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18 September 2012 Board members Kirklees PCT Broad Lea House Bradley Business Park Dyson Wood Way Bradley Huddersfield HD2 1GZ

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0844 798 7130

Dear Board members

Kirklees PCT Annual Audit Letter 2011/12 I am pleased to submit my Annual Audit Letter which summarises my 2011/12 audit of Kirklees PCT.

Financial statements and VFM conclusion On 6 June I presented my Annual Governance Report (AGR) to the PCT’s Audit Committee. My AGR outlined the findings of my audit of the PCT’s 2011/12 financial statements and my assessment of the PCT’s arrangements to secure value for money in its use of resources. Whilst I will not repeat the detail of those findings in this letter, the key messages are as follows: The financial statements and supporting working papers presented for audit were of a good quality. A number of adjustments were identified through the audit process, all of which the Director of Finance reflected in the amended accounts. None of the amendments had an impact on the reported financial performance of the PCT. The PCT managed its resources within the resource limits set by the Department of Health and achieved its target surplus of £8.3m. It delivered its target of £12m of Quality, Innovation, Productivity and Prevention (QIPP) savings in 2011/12 and has a QIPP plan for 2012/13 which is based on robust planning processes. Following the Audit Committee I: •

issued an unqualified opinion on the PCT’s 2011/12 financial statements on 8 June meeting the Department of Health’s deadline of 11 June;

concluded that you have made proper arrangements to secure economy, efficiency and effectiveness in your use of resources; and

certified completion of the audit on 8 June 2012.

Audit Commission, 3 Leeds City Office Park, Holbeck, Leeds, West Yorkshire, LS11 5BD T 0844 798 7130 F 0844 798 7131


Payment by Results (PbR) Data Assurance Framework PCT arrangements In March 2012 I issued my report on the review of your arrangements for ensuring the data that underpins provider contracts are of good quality. I found that the PCT was performing well in each of the three areas I reviewed.

Provider reports During 2011/12, the Audit Commission has carried out work on the accuracy of clinical coding data and all data items that affect the price commissioners pay for a spell under PbR rules at your two main providers. In summary: •

Calderdale and Huddersfield NHS Foundation Trust: The performance of the Trust, measured using the clinical coding HRG error rate of 9%, is slightly better than the 2009/10 national average of 9.1% and the Trust has made good progress in implementing recommendations agreed in previous years.

Mid Yorkshire Hospitals NHS Trust: The Trust’s HRG error rate is 16.5 per cent. This is worse than the national average from 2009/10 of 9.1 per cent, and is also worse than the Trust’s results in 2010/11 when 7.7 per cent of HRGs were incorrectly coded. The Trust has made good progress in implementing recommendations from the outpatients and reference costs audits undertaken in previous years, and has made reasonable progress in implementing recommendations from previous clinical coding inpatients audits although it still needs to continue to move towards using case notes as the source documentation for coding.

Closing remarks I have discussed and agreed this letter with the Chief Executive and Director of Finance. While this has been another challenging year for the PCT I wish to thank the finance staff for the positive and constructive approach they have taken to my audit. I also wish to thank senior management and the Audit Committee for their support and co-operation during the audit. Yours sincerely

Paul Lundy District Auditor