We have identified the following reports produced specifically on this subject:

By email Ben Clover cloverben@hotmail.com Freedom of Information Corporate Services Barts Health NHS Trust c/o Archives / Records Office Lower Ground Floor 9 Prescot Street Aldgate E1 8PR email: FOI@bartshealth.nhs.uk www.bartshealth.nhs.uk 3 December 2012 Dear Mr Clover Request for information Thank you for your email of 30 October 2012 to Barts Health NHS Trust requesting copies of all interim reports prepared on the issue of salary overpayments. We have identified the following reports produced specifically on this subject: Internal Audit Progress Report July 2012. This is a report prepared by the Trust s Internal Audit team and presented to the Audit and Risk Committee which sets out the findings of a review of salary overpayments at Barts and The London NHS Trust covering the period to January 2012. This report also includes details of other, unrelated internal audit reviews, and these sections have therefore been redacted. A schedule relating to the above internal audit report setting out the recommendations and the associated management responses. A paper presented to the Trust Management Board on 30 October 2012 on reducing salary overpayments. Please note that the Trust considers that disclosing the names of staff below Director or Consultant level may not be fair processing under the Data Protection Act. Therefore the attached documents have been redacted accordingly under Section 40(3) of the Freedom of Information Act. The total figure for salary overpayments for Barts and The London NHS Trust for the last financial year is 995,000, which equates to 0.25% of the total salary bill of 393 million. The majority of this amount has either been fully recovered or been fully accounted for, with just 27% of the total - 275,580 - still outstanding and being actively pursued. Barts Health NHS Trust: Newham University Hospital, The London Chest Hospital, The Royal London Hospital, St Bartholomew s Hospital and Whipps Cross University Hospital.

Salary overpayments can occur when an individual s circumstances change for example when they reduce their hours or leave the Trust - and this information is not passed to payroll in time to meet the processing deadline. In the short term the Trust is introducing simpler electronic forms for reporting staff leavers and management guidelines have been reissued. From December, managers down to ward level will receive a report for approval showing who they are responsible for paying and the potential for full positive reporting is being investigated. If possible, we will begin with a pilot in areas where e-rostering is being utilised. Over the longer term, full positive reporting will become possible with the roll out and harmonisation of e-rostering. Data on salary overpayments will be reviewed at performance review meetings and reported to the Trust Management Board monthly. Repeat offenders will be subject to disciplinary action. We rigorously pursue all salary overpayments and are confident that these new additional measure will help further to avoid their occurrence in the first place. I hope that this response meets your requirements. If you have any queries then please contact us at FOI@bartshealth.nhs.uk If you remain dissatisfied on how your request has been handled, you can complain in writing to: Freedom of Information c/o Archives and Records Centre Barts Health NHS Trust Lower Ground Floor 9 Prescot Street London E1 8PR Email: FOI@bartshealth.nhs.uk If, after we have addressed your complaint, you remain dissatisfied with how we have responded, you are entitled to appeal to the Information Commissioner (Tel: 01625 545 745). Details are shown at www.informationcommissioner.gov.uk. Yours sincerely Ian Walker Director of Corporate Affairs 2

AC 18/12 Internal Audit VFM Studies Computer Audit Data Quality Capital Audit Consultancy Counter fraud Security Management Corporate Investigations London Audit Consortium Hosted by Barts Health NHS Trust INTERNAL AUDIT PROGRESS REPORT Client: Barts Health NHS Trust July 2012 Distribution: Audit and Risk Committee Members Audit and Risk Committee Attendees Author: Jim Callaghan Assistant Director of Audit ISO 9001 CERTIFIED

Finalised Reports Section A Finalised reports are ranked in order of the level of assurance that can be provided with regard to the system of internal control based on Audit s findings, recommendations and conclusions made in the reports. The rankings will also take into account materiality and will fall into one of five categories; full, significant, reasonable, limited and none. Project Level of Assurance Full Significant Reasonable Limited None Barts and the London NHS Trust Salary Overpayments * Referral to Treatment Time * Reporting NHP PFI Performance Monitoring * Newham University Hospital NHS Trust Board Assurance Framework CQC Budget Setting Whipps Cross University Hospital NHS Trust Deloitte will present a separate report containing details of all recently finalised 2011-12 audit reports relating to Whipps Cross * The recommendations from these reports are detailed in Schedule 1. 2

