Minutes of the Audit Committee held Wednesday 9 September 2009 at 2.15pm in the Boardroom, St Luke’s House, Huddersfield Present: Tony Gerrard Valerie Aguirregoicoa
Non-executive Director and Chair Non-executive Director
In attendance: Bryan Machin Helena Corder Paul Lundy Mark Dalton Nigel Bell Helen Jones Liz O’Reilly Janice Boucher Alison Fearnley
Executive Director of Finance Director of Corporate Services District Auditor Audit Manager Head of Internal Audit Internal Audit Manager Local Counter Fraud Specialist Finance and Performance Lead - KCHS Corporate Governance Administrator
Apologies for absence Apologies for absence were received from Mehboob Khan, Nonexecutive Director and Steve Brennan, Deputy Director of Finance.
Minutes of the last meeting held 22 July 2009 The minutes of the Audit Committee meeting held on 22 July 2009 were AGREED as a true and accurate record.
Outstanding General Matters arising before Provider Split AC/09/28
Code of Business Conduct
Mark Dalton advised he was happy to share anonymised examples of where other Trusts had achieved good practice with the Code of Conduct in relation to clinicians but he didn’t have any specifically relating to independent contractors. It was therefore agreed this was not appropriate. AC/09/30
Effectiveness of Internal and External Audit
Tony Gerrard was still to set up a meeting to discuss how this should be taken forward. AC/09/66.1 Business Case for the Holme Valley Memorial Hospital Project Helena Corder advised that, in relation to the outstanding action concerning the process for single tender waivers, she had discovered a form which Supplies had been using and that she would devise an appropriate system within the PCT for staff to follow internally.
It was recognised that Standing Financial Instructions may need to be reviewed to ensure this process is clear. Provider Agenda AC/09/85
Matters arising AC/09/04
Internal Audit Progress Report – Loan Stores
Helen Jones advised that there were seven outstanding recommendations from the Loan Stores audit. Helen AGREED she would submit a report to the Audit Committee in November following the outcome of the follow-up Internal Audit Review. It was AGREED that Bryan Machin and Janice Boucher would take time out with Internal Audit to go through the outstanding issues to agree how these could be resolved. Bryan Machin advised that he would follow-up progress on the revision of the Partnership Agreement and report back to the Audit Committee in November. AC/09/86
Internal Audit Progress Report – Kirklees Community Healthcare Services Helen Jones presented the Kirklees Community Healthcare Services, Internal Audit Progress Report to the Audit Committee. She advised the meeting that the following reports had been discussed and agreed with management since the last Audit Committee: • •
Risk Management Medical Devices
Helen provided a brief overview of the key findings for each of the above reports. In particular the following points were highlighted in respect of the above audits: Risk Management It was noted that ‘limited assurance’ had been given in respect of Risk Management as at the time of the review KCHS were in the early stages of developing and implementing its risk management processes. It was noted that a follow-up review would be undertaken towards the end of the year. Following discussion it was AGREED that minutes from the Integrated Governance Committee for KCHS would be reported to the Audit Committee. The Audit Committee RECEIVED and NOTED the Risk Management Action Plan.
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Medical Devices It was noted that ‘Significant Assurance’ had been provided in respect of the Medical Devises audit. However it was noted that an action plan had been agreed with management containing 5 recommendations that related to issues listed in the Key findings section of the report. It was noted that the Head of Integrated Governance was the lead responsible for the implementation of the recommendations. In addition it was noted that the following reports were in draft and were in the process of being finalised with management: • •
Records Management Waste Management
Finally it was noted that to date 30 days had been completed against the 2009/10 Audit Plan which included time brought forward from the previous year. The Audit Committee RECEIVED and NOTED the Internal Audit Progress Report for KCHS. AC/09/87
Minutes of KCHS Finance, Performance and Business Development Committee The Audit Committee RECEIVED and NOTED the Minutes of the KCHS Finance, Performance and Business Development Committee held on 21 May, 18 June and 23 July 2009.
Commissioning Agenda AC/09/88
Matters arising AC/09/73
Internal Audit Progress Report – K18/2009 Contracting Helen Jones provided feedback on the outstanding Service Level Agreements which had not been signed. These included: Kirkwood Hospice, Bernardo’s, Brunswick and the British Pregnancy Advisory Service. It was recognised that these would be followed up by Helen Jones as part of the follow up review process. It was AGREED that Helen would confirm the value of these contracts at the next meeting.
Payment by Results Data Assurance Framework Bryan advised the Audit Committee that he had not had sufficient time to review Appendix 6 of the PbR report in detail as this was quite complex. He therefore AGREED that he would provide feedback at the next meeting in November.
