adjustment could be positive or negative depending upon local economic indicators. This differs from payment by results (PbR) where MFF is nil or a positive adjustment. The Trust had a reference cost index of 100 for the financial year 2010/11, which equates to the national average. This is considered reasonable given the size and complexity of the Trust and the fact that we have a large PFI. Mr Kirby suggested that it would be useful for members to attend a workshop with finance colleagues, to gain a deeper insight into Reference Costs. This topic had been identified under item 4.1, as an area for further development and/or training. The audit committee were recommended to note this information. Decision 19Jul12 No020 MFF would be included further development and/or training. 10

12 12 ANY OTHER BUSINESS There was no further business to report. 13 NEXT MEETING Thursday 27 September :30 am Board Room, The Murray Building 11