Section B 1.1 Introduction and Background Salary Overpayments (BLT) (Final Report July 2012) This audit was completed as part of the Trust s Internal Audit Plan for the 2011/12 financial year. 1.2 System Importance and Key Risks The system is of high importance to the Trust. This is principally because the organisation will incur avoidable costs if robust system controls for preventing, identifying and recovering salary overpayments are not maintained. Payroll services are provided by North East London Pay Consortium (NELPC). During the 2010/11 financial year, 329 salary overpayments were made with a value of 971k. There were 207 overpayments with a total value of 838k made in the 2011/12 financial year from April to January 2012. An extrapolation of these figures shows an upward trend in the value of overpayments which could reach 1m by the end of the year with a decreased number of cases to 248. 1.3 Project Objectives and Scope The objective of the review was to evaluate the systems of control relating to the timely and accurate updating of ESR records when employees leave the Trust or changes with salary implications are made to their contracts of employment. The review sought to provide assurance that the mechanisms in place are sufficiently robust to prevent salary overpayments being made but that, where such payments are made, they are promptly identified and appropriate and effective measures are taken to recover payments made in error. 1.4 Audit Opinion The precision of audit opinions is determined by the effectiveness of audit processes and the size of the project budget particularly concerning audit testing. LAC follows a risk based approach so as to maximise the effectiveness of audit resources. It also operates a quality system that ensures compliance with the NHS Internal Audit Standards. The opinions provided only apply to the elements of the system that have been audited. The table below sets out the overall systems assurance and individual assurances for each system element. The direction of travel explains changes since the last audit. Finally the number of audit recommendations is provided, grouped by priority. Recommendations have been designed to consolidate/ strengthen significant assurance areas and move all lower levels of assurance to significant assurance once fully implemented. It should be noted that other risk factors may be identified during future reviews that could impact on the ability to allocate an improved assurance level. 3

Control Objective/ Risk Area Assurance Level DOT Recommendations by Priority High Med Low 1. Leavers are processed on a timely basis. Limited 3 2. Leavers are paid amounts there are entitled to, and overpayments are identified and recovered. Reasonable 1 (covered in Control Objective1 ) 3. Staff are paid correct amounts on changes made to their contracts. Limited 1 1 4. Controls are in place to ensure that salaries overpaid are monitored and appropriate actions taken. Limited 4 Overall Assessment Limited 1 8 The overall limited assurance level was determined because the mechanisms in place to address the Trust s long-term problem with high levels of salary overpayments are not operating effectively. In recent years, Audit have noted that the number and value of salary overpayments caused by late notification of leavers details have been decreasing, while the instances of overpayments due to late notification of employee changes have been on the increase. This trend has become particularly evident in the current financial year to January 2012. For instance: In 2010/11, salary overpayments due to late notification of leavers totalled 389k, with a lower figure of 345k relating to changes. However, for the 10 month period to January 2012, the corresponding overpayment figures were 269k and 437k. Details of salary overpayments are reported to the Operational Management Group (OMG), Audit and Risk Committee, Trust Board and Divisional senior managers for noting and for actions to be taken as appropriate. It is Audit s view however that these reporting arrangements are disjointed, as each report contains different salary overpayment information. A single, consolidated report containing detailed analysis of all overpayments made across all Trust Divisions and CAUs would identify where there are particular problems and allow directed, corrective action to be taken. The audit was also unable to verify that the Trust has robust systems and solutions in place for reducing the level of overpayments and holding Trust management to account for overpayments made as a result of their failure to follow the existing procedures relating to the timely notification of leavers and employee changes. Such measures 4

could include the use of appropriate sanctions where managers repeatedly or consistently fail to follow procedures. Payroll can generally only identify overpayments made based on source documentation received from the managers providing notification of employee changes and leavers. However, as notification of changes and leavers is not being submitted to Payroll in a timely manner, Audit cannot provide assurance that the overpayments identified represent all salaries overpaid. The prevention of salary overpayments must therefore be the primary objective to ensure that Trust resources are properly utilised, financial efficiencies made and savings targets achieved. As salary overpayments made by public bodies have recently made headlines in the national media, the Trust needs to remain sensitive to public concern on this subject and ensure that it takes all necessary measures to achieve a significant reduction in the number and value of salary overpayments being made. The report does not contain any findings that the Trust needs to: Consider as potential disclosures within its Annual Governance Statement or Consider notifying the Care Quality Commission regarding non-compliance with the Essential Standards of Quality and Safety. 5

