Minutes of the Audit Committee held on Wednesday 2 February 2011 in the Stewart Room, Broad Lea House, Bradley Business Park Present: Tony Gerrard Valerie Aguirregoicoa
Non-executive Director and Chair Non-executive Director
In attendance: Bryan Machin Helena Corder Steve Brennan Paul Lundy Richard Walker Nigel Bell Helena Jones Liz O’Reilly Janice Boucher Alison Fearnley
Executive Director of Finance Director of Corporate Services Deputy Director of Finance 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.
Accuracy of minutes of meeting held on the The minutes of the last Audit Committee meeting held on the 10 November 2010 were AGREED as a true and accurate record.
Kirklees Community Healthcare Services (KCHS) – Provider Agenda AC/11/03
Matters arising There were no matters arising from the Minutes of the last meeting relating to the KCHS agenda.
KCHS Internal Audit Progress Report Helen Jones presented the KCHS, Internal Audit Report to the Audit Committee. She advised the meeting that a total of 93 days had been provided against the agreed plan. This represented 79% of the plan and was in line with expectations. It was noted that since the last Audit Committee meeting one further audit report had been finalised. This included: Tough Books
Helen provided a brief overview of the key findings. In particular the following points were highlighted: Tough Books It was noted that the review had provided limited assurance due to concerns around connectivity, booting up the equipment and access controls. In addition it was highlighted that there were some information governance issues. Valerie Aguirregoicoa was concerned regarding the outcome of this review as it appeared inconsistent with a previous report presented to the Governance Committee, which had been undertaken following concerns raised by a member of the public at the Annual General Meeting. Helena Corder provided background to the review which had been undertaken by the Director of Performance and Information regarding the use of Tough Books and provided assurance that the outcome of the review had not raised any specific concerns. Helena therefore AGREED to share this report with the Audit Committee for information. In addition Helena provided assurance that steps were being taken to improve connectivity via meetings with British Telecom. Janice Boucher also provided assurance that further work was being undertaken by KCHS to resolve these issues and explained that steps were also being undertaken to improve cultural behaviours as some staff were initially reluctant to use Tough Books. In view of the above concerns, it was AGREED that Janice would provide an update at the next meeting regarding how these issues had been resolved. In addition to the above discussions, it was highlighted that Janice disagreed with some of the findings in the internal audit report. She explained that if she had had some input into the review the outcome may have been reported differently. It was therefore AGREED that Janice would liaise with Helen Jones to investigate this further. Helen went on to highlight the audits which were ongoing in relation to the 2010/11 plan. These included: Holme Valley â€“ Intermediate Care Budgetary Control and Financial Management In addition to those listed above, it was noted that the following audit was planned for the next quarter: Governance
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Finally Helen summarised the changes that had been made to the annual plan. It was recognised that these changes were required to account for the additional time required to complete key reviews. The Audit Committee RECEIVED and NOTED the KCHS Internal Audit Progress Report. AC/11/05
Minutes of KCHS Finance, Performance & Business Development Committee The Audit Committee RECEIVED and NOTED the KCHS Finance, Performance and Business Development Committee minutes held on 21 October and 19 November 2010. In particular the following was highlighted: Janice highlighted the financial position and progress against Cost Improvement Plans, following a question raised by Valerie. Janice confirmed that KCHS was expecting to achieve a significant surplus this financial year due to improving clinical contact and reduced travel savings. Janice went on to describe the purpose of the District Nurse efficiency project in more detail. Tony Gerrard enquired how KCHS hoped to improve discharge arrangements at Holme Valley Memorial Hospital (HVMH). Janice expanded on the actions being taken to improve this highlighting how KCHS was engaging with partner organisations to enable patients to be discharged earlier.
