The Annual Audit Letter for Chorley and South Ribble Clinical Commissioning Group

Transcription

1 The Annual Audit Letter for Chorley and South Ribble Clinical Commissioning Group. Year ended 31 March 2015 June 2015 Fiona Blatcher Engagement Lead T M E fiona.c.blatcher@uk.gt.com Gareth Winstanley Manager T M E gareth.j.winstanley@uk.gt.com Peter Buckley Executive T E peter.g.buckley@uk.gt.com 2015 Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June 2015

2 Contents Section Page 1. Executive summary Audit of the accounts Value for Money 9-11 Appendices A Reports issued and fees Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June

3 Section 1: Executive summary 01. Executive summary 02. Audit of the accounts 03. Value for Money 2015 Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June 2015

4 Executive summary Purpose of this letter Our Annual Audit Letter (Letter) summarises the key findings arising from the work that we have carried out at Chorley and South Ribble Clinical Commissioning Group (the CCG) for the year ended 31 March The Letter is intended to communicate key messages to the CCG and external stakeholders, including members of the public. We reported the detailed findings from our audit work to those charged with governance in the Audit Findings Report on 20th May Responsibilities of the external auditors and the CCG This Letter has been prepared in the context of the Statement of Responsibilities of Auditors and of Audited Bodies, Local NHS bodies issued by the Audit Commission in April 2014 (Statement-of-responsibilities-NHS-April-2014.pdf). The CCG is responsible for preparing and publishing its financial statements accompanied by an Annual Governance Statement. It is also responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources (Value for Money). Our annual work programme, which includes nationally prescribed and locally determined work, has been undertaken in accordance with our Audit Plan issued in February 2015 and is conducted in accordance with the Audit Commission's Code of Audit Practice (the Code), International Standards on Auditing (UK and Ireland) and other guidance issued by the Audit Commission. Audit conclusions The audit conclusions we have provided in relation to our 2014/15 audit are as follows: Financial statements opinion We provided an unqualified opinion on the financial statements which give a true and fair view of the CCG's financial position as at 31 March 2015 and of net expenditure recorded by the CCG for the year. As well as an opinion on the financial statements, we are required to give a regularity opinion on whether expenditure has been incurred 'as intended by Parliament'. Failure to meet statutory financial targets automatically results in a qualified regularity opinion. We are pleased to report that, based on our review of the CCG's expenditure we gave an unqualified regularity opinion. Value for money (VfM) We provided an unqualified conclusion in respect of the CCG's arrangements for securing economy, efficiency and effectiveness in its use of resources Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June

5 Key areas for the CCGs attention Chorley and South Ribble CCG: met all its statutory financial targets in 2014/15, including the delivery of a 3.816m surplus delivered efficiency savings of 3 million is expected to continue to provide cash flow assistance to its main provider. It remains important that the CCG obtains explicit approval from NHSE should future payments be made to support the provider should ensure that policies and procedures aimed at strengthening the CCG's governance arrangements for managing conflicts of interest are fully applied in practice. Acknowledgments The CCG's finance team prepared the draft accounts and working papers to a good standard, within a tight timescale whilst managing competing demands on their time. This is a significant achievement and we would like to take this opportunity to record our appreciation for the assistance provided by the finance team and other staff during our audit. Grant Thornton UK LLP 25 June 2015 The Chorley and South Ribble CCG local economy continues to face significant financial challenges. The environment has become particularly challenging for 2015/16 onwards, linked to the difficult financial position of acute and community providers as well as for the county council. The CCG has a demanding savings target of 9.6m to achieve and any issues/failures by providers will make delivery even more difficult. The CCG fully recognises the scale of challenge it faces and has a good planning and monitoring base from which to progress. Effective working with partners to robustly monitor outcomes from initiatives and developments; evaluate their financial impact; and respond to the implications quickly will be a cornerstone to successful delivery Grant Thornton UK LLP Annual Audit Letter for Chorley and South Ribble CCG 5

6 Section 2: Audit of the accounts 01. Executive summary 02. Audit of the accounts 03. Value for Money 2015 Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June 2015

7 Audit of the accounts Audit opinion We completed our audit of the CCG's financial statements in line with Auditing Standards and issued an unqualified audit opinion on 27th May Key findings The findings of our audit of the financial statements are summarised below: Preparation of the financial statements The CCG submitted its financial statements on 24 April 2015, meeting the NHS England deadline. Given the on going change agenda facing the CCG, this was a major achievement. The overall quality of the accounts and working papers was of a good standard. Issues arising from the audit of the financial statements The draft accounts presented for audit showed a surplus of 3.816m. We did not identify any material errors or uncertainties in the financial statements. A small number of minor adjustments were made to the disclosure notes to improve the overall presentation of the accounts. The CCG amended all issues raised and none of these affected the primary financial statements. Annual report We reviewed the CCG's annual report to confirm that this was consistent with our knowledge and audit work. We agreed some amendments to entries within the Remuneration Report that were subject to audit and were satisfied that this was prepared in accordance with the guidance issued by NHS England. Conclusion Prior to giving our opinion on the accounts, we are required to report significant matters arising from the audit to 'those charged with governance' (the Governing Body at the CCG). We presented our report to the Governing Body on 20th May 2015 and summarise only the key messages in this Letter. We issued an unqualified opinion on the CCG's 2014/15 accounts on 27th May 2015, meeting the deadline set by the Department of Health (DH). Our opinion confirms that the accounts give a true and fair view of the CCG's financial position as at 31 March 2015 and of the net expenditure recorded by the CCG for the year. We provided an opinion that the financial statements give a true and fair view of the CCG's financial position and of its expenditure. Annual governance statement We examined the CCG's arrangements and processes for compiling the Annual Governance Statement (AGS) and read the AGS to consider whether it was in accordance with our knowledge of the CCG. We had no matters to report in relation to the CCG's compliance with NHS England guidance on governance statements Grant Thornton UK LLP Annual Audit Letter for Chorley and South Ribble CCG 7