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AC/09/81.2 Authorisation of electronic claims forms It was noted that Bryan Machin, Helena Corder and Sue Ellis were meeting on 11 September 2009 to discuss an appropriate process for the authorisation of electronic claims forms. It was noted that Helen Jones would report back to a future Audit Committee meeting on how the electronic Payroll system would be audited in the future by Internal Audit, following the outcome of the review undertaken by Bryan, Helena and Sue. AC/09/89
Internal Audit Progress Report – NHS Kirklees Helen Jones presented the NHS Kirklees, Internal Audit Progress Report to the Audit Committee. She advised the meeting that the following reports had been discussed and agreed with management since the last Audit Committee: • • •
K17/2009 K21/2009 K25/2009
Capital Assurance Framework Safeguarding
Helen provided a brief overview of the key findings for each of the above reports. In particular the following points were highlighted in respect of the above audits: Capital It was noted that ‘Significant Assurance’ had been provided in respect of the Capital audit, however some issues were identified which need to be addressed. It was noted that an action plan had been agreed with management which contained 4 recommendations. It was noted that the Head of Estates and Facilities was the lead responsible for the implementation of these recommendations. Bryan Machin advised that there was a need to consider how Internal Audit provision was arranged given that the Estates service was now a shared service. Assurance Framework (AF) It was noted that this review formed part of the work in support of the Head of Audit’s overall opinion of the system of internal control in place at the PCT. Therefore no separate opinion was given by Internal Audit. It was noted that the audit identified some areas of improvement. An action plan had been agreed which contained 9 recommendations. It was noted that the Director of Corporate Services was the lead responsible for the implementation of the recommendations. It was recognised that Internal Audit would undertake a further review of the AF to ensure this was working more effectively. Page 4 of 10
It was AGREED that the Audit Committee would review the BAF to ensure that key areas of risk were being effectively monitored. In addition it was recognised that a documented process needed to be developed around the work programmes for the other sub-committees. Safeguarding It was noted that no Internal Audit opinion had been given in respect of this audit as the PCT was in the process of implementing a number of action plans that responded to recommendations made from serious case reviews. It was recognised that generally good systems and processes were in place and that the PCT was continually learning from events and implementing procedures to address any areas of improvement. An action plan had been agreed with management following the outcome of the review which contained 3 recommendations. It was noted that this area would be audited further to evaluate how the new arrangements were working. In addition to the above it was noted that two further reports were in draft and in the process of being finalised with management: • •
GMS/PMS Tenders and Quotes
It was also noted that work had commenced on the following audits: • • • • •
Clinical Governance Performance Management Mandatory Training IT Disaster Recovery IT Infrastructure – New Build Plan
Finally it was noted that a total of 61 days had been completed against the 2009/10 Audit Plan to date. The Audit Committee RECEIVED and NOTED the Internal Audit Progress Report for NHS Kirklees. AC/09/90
Local Counter Fraud Specialist Update Report Liz O’Reilly presented the Local Counter Fraud Specialist update report to the Audit Committee. Liz circulated an update on progress with existing cases, together with information of new cases and on cases closed since the last Audit Committee. She provided a brief overview of each case. It was noted there were a total of five ongoing cases. The Audit Committee also reviewed a summary of work performed by the Local Counter Fraud Specialist since the last Audit Committee.
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It was noted that a total of 28.25 days had been completed against the 2009/10 Local Counter Fraud Work Plan to date, against a total plan of 52 days. The Audit Committee RECEIVED and NOTED the Local Counter Fraud update report. AC/09/91
Use of Resources The Audit Committee received a copy of the Draft Use of Resources report from the Audit Commission for information. Mark Dalton introduced the report and highlighted the key findings and conclusions. It was noted that the PCT was meeting or exceeding minimum standards across all three themes assessed under the Use of Resources framework. The PCT was exceeding minimum requirements and performing well in the area of managing finances. It was recognised that this was a notable achievement in the first year of this assessment framework. Mark highlighted the key opportunities for improvement and shared the draft action plan with the Audit Committee. It was recognised that this was subject to discussion with the Chief Executive and Director of Finance and once agreed this would be presented to the Audit Committee for information. Mark advised that a national report was due to be published that would highlight examples of good practice where level 3 and 4 attainments had been achieved. It was AGREED that Mark would share this report with Audit Committee for information when published. Valerie Aguirregoicoa said she would welcome a cover sheet to accompany Audit Committee reports that summarised the detail of the reports. Helena advised that she had revised the cover sheet template used for Board reports and AGREED to share this with Valerie, with a view to using this at future Audit Committee meetings. The Audit Committee RECEIVED and NOTED the Draft Use of Resources report.
Review of Annual Audit Letter The Audit Committee RECEIVED and NOTED the Draft 2008/09 Annual Audit Letter. It was noted that this summarised the work undertaken by external audit during 2008/09 and was subject to agreement by the Chief Executive and Director of Finance. It was noted that once this had been agreed it would be presented to the Board in October for information. It was NOTED that the agreed Action Plan would also be presented to the Audit Committee in November 2009.