1.5 Key Findings Control Objective 1: To ensure that all leavers are processed on a timely basis in order to avoid overpayments being made (Limited Assurance) Leaver forms authorised by managers are submitted directly to Payroll via an electronic database, which is reviewed regularly by Payroll staff to ensure that completed forms are promptly processed. However, this audit confirmed that the Trust continues to experience high levels of salary overpayments caused by managers failing to complete and submit leaver forms on a timely basis, i.e. before the employee leaves the Trust. Audit testing identified instances where salary payments continued to be made for periods ranging between nine weeks and eight months after the employee had left the Trust. Trust budget holders receive monthly finance and staff register reports from the Finance Department and these should be the primary mechanism by which ex-employees in respect of whom a leavers form has not been completed and submitted to Payroll are identified, thereby minimising the value of the salary overpayment. However, as a system of positive returns is not in place, there is no way to measure the extent to which these reports are reviewed by budget holders and ex-employees identified, which means that Audit cannot provide assurance that there are not further unidentified salary overpayments in addition to those detailed in this report. For this reason, robust preventative measures are essential to ensure that salary overpayments do not occur in the first place. Trust managers must be fully aware of the financial implications of late notification of leavers and changes and it is Audit s view that the Trust should also use appropriate sanctions where procedures are consistently not complied with. Audit s concerns over salary overpayments, whether caused by late notification of leavers or changes to employee contracts, have been raised in several previous Payroll reports. The Trust Board and Audit and Risk Committee have also expressed their concerns over this matter. One recent initiative involved the development of guidance for circulation to managers to ensure that they are aware of the importance of prompt completion and submission of leaver forms immediately upon notification of the leaver s resignation. The guidance also covered the requirement for prompt notification of changes to employee contracts of employment that have salary implications. Divisions were also required to provide explanations to senior Trust managers for the delay and reasons why the overpayments were allowed to occur for appropriate actions to be taken. Audit understand that the intention was to periodically issue this guidance to all Trust managers on an ongoing basis, but there was little evidence that this is being done. At the time of this review, each Trust employee was required on the day of their resignation to complete and submit to Payroll a Resignation Form, which provided details of the notice period relevant to their position. Although this form was not formal notification of a leaver, it was used by Payroll as a means of calculating the leaving date and ensuring that pay was not processed by the ESR Payroll system after this date, if an authorised leaver form was not received. Leavers did not however always complete and submit these forms to Payroll. As most of the information on the Resignation Form duplicated information required by the leaver form and did not replace the requirement for a leaver form to be submitted for an employee to be officially terminated in the Payroll system, Audit considered that there was little value in retaining the use of the form. Since this review was completed, the Trust has decided to discontinue the use of the Resignation Form, so no recommendation has been made. The authorised leaver form submitted to Payroll is the formal notification of a leaver. Effort should therefore be focused on ensuring that managers submit the leaver forms in 6

providing formal notification of a leaver. Where neither a resignation form nor a leaver form is received and processed by Payroll before the employee s leaving date, salary overpayments will be made. Staff registers, showing the posts recruited to within the Divisions for which salaries are being paid, are submitted by Finance on a monthly basis to budget holders for review. The staff register enables budget holders to identify leavers who are still shown as in post and being paid. There is however no requirement for positive returns to be made to confirm the completeness and accuracy of these registers. It is Audit s view that positive returns form a valuable means of ensuring that leavers who have not been terminated in the payroll system are quickly identified and do not continue to be paid. The monthly review by NELPC of payroll reports ensures that overpayments are promptly identified. The payroll reports underpinning the payroll runs are checked to all source documentation which include leaver forms. For identification of overpayments, this would primarily be through the review of payroll reports which show employee changes and leavers backdated in the ESR payroll system because the effective change date and leaving dates have past. Through this process the recovery of the sums overpaid is instigated. The whole process of identification of salary overpayments by Payroll is therefore based on the appropriate source documentation received, but to ensure that all leavers are processed timely and overpayments avoided, it is essential that all leaver forms are submitted promptly to Payroll for processing. Control Objective 2: To ensure that leavers are only paid amounts they are entitled to on their departure and any overpayments are identified, recovered and appropriately recorded in the accounting records (Reasonable Assurance) Leaver forms received by Payroll specify the employee s last day of service and any accrued annual leave to which the leaver is entitled. The payroll checks undertaken ensure that pay is accurately made. However, there is no assurance that the leaver forms received by Payroll represent all leavers. Audit sample testing confirmed that the leaving date of the leaver is accurately registered in the ESR Payroll system to prevent salaries being processed and paid after this date. As the Trust recognises that not all salary overpayments will be recovered, a bad debt provision is raised for all invoices relating to overpayments. The relevant cost centre (CAU/ Division) is appropriately charged and no credit for this is given until the salary overpaid has been recovered. Control Objective 3: To ensure that staff are paid correct amounts on changes made to their contracts (Limited Assurance) Where changes with salary implications are being made to an employee s contract of employment, the authorised change form is submitted to HR for validation before being forwarded to Payroll for the changes to be processed. Audit testing found that not all changes were being notified to HR on a timely basis for validation. It is recognised that changes notified to HR and Payroll after the effective date of change may be reasonable where the date of change can only be confirmed retrospectively. However, Audit s concern is over the length of delay in notification which in some cases has resulted in salaries overpaid becoming significant in value. Audit testing found an instance where the change made to pay was over 3 years late. The cumulative effect of this late change processed led to an overpayment of over 126k 7