Minutes of the KCHS Governance Committee The Audit Committee RECEIVED and NOTED the KCHS Governance Committee minutes held on 3 June, 5 August and 8 October 2010. In particular the following points were raised or commented on: It was suggested that it would be good practice to anonymise GP’s names within these minutes in the future. A discussion ensued regarding the implementation and dissemination of policies within KCHS. In particular Valerie requested assurance that the process was robust and enquired if KCHS’ policies mirrored NHS Kirklees’ policy database. Janice expanded on the process and explained that all policies and procedures were uploaded onto KCHS’ intranet site. In order to provide further assurance regarding this process, it was AGREED that Janice and Helena would liaise to cross reference the database. In addition there was a discussion regarding what transition/governance arrangements were in place to manage the separation of provider functions under the Transforming Community Services (TCS) agenda. Page 3 of 9
Janice provided assurance that KCHS was developing a transition plan (a workstream document) in terms of preparing for business readiness which she AGREED to share with the Audit Committee at the next meeting. The Committee discussed whether or not it would be beneficial for a Non-executive Director (NED) to attend the TCS Executive Board. Bryan AGREED to raise this, on behalf of the Audit Committee, at the next TCS Exec Board which was due to be held the following day. The Committee also debated the future function of the Audit Committee. Paul Lundy expanded on the future governance requirements and confirmed that the Audit Committee would still need to remain established. NHS Kirklees (Commissioning) Agenda AC/11/07
Matters Arising AC/10/105
NHS Kirklees Internal Audit Progress Report
QOF 5% Validation Check Feedback had been provided by Mark Jenkins (via email to NEDs) regarding the query raised at the last meeting in relation to fraudulent QOF payments. On reflection it was felt that the information provided by Mark did not entirely answer the question raised. It was therefore AGREED that further clarity would be sought from Mark regarding this point. In addition Helen Jones advised that she had provided Mark with a list of the practices concerned so this could be followed up. AC/11/08
NHS Kirklees Internal Audit Progress Report Helen Jones presented the NHS Kirklees, Internal Audit Report to the Audit Committee. She advised the meeting that a total of 190 days had been provided against the agreed plan. This represented 61% of the plan and was in line with expectations. It was noted that since the last Audit Committee meeting a further two audit reports had been finalised. This included: Contract Management Commissioning Helen provided a brief overview of the key findings. In particular the following points were highlighted:
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Contract Management It was noted that this audit had received ‘Significant Assurance’. It was highlighted that the review found the systems and controls surrounding the management of the contracts and monitoring of the payments at NHS Kirklees were found to be satisfactory. However the report contained one recommendation that related to the monitoring of payments at GP practice level. An action plan had been agreed with management to address this. Commissioning It was noted that this audit had received ‘Significant Assurance’. It was highlighted that overall the processes in place for the commissioning of services and the contract management arrangements at NHS Kirklees were found to be robust. It was recognised that the report contained three recommendations that related to: web browser; assurance on the coding of treatments; and specifications. An action plan had been agreed with management to address these. Information Governance Toolkit Helena Corder reported on the key requirements for achieving Level 2 of the Information Governance (IG) Toolkit (Version 8) and summarised the areas that had not been met. It was highlighted that the level of evidence which the PCT was expected to supply seemed inappropriate. Helena confirmed that Internal Audit was undertaking a review to evaluate the adequacy of information provided to support the self assessment. In addition a gap analysis would be produced detailing any areas where additional information is required. The outcome of this review would be reported to the next Audit Committee. Holme Valley Memorial Hospital Tony Gerrard asked Helen Jones to conduct a review of how the PCT had considered the complex issues around investment in Holme Valley to facilitate learning. It was AGREED Tony, Bryan and Helen would meet to discuss how this could be achieved. The Audit Committee RECEIVED and NOTED the NHS Kirklees Internal Audit Progress Report. AC/11/09
NHS Kirklees Local Counter Fraud Progress Report Liz O’Reilly presented the Local Counter Fraud Progress Report to the Audit Committee and summarised the work performed since the last meeting. In particular the following was highlighted: Creating an anti-fraud culture 2 Mandatory Training sessions had been held during November and December 2010. Presentations – at GP Practice Protected Time events. E-learning – Work was being undertaken to develop a fraud e-learning package. Page 5 of 9
Fraud Survey – the annual staff fraud survey was to be launched within the next few weeks. It was suggested that a different approach would need to be taken to target KCHS staff. In addition it was suggested that completion of the survey should be made mandatory for all staff and sent via email rather than advertising this through the usual channels. In addition it was highlighted that Independent Contractors also needed to be targeted. Deterring Fraud Communications – A fraud alert was posted on GP Link relating to a bogus doctor targeting patients for bank details HRMC scam alert in Weekly Talk Xmas scam warning in Weekly Talk Prevent Fraud Fraud Information Report - A Counter Fraud Service information report had been completed in relation to an attempted prescription fraud by a patient. A notice was sent to Finance about several companies accused of issuing false invoices to NHS Trusts. Policy Review – the Counter Fraud and Corruption Policy was being reviewed to take to the Governance Committee March 2011. Detecting Fraud National Fraud Initiative Ongoing work is being undertaken to prepare for approval of data expected end January 2011. It was noted that Steve Brennan was undertaking some work around this. Liz explained that the PCT had received the Counter Fraud Service Provision Qualitative Assessment for 2009/10 on 23 December 2010. It was recognised that there are four possible ratings. The Audit Committee acknowledged that the PCT had received a rating of Level 2: adequate performance. This was the same rating achieved by the PCT in 2008/09. Following a discussion at the last meeting further fraud benchmarking data for the Northern and Yorkshire region was circulated to the committee for information. The committee reviewed the data in detail and debated what could be achieved form investing in additional counter fraud days and what other creative initiatives could be used to promote fraud awareness. Following discussion it was AGREED that Liz would try to identify areas where investment would improve outcome, in order to determine if investing in additional counter fraud days would benefit the PCT.