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Follow up of External Audit Recommendations The Audit Committee received an update on the progress made in implementing the recommendations contained in recent External Audit reports. Bryan Machin introduced the report and explained that the report provided assurance to the Audit Committee that External Audit recommendations had been appropriately followed up. It was recognised that a timetable needed to be agreed with External Audit for the agreed recommendations. It was noted that External Audit would provide an update on this at the next meeting. The Audit Committee RECEIVED and NOTED the report.
Final Accounts Memorandum Mark Dalton introduced the 2008/09 Final Accounts Memorandum. He explained that the Accounts Memorandum built on the Annual Governance report and provided more detailed findings, conclusions and recommendations in relation to their work on the Accounts for the year 1 April 2008 to 31 March 2009. Mark highlighted the key findings and the opportunities for improvement in the 2009/10 Accounts. A query was raised with regard to the percentage required in meeting the Better Payment Practice Code. Mark AGREED to check if this was now 100% instead of 95%. It was AGREED to add the Action Plan to the routine audit recommendations. The Audit Committee RECEIVED and NOTED the Final Accounts Memorandum.
Appointment of Auditor â€“ NHS Kirklees The Audit Committee received a copy of a letter from the Audit Commission advising NHS Kirklees that the Commission proposed to extend the appointment of an officer to cover the audit of the accounts for 2010/11and 2011/12. It was recognised that the Engagement Lead role would continue to be undertaken by Paul Lundy. The Audit Committee RECEIVED and NOTED the appointment of the Auditor.
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Single Tender Waiver Report The Audit Committee received a report advising the committee of two instances where the Chief Executive had agreed to waive Standing Orders to allow a single source tender to be issued. It was noted that one was in relation to the Performance Accelerator application to appoint Dynamic Change and the other in relation to the Commercial Procurement Collaborative, to enable the Commercial Professional Network (CPN) to start delivery of its work programme by entering into a contract with Solsus Limited who employ James Gooding. It was recognised that there had been an oversight in bringing the single source tender to the Audit Committee’s attention in relation to the Performance Accelerator application, and that this should have been presented to the Audit Committee earlier. Concerning this it was noted that the PCT was currently seeking tenders for future provision of a suitable system. With regard to the second single source tender, Commercial Procurement Collaborative, two questions were raised: •
Would James Gooding, employed by Solus Limited hold any intellectual property rights at the end of his contract with the PCT Collaborative which would make it necessary for us to engage him for a further period? When was the end of his contract and would his services be required at the end of the current contract.
It was AGREED that Bryan Machin would raise these issues with Lois Bentley and Amanda Forrest and report back to the next Audit Committee. The Audit Committee RECEIVED and NOTED the two occasions where the Chief Executive had agreed to waive Standing Orders to allow a single source tender to be issued. AC/09/97
Changes to Government Banking Services Bryan Machin introduced the Government Banking Services report to the Audit Committee for information. He explained that the report highlighted the changes to the PCT’s banking arrangements that would result from the Government Banking Services (GBS) changing its main provider of banking transaction services, and updated the Audit Committee on the progress being made towards implementing these changes. It was recognised that the revised banking arrangements would be formally taken to the Board for approval at a later date prior to the planned ‘go live’ date of December 2009. The Audit Committee RECEIVED and NOTED the Governance Banking Services report.
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Role of the Company Secretary The Audit Committee considered an example Job Description of the Role of the Company Secretary specific to a PCT. It was recognised that the Director of Corporate Services, Helena Corder, currently discharged responsibility for this role but there was a need for this to be strengthened and agree how these duties should be undertaken, and by whom, if not by Helena. It was AGREED that Tony, Mehboob and Valerie would identify any initial gaps in the job description. This would then be broadened out for further consideration by the other Non-executive Directors. It was AGREED that the outcome of these discussions would be followed-up at a future Audit Committee meeting.
Finance and Performance Committee update The Audit Committee RECEIVED and NOTED the Minutes of the Finance and Performance Committee held on 17 June and 22 July 2009.
Governance Committee update The Audit Committee RECEIVED and NOTED the Minutes of the Governance Committee held on 1 July 2009.
Any other business AC/09/101.1 International Financial Reporting Standards Bryan Machin advised the Audit Committee that the PCT was likely to breach the deadline for the submission of the re-stated Accounts. He explained that this was due to insufficient guidance being received in relation to legal charges on fixed assets and how these should be accounted for under IFRS, thus leaving the PCT with insufficient time to undertake the necessary work that is required prior to the deadline. The Audit Committee NOTED that the deadline was likely to be breached unless this was extended by the Department of Health.
Date and time of next meeting It was AGREED that the next meeting of the NHS Kirklees Audit Committee would take place at 2.00pm on the 11 November 2009 in the Boardroom at St Lukeâ€™s House, Huddersfield. Post meeting note: The November meeting was subsequently cancelled and rearranged to take place on 17 December 2009.
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