gross pay for the employee who has since left the Trust. The doctor was paid a banding supplement for on call duties but since July 2007, had no responsibilities for such duties. However, banding supplement continued to be paid (costing about 4k per month) until identified by Finance in May 2011 when it was escalated to the Divisional Head of HR and the consultant in charge. An invoice has been raised to recover the debt which since referral to the debt collecting agency for recovery, the doctor has agreed to repay monthly amounts of 500. It is imperative that changes are promptly notified to HR and Payroll. This would avoid salaries being overpaid and amounts accumulating to be recovered. Processes implemented by Payroll ensure that overpayments due to retrospective changes made in the ESR system are identified on a timely basis. Where agreed, the overpayments are recovered through regular deductions from the employees salaries. However, where the overpayment is considered too large to be recovered from salary over a reasonable space of time, or where the employee has no current earnings (e.g. employee on unpaid or sick leave), an invoice is raised instead. Of 437k salaries overpaid due to late notification of employee changes in the 10 months to January 2012, 333k (76%) were invoiced, whilst the remainder of 104k (24%) were repayments made by salary deductions. By not collecting repayments on a regular basis from existing employees salaries, there is an increased risk that the overpayments may not be recovered. Control Objective 4: Controls are in place to ensure that salary overpayments are monitored and appropriate actions taken (Limited Assurance) A schedule of salaries overpaid is produced by NELPC each month and circulated to senior managers in HR and Finance for review. The information provided is used for reporting to the Operational Management Group (OMG) and the Audit and Risk Committee. Reporting to Senior Management Groups and Trust Board Operational Management Group The number of salary overpayments by Trust Division made in the current and previous months is reported to the Operational Management Group (OMG) within the HR Workforce Relations report. No comparative year to date data is provided to enable trends in the number of overpayments made to be ascertained for targeted action to be taken. Although there was no indication in this HR report of the value of salaries overpaid, the monthly value of overpayments is separately noted in the dashboard which reports on Trust performance. To enable proper assessment of the overpayment position to be made in supporting actions required, it would be helpful to include details of how long the overpayments were allowed to accumulate before notification to Payroll for processing, and whether the same manager(s) were responsible for some, most or all of the overpayments made. It was not evident from the action notes of the OMG meetings reviewed by Audit that the information presented on salaries overpaid had facilitated debate, as there was no record of the overpayments having been discussed. 8

Audit and Risk Committee As a standing agenda item, the Audit and Risk Committee receive a report containing details of salary overpayments made in the previous quarter as well as cumulative, yearto-date figures, the previous year s data, the reasons for the overpayments, as well as outstanding amounts that the Trust is proposing to write off. A single figure is presented for the total value of outstanding salary overpayment debts. The figures reported to the October 2011 and February 2012 meetings of the Audit and Risk Committee were 1,124k and 1,024K respectively. As at the end of November 2011, there were 352 overpayments with a total value of 884k awaiting recovery by the Trust. An analysis of this figure revealed that: 594k (248 cases), representing 67% in value of the total debt, and 70% of cases, had been referred to debt collecting agencies for recovery. Of the total debts of 884k, 540k (242 cases) were over a year old and of this amount there had been no evidence of any repayments having been made for 402k (178 cases) of overpayments invoiced. It is Audit s view that information disclosing the age of the debt and the proportion referred to debt collecting agencies for recovery should form part of the report provided to the Audit and Risk Committee to provide enhanced transparency as regards the overpayments at risk of not being recovered. Trust Board As part of aged debtors reporting for the Trust as a whole, the age of the debt for salary overpayments is reported at a high level, but it is Audit s view that the Board should also receive more detailed information on the overpayments reported, actions taken to address underlying issues and measures of success achieved. This would not only raise the profile of salary overpayments in the Trust Board agenda and clearly show the Board s commitment to controlling salary overpayments but, with the overpayment of salaries made by public bodies recently making headlines in the national media, it is important that the Board remains apprised at each meeting of the Trust s performance in this area. Divisional Senior Managers Although senior management within each Division are provided a schedule prepared by NELPC of the overpayments made each month and this identifies the reason for each overpayment the fact that the Trust is not seeing a material reduction in the number and value of salary overpayments being made would suggest that existing measures, including more granular management information, are not proving to be effective. From information available during the period of our review, an analysis was made of all salary overpayments made in financial years 2008/09 to 2010/11, plus the 9 months from April to December 2011. It was revealed that over this period an average of 82% of overpayments by value were due to the late notification of leavers and changes to Payroll for processing, with the remainder due to errors made by the Divisions ( Client Errors ) and by Payroll (See Appendix 1). Further analysis of the above figures confirmed that whilst there has been a reduction in the number and value of salary overpayments caused by late notification of leavers details to Payroll, the figures relating to late notification of employee changes have been rising in this period. For instance: In 2010/11, salary overpayments due to late notification of leavers totalled 389k with a lower figure of 345k relating to changes. 9