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The Audit Committee RECEIVED and NOTED the Local Counter Fraud Progress Report. AC/11/10
External Audit Progress Report Richard Walker presented the External Audit Progress Report to the Audit Committee and provided a brief overview of the key areas of work being undertaken: Audit Plan It was noted that the 2010/11 Audit Plan was included as a separate item on the audit committee’s agenda. Financial Statements Interim audit work had commenced in November 2010. It was noted that to date there were no risks to bring to the attention of the Audit Committee. ISA 240 compliance letters Richard confirmed that he had received a response from both Bryan and Tony in respect of the required assurances. Value for money conclusion work It was noted that strong governance and monitoring arrangements had been put in place to deliver the £14.9m QIPP programme which was forecast to be on target. 2010/11 Payment by Results Data Assurance Framework reference cost reviews It was noted that the reference cost review at CHFT had not yet commenced as the Trust had expressed some concerns regarding its participation in the programme of work. These issues were reported to have been resolved. The Audit Committee RECEIVED the report and NOTED the timetable of key phases of the audit.
2010/11 Audit Plan Richard Walker presented the 2010/11 Audit Plan to the Audit Committee. It was noted that the plan set out the proposed work for the audit of financial statements and the value for money conclusion. It reflects: Audit work specified by the Audit Commission for 2010/11 Current national risks relevant to local circumstances; and Local risks. It was recognised that the fee for the audit was £233,400 as indicated in the Audit Letter dated 17 March 2010. Richard drew the committee’s attention to additional risks that were appropriate to the current opinion audit. These included: Page 7 of 9
Financial risks & pressure to achieve the control total Management costs Provision for cost of organisational restructuring In addition the Audit Committee acknowledged that there were specific financial challenges to managing the local health economy. The Audit Committee RECEIVED and APPROVED the 2010/11 Audit Plan. AC/11/12
Overview of Financial Planning Cycle The Audit Committee RECEIVED and NOTED an overview of the Financial Planning cycle and process in order to provide assurance that the process is robust.
Agreement of Final Accounts Timetable and Plans Steve Brennan circulated a copy of the 2010/11 Annual Accounts Timetable to the Audit Committee for information and provided a verbal overview of the process; assignment of the responsibilities and the required timescales. The Audit Committee NOTED the agreed Final Accounts Timetable and plans and was assured that a robust process was in place.
Board Assurance Framework Helena Corder provided an overview of the new performance management system Performance Plus and explained that all risk management issues were now linked up. In addition it was noted that evidence of how risk is being mitigated had been allocated to each area of risk. It was noted that all Non-executive Directors and Internal Audit would have access to the new system following appropriate training. Finally Helena confirmed that the Board would receive a separate spreadsheet (attached to the BAF) outlining the areas that the Board had discussed, following a suggestion made at the last Board meeting. The Audit Committee RECEIVED and NOTED the Board Assurance Framework.
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Snapshot of the Finance and Performance Committee The Audit Committee RECEIVED and NOTED an update on Finance and Performance activity undertaken between November 2010 and January 2011. The committee also RECEIVED and NOTED the minutes of the Finance and Performance Committee held on 20 October and 17 November 2010. Valerie enquired if new Terms of Reference had been agreed for the new Finance, Performance and Strategy Committee which had superseded the Finance and Performance Committee. Helena confirmed these had been agreed however the Scheme of Delegation and other Terms of Reference were yet to be reviewed which would not be undertaken until the PCT cluster arrangements had been agreed, in order not to duplicate work.
Governance Committee The Audit Committee RECEIVED and NOTED an update on Governance Committee activity undertaken between October and January 2011. In addition the committee also RECEIVED and NOTED the minutes of the Governance Committee held on 13 October and 8 December 2010.
Any other business AC/11/17.1
Proposed Bad Debt Write Off
Steve Brennan tabled a report proposing to write off £6,113 of debt. It was noted that £5,868.85 amounted to legacy debt and £244.29 amounted to dental charge income. It was emphasised that it was no longer economically worth pursuing the debt in relation to dental change income due to the amount it would cost to pursue this through external debt collecting agencies. Steve provided clarity regarding the legacy debts and following discussion the Audit Committee AGREED to write off the £6,113.14 of debt as detailed in the report. AC/11/18
Date and time of next meeting It was AGREED that the next meeting of the NHS Kirklees Audit Committee would take place between 9.30am and 12.00pm on Wednesday 11 May 2011 in the Stewart Room at Broad Lea House.
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