However, for the 9 month period to December 2011, the corresponding overpayment figures were 221k and 422k. Information available subsequent to the time of our review showed that in the 10 month period to January 2012 salaries overpaid as a result of late notification leavers amounted to 269k with a higher figure of 437k relating to changes. The detailed analysis at Appendix 2 shows the overpayment figures for each Division and CAU in 2010/11 and in the 9 months to December 2011 and also identifies the services responsible for the largest salary overpayments. It is Audit s conclusion that the Trust can only begin to resolve its long-term problem with salary overpayments by enhancing the quality of reporting, implementing clear lines of responsibility and accountability for salaries overpaid, and demonstrating that in a drive to reduce the overpayments, senior management are fully engaged in the monitoring process. Audit s proposal to resolve this long standing issue in controlling salary overpayments is to: Nominate a senior executive group that would be responsible for monitoring salary overpayments and reporting to the Trust Board. Improve the analysis of reports produced to show the monthly and cumulative overpayments incurred by each CAUs and Divisions, identifying trends, length of delay before changes and leavers were notified to Payroll for processing, and managers under whose responsibility salaries are consistently overpaid. Establish a procedure which would require that consistent or repeat offenders identified are called to attend the senior executive group meetings to explain reasons that resulted in the overpayments made and how this is being addressed to reduce overpayments. Establish a dedicated team of one or two members of staff whose role would include providing training to managers based on CAU and Division overpayment figures, co-ordinating the use of positive returns in the form of staff registers and imposing sanctions on consistent/ repeat offenders as approved by the nominated senior management group. It is Audit s view that the causes that have resulted in the long standing problem with salary overpayments can only be eliminated and overpayments controlled where senior management and the Trust Board are fully committed to this cause and are seen to take appropriate actions. 10

[The remainder of the document has been redacted as it covers different subjects unrelated to salary overpayments] Referral to Treatment Time Reporting (BLT) (Final Report July 2012) 1.6 Introduction and Background When a patient is referred to hospital, for any consultant led treatment, a Referral to Treatment (RTT) clock is started. A national target was introduced of 18 weeks between the start of this clock, and either the start of any required treatment or the discharge of the patient. Each time a patient attends hospital for a visit, an RTT outcome has to be recorded on CRS, as set out in NHS guidance. Depending on the outcome that is recorded, the RTT clock will either: Stop (if treatment is started, the patients is discharged, or the patient is just to be subject to regular checks and monitoring) Continue as a ticking clock (if treatment has not yet started, or diagnostic tests are required) Start (If a patient has been under active monitoring, and their RTT clock has previously stopped, but it is now decided that they need further treatment). During 2010-11, it was announced that performance management of the 18 week waiting time target by the DoH had ceased. However, new measures of the median and 95 th percentile RTT waiting times were introduced to provide a fuller picture of waiting times, and RTT performance continued to be reported externally and is a National Performance Measure included in the Operating Frameworks for 2011-12 and 2012-13. The % of clock stops within 18 weeks remains a key performance measure that is monitored both internally and externally, and reported by the Dept of Health. Following the introduction of CRS, the Trust had major problems with data quality regarding 18 week performance, as set out in previous internal and external reports, resulting in significant amounts of validation being required before results are reported. A central Validation and Correction team was set up to validate the data that was extracted from CRS before it was reported. This team is still in place, although at significantly reduced staffing levels. All identified 18 week breaches are also validated by Divisions. This report combines the findings from 2 reviews from the Trust s Internal Audit Plan for the 2010/11 financial year - a review into 18 week outcome recording at clinics, and a review of the validation processes in place to identify and correct errors prior to reporting data (which assesses the impact of the issues identified in the first audit). The audit work into clinic outcomes was completed in 2010, but only reported to management. The ongoing level of errors apparent in the data indicate that the issues identified are still current, and have therefore been included in this report with updated data where relevant. 1.7 System Importance and Key Risks The system is of high importance to the Trust. This is principally because monitoring of RTT times is a key Trust target. Inaccurate 18 week data can result in: 11

AC 33/12 Salary Overpayments - Audit Findings and Recommendation Schedule CONTROL OBJECTIVE 1 To ensure that all leavers are processed on a timely basis in order to avoid overpayments being made. DOT ASSURANCE LEVEL: LIMITED Findings Recommendations Responsibility & Management Response Issue of Guidance The process of identification of salary overpayments by Payroll is primarily through the review of payroll reports which show employee changes and leavers processed retrospectively in the ESR payroll system. These reports are based on source documentation, such as the employee change and leaver forms received. However these forms are not always received on a timely basis for processing and in preventing salaries being overpaid. To address concerns related to the rising number of salary overpayments, guidance was produced for circulation to managers Audit understand that this guidance was to be periodically sent to managers on an ongoing basis but there was a lack of evidence available to show that this had been complied with during the year. To effectively control the number of overpayments, the guidance was in the past, accompanied by a communication requiring that the NELPC General Manager contact the Divisional GM for an explanation for the late notification of leaver/ change to contract and this would be forwarded to the Directors of Finance and HR for action to be taken. Risk: Managers may not be made aware on a continuous basis of the importance of prompt submission of leaver forms to Payroll to prevent salary overpayments. R1: (Medium) Guidance on the prompt completion of leaver and change to contract forms to Payroll should be circulated to managers on a quarterly basis. This guidance should be accompanied by a communication with explanations for the reasons for the overpayment would be required to be provided to senior management where salaries are consistently overpaid. Responsibility All Executive Directors and CAG Operations Directors Implementation date 1 October 2012 Management Response Agreed. The CFO has reissued the guidance to all Executive Directors and CAG Operations Directors. Any future salary overpayments will require a report to the CFO from the relevant Director. A synopsis of salary overpayments will be presented monthly for the remainder of the financial year to the Trust Executive (TX) meeting and reported bi-annually to the Audit and Risk Committee. Thereafter quarterly reports will be presented to TX. A follow up review will be built into next year s internal audit plan for a future report to the Audit Committee. 1

AC 33/12 Findings Recommendations Responsibility & Management Response Positive Returns Staff registers (nominal rolls) showing the posts recruited to within the Divisions for which salaries are being paid, are submitted by Finance on a monthly basis to budget holders for review. This should enable budget holders to identify leavers who are still shown as in post and on the payroll, but there is no clear requirement for budget holders to confirm the completeness and accuracy of these records and therefore no sanctions are applied when they fail to do so. Risk: Where a member of staff has been identified as one who has left the Trust, this may not be confirmed to Payroll to ensure that any salaries being made are stopped. R2:(Medium) A system of positive returns should be introduced with immediate effect. The process must be sufficiently robust to enable errors and omissions to be promptly identified and timely corrective action to be taken. The extent to which the process is being consistently applied and its effectiveness in reducing the number and value of salary overpayments will be evaluated as part of a follow-up review within the 2013-14 internal audit plan. The Trust should consider making repeat or persistent failures to comply with this requirement a disciplinary offence. Responsibility HR Director Implementation Date 1 st December 2012 Management Response The Trust Executive endorsed the recommendation of positive reporting in September for December implementation. A managers briefing pack will be developed and each CAG/Manager/provided with an analysis of the previous history of non- compliance, both from a local level and at trust wide level, to give the context for the changes being made and the objectives. Clear messages need to be communicated about Managers role and level of responsibility and that failure to comply will be dealt with through the disciplinary process if required. 2

AC 33/12 CONTROL OBJECTIVE 2 To ensure that leavers are only paid amounts they are entitled to on their departure and any overpayments are identified, recovered and appropriately recorded in the accounting records. DOT ASSURANCE LEVEL: REASONABLE Findings Recommendations Responsibility & Management Response Leavers Paid Entitlement Audit testing confirmed that the leaving date of the leaver based on leaver forms received by Payroll is accurately registered in the ESR Payroll system to prevent salaries being processed and paid after this date. However, the system (e.g. lack positive returns, late notification of leavers and employee changes) in place do not provide assurance that the leaver forms submitted to Payroll represent all leavers. Risk: See R1 and R 2 above See R1 and R2 above Agreed See response to recommendations 1&2. 3

AC 33/12 CONTROL OBJECTIVE 3 To ensure that staff are paid correct amounts on changes made to their contracts. DOT ASSURANCE LEVEL: LIMITED Findings Recommendations Responsibility & Management Response Submission of Change Forms Audit testing found that not all changes were notified to HR on a timely basis for validation, or were identified for the change forms to be promptly raised. This resulted in changes processed after the agreed effective date of change which included an instance where the change made to pay due to the removal of a doctor s banding supplement, was over 3 years late. The cumulative effect of this late change processed led to an overpayment of over 126k gross pay for the employee who has since left the Trust. The length of delay in notification of the change has therefore in some cases led to salaries overpaid becoming significant in value. Risk: Potential financial loss to the Trust R3: (High) A Change Form should be completed and promptly submitted to HR for validation and processing by Payroll, as soon as the effective date of change in staff contract is known. Responsibility Executive Directors and CAG Operations Directors. HR Director Implementation date 1 st November 2012 Management Response Needs to be submitted by the responsible ED or CAG Operations Director. This will be a focus area for briefings as this (i.e. change forms) is a more significant problem along with late notification of leaving. The implementation of Barts Health E-Forms is expected to improve the flow of staff changes and EST control information through the trust. The E-Form infrastructure enables tracking and automates alerts to relevant stakeholders throughout the journey of the forms. 4

AC 33/12 Deductions from Salary Where the salary overpayments made to existing employees are large and may not be recovered through salary deductions over a reasonable amount of time, or where there are no earnings (e.g. employee on unpaid or sick leave) an invoice is raised instead for the repayment. Risk: By invoicing existing employees for the recovery of the salary overpaid rather than to obtain repayment by salary deductions, there is a risk that that the overpayment may not be recovered. R4: (Medium) Salary overpayments made to existing employees should be recovered by deductions from their salary payments over the shortest possible period. Where the overpayment is relatively large compared with salary received, deductions should still be made so that a level of net salary of, for example, 60% remains. Responsibility Executive Directors or Operations Directors. Implementation date Immediately. Management Response Agreed. Salary deduction should be the usual way of recovering overpayments, with invoices only being raised for people who have left the organisation or there are no earnings. The objective should be to recover the payment over the same elapsed timescale the overpayment was made or shorter if possible. 5

AC 33/12 Control Objective 4 Controls are in place to ensure that salary overpayments are monitored and appropriate actions taken. DOT ASSURANCE LEVEL: LIMITED Findings Recommendations Responsibility & Management Response Operational Management Group (OMG) The number of salary overpayments by Trust Division made in the current and previous months is reported to the Operational Management Group (OMG) within the HR Workforce Relations report.. Although there is no indication of the value of salaries overpaid provided in the HR report, the monthly value of overpayments is separately noted in the Data Quality Dashboard which reports on trust performance. By segregating the reporting of the value of overpayments from the number of cases to which they relate, the presentation of salaries overpaid is incomplete to enable proper assessment of the overpayment position to be made in supporting actions required. Risk: Where reporting of the value of overpayments is segregated from that of the number of cases to which they relate, there is incomplete presentation of salaries overpaid for appropriate actions to be taken. R5: (Medium) The report submitted to Operational Management Group (OMG) on salary overpayments should show within the same report, both the value of the overpayment and the number of cases it represents. Responsibility Human Resources Implementation date 1 st December 2012. Management Response This will be covered in the briefing pack provided to each CAG/Manager and reported centrally at TX/TMB in future. Audit and Risk Committee A standing agenda item for this Committee is a report containing details of salary overpayments for the previous quarter, plus year to date figures, comparative figures from the previous financial year, reasons for the overpayments and outstanding amounts written off. A single figure is presented for the total value of salary overpayment debts outstanding. The reported figure was 1,124K in October 2011 and 1.024K in February 2012. Audit review found that as at the end of November 2011, the overpayment debts outstanding was 884k (352 cases). An analysis of this debt found that: R6: (Medium) An analysis of the salary overpayment debts outstanding reported to the Audit and Risk Committee should be provided to show the debts referred to debt collecting agencies and ages of the debt over a year old. Responsibility Associate Director- Financial Accounts. Implementation date December 2012. Management Response Agreed. This will be provided to future Audit and Risk Committee meetings 6

AC 33/12 Findings Recommendations Responsibility & Management Response o o 594k (248 cases), representing 67% in value of the total debt, and 70% of cases, had been referred to debt collecting agencies for recovery. Out of the total debts of 884k, 540k (242 cases) were over a year old and of this amount there had been no sign of any repayments made for 402k (178 cases) of overpayments invoiced. Risk Committee meetings bi- annually. The salary overpayment debt reported to the February 2012 Audit and Risk Committee was 1,024k. No information disclosing the age of the debt and the proportion referred to collecting agencies for recovery is provided Risk: The amount of salary overpayment debt at risk of recovery cannot be properly assessed without a proper analysis the debt provided. Trust Board As part of aged debtors reporting for the Trust as a whole, the age of the debt for salary overpayments is reported at a high level. However, no narrative is provided to show the reasons for the overpayments, actions to address underlying issues and measures of success achieved. Risk: Insufficiency of Trust Board awareness of the significance of salaries overpaid and measures to control them. R7: (Medium) The disclosure made to the Trust Board on salary overpayment debts outstanding should be accompanied by a narrative providing the main reasons for the overpayments made, actions taken to address underlying issues and measure of success achieved. Responsibility Chief Financial Officer. Implementation date December 2012. Management Response Agree that the narrative should be provided but suggest this should be to the Audit and Risk Committee rather than the public board meeting due to staff confidentiality issues. 7

AC 33/12 Findings Recommendations Responsibility & Management Response Trust-Wide Responsible Group and Reporting The number of salary overpayments by Trust Division made in the current and previous months is reported to the Operational Management Group (OMG) within the HR Workforce Relations report. Although there was no indication in this HR report of the value of salaries overpaid, the monthly value of overpayments is separately noted in the dashboard which reports on Trust performance. No comparative year to date data is provided to enable trends in the number of overpayments made to be ascertained for targeted action to be taken. The HR Workforce Relations report presented at the November 2011 OMG meeting showed the information on salary overpayments made. However, it was not evident from the action notes of the OMG meetings reviewed by Audit that this had facilitated debate as there was no note that salary overpayments had been discussed. Reporting on a trust-wide level is disjointed with different information on salary overpayments reported separately to the OMG, Audit and Risk Committee and Trust Board. From information provided at the time of the audit review, an analysis was made of salaries overpaid for the financial years 2008/09 to 2010/11 and the 9 months from April to December 2011. This showed that on average, 82% of overpayments was due to the late notification of leavers and changes to Payroll for processing whilst the remainder was due to errors made by the Divisions ( Client Errors ) and by Payroll. Audit s further analysis of the salaries overpaid in 2010/11 and the 9 month period to December 2011 showed the proportion of overpayments due to the late notification of changes and that for leavers. This showed that: o In 2010/11 the overpayments due to late notification of leavers was 389k whilst that for changes was 345k. o However, for the 9 month period to December 2011 the R8: (Medium) To facilitate actions in controlling salary overpayments, the following should be in place: a).a senior executive group that would be responsible for monitoring salary overpayments and reporting to the Trust Board should be nominated. b) The analysis of reports produced should show the monthly and cumulative overpayments incurred by each CAUs and Divisions, identifying trends, length of delay before changes and leavers were notified to Payroll for processing, and managers under whose responsibility salaries are consistently overpaid. c) A procedure should be established which would require that consistent or repeat offenders identified are called to attend the senior executive group meetings to explain reasons that resulted in the overpayments made and how this is being addressed to reduce overpayments. d) Where responsible managers consistently make errors that lead to salary overpayments being made, the Trust should consider treating these Responsibility Chief Financial Officer. HR Director Implementation date December 2012. Management Response Agreed. The briefing pack will cover the historical performance and regular monthly reports will be provided trust wide to monitor non-compliance. The TX and OMG will monitor this regularly and a report will be brought to the Audit and Risk Committee next year to demonstrate improvement. Managers consistently failing to comply will be subject to the trust s performance management regime leading to disciplinary action. 8

AC 33/12 Findings Recommendations Responsibility & Management Response corresponding overpayments were 221k and 422k. It is therefore not evident that current measures in place are materially reducing salary overpayments. It is unclear as to which trust-wide group is responsible for monitoring and taking actions to ensure that the overpayments are reduced. Reports on salary overpayments do not provide sufficient analysis for actions to be taken, and sanctions are placed on managers responsible for the overpayments to ensure that employee changes and leavers are promptly notified for payroll processing. Risk: Salary overpayments will continue to be a problem where reporting is insufficient, no clear responsibility has been delegated to a senior management group to monitor overpayments with sanctions imposed where needed. as disciplinary offences. e) A dedicated team of one or two members of staff should be established whose role would include providing training to managers based on CAG overpayment figures, coordinating the use of positive returns and imposing sanctions on consistent/ repeat offenders as approved by the nominated senior management group. This situation will be kept under review following the forthcoming initiative on reporting packs. Hopefully this will demonstrate the improvement required and obviate the need for establishing a dedicated team as the problem will be resolved at source. 9

Report to: Trust Management Board: 30 October 2012 TMB 36/12 Title Reducing Overpayments & Improving the Quality of Payroll Information Sponsoring Director Michael Pantlin - Director of HR Author(s) Natalie Edwards Interim Associate Director of HR Governance, Workforce Information & Systems Purpose Outline of the mechanisms agreed to reduce payroll overpayments Previously considered by n/a Summary Barts Health over pays staff circa 1m per year much of which is lost. This has to stop. Payroll relies on source documentation received from the managers providing notification of employee changes and leavers. However, notification of changes and leavers is not being submitted to Payroll in a timely manner and managers are not currently held to account for overpayments made as a result of their failure to follow the existing procedures. This paper outlines the mechanisms that will be implemented to improve the accuracy of payroll returns in both the short and the long term. The background papers that drive the direction of the changes are also attached for information. Related Trust objectives Sub-objectives 6. Deliver the Trust s 2012/13 financial plan, and cost improvement target, and develop a sustainable long term financial plan (LTFM). Risk and Assurance This report provides assurance in relation to Trust Objective 6 (above). Related Assurance n/a Framework entries Legal implications/ regulatory requirements None. Action required The Trust Management Board is asked to note the actions being taken to improve payroll accuracy and reduce overpayments across Barts Health. 1

TMB 36/12 BARTS HEALTH NHS TRUST TRUST MANAGEMENT BOARD: 30 OCTOBER 2012 REDUCING OVERPAYMENTS & IMPROVING THE QUALITY OF PAYROLL INFORMATION PURPOSE 1. This paper outlines the actions being taken to improve payroll accuracy and reduce overpayments to staff across Barts Health. BACKGROUND 2. Payroll relies on source documentation received from the managers providing notification of employee changes and leavers. However, notification of changes and leavers is not being submitted to Payroll in a timely manner and managers are not currently held to account for overpayments made as a result of their failure to follow the existing procedures. 3. As reported in the recent Internal Audit Report - Salary Overpayments No: BLT 1112 12 for Barts and The London Trust: During the 2010/11 financial year, 329 salary overpayments were made with a value of 971k. There were 207 overpayments with a total value of 838k made in the 2011/12 financial year from April to January 2012. An extrapolation of these figures shows an upward trend in the value of overpayments which could reach 1m by the end of the year with a decreased number of cases to 248. ISSUES TO RESOLVE 4. In order to address the problem there are two issues to resolve: BH Systems and Processes Accountability of Managers BH Systems and Processes 2