8 Financial performance 2014/15 The CCG's performance against its financial targets is set out in the table below: Target Actual Met? Delivery of the 2015/16 financial plan is dependent on the management of a much greater range and complexity of financial risks than in previous years. Expenditure not to exceed income Revenue resource use does not exceed the amount specified in direction Revenue administration resource use does not exceed the amount specified in Directions 227, ,121 Yes 225, ,708 Yes 4,521 4,216 Yes Looking forward The CCG faces some key challenges going forward some of which remain outside its control, most notably the financial viability of one of its main providers. The CCG has a track record of meeting its financial targets and is well aware of the extent of the challenges it faces and is responding appropriately. The CCG successfully met all of the financial targets required of it. It had originally agreed with NHS England a planned surplus of 2.292m for 2014/15 and exceeded this by 524k. The CCG's financial budget for 2015/16 includes a productivity and efficiency target of 9.6m. This is a significant increase on the 3m achieved in 2014/15, and is a considerable challenge. The CCG has schemes in place to cover all of the cost saving target. The CCG is aiming to identify additional schemes in addition to the target, which will provide a contingency if there is any slippage Grant Thornton UK LLP Annual Audit Letter for Chorley and South Ribble CCG 8

9 Section 3: Value for Money 01. Executive summary 02. Audit of the accounts 03. Value for Money 2015 Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June 2015

10 Value for Money Value for Money conclusion The Code describes the CCG's responsibilities to put in place proper arrangements to: secure economy, efficiency and effectiveness in its use of resources ensure proper stewardship and governance review regularly the adequacy and effectiveness of these arrangements. We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the CCG has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. In 2014/15 we are required to give our VfM conclusion based on the following two criteria specified by the Audit Commission which support our reporting responsibilities under the Code and the Act: The CCG has proper arrangements in place for securing financial resilience. The CCG has robust systems and processes to manage effectively financial risks and opportunities, and to secure a stable financial position that enables it to continue to operate for the foreseeable future. The CCG has proper arrangements for challenging how it secures economy, efficiency and effectiveness. The CCG is prioritising its resources within tighter budgets, for example by achieving cost reductions and by improving efficiency and productivity. Key findings Securing financial resilience We have undertaken a review which considered the CCG's arrangements against the three expected characteristics of proper arrangements as defined by the Audit Commission: financial governance; financial planning; and financial control. During 2014/15 the CCG strengthened its financial governance arrangements. It has put in place new arrangements to deal with the devolution of commissioning for primary care services from 1st April The local health economy has become particularly challenging for 2015/16 onwards, aligned with financial pressures for acute and community providers as well as for the county council. The CCG faces a very demanding savings target of 9.6m to achieve and any issues/failures by providers will make delivery even more difficult. The CCG fully recognises the scale of challenge it faces and has a good planning and monitoring base from which to progress. Effective working with partners to robustly monitor outcomes from initiatives and developments; evaluate their financial impact; and respond to the implications quickly will be a cornerstone to successful delivery of the financial budget for 2015/16. Additionally, ensuring that the new arrangements/policies agreed for managing conflicts of interest are affective will be important as the CCG makes key procurement decisions during 2015/16 affecting the local GP practices. Challenging economy, efficiency and effectiveness The CCG has developed a clear vision and priorities for the area following extensive consultation with patients and providers. It has a good understanding of its costs and the drivers of those costs and this is reflected in its five year plan to achieve improvements in healthcare and efficiencies. In particular it has set in motion transformational changes with partners around urgent care which are designed to improve care whilst reducing costs. The increasingly difficult financial position in which providers are operating in, is making it more and more difficult for the CCG to engage effectively with them to achieve transformational change. Working with providers and other agencies to deliver on its objectives will be a significant challenge going forwards Grant Thornton UK LLP Annual Audit Letter for Chorley and South Ribble CCG 10

11 Value for Money Overall VfM conclusion On the basis of our work, and having regard to the guidance on the specified criteria published by the Audit Commission, we are satisfied that in all significant respects the CCG put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June

12 Appendices Appendices 2015 Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June

13 Appendix A: Reports issued and fees We confirm below our final fees charged for the audit and provision of non-audit services. Fees Planned Actual Statutory audit 60,000 60,000 Fees for other services Service Fees None Nil Total fees 60,000 60,000 Reports issued Report Date issued Audit Plan February 2015 Audit Findings Report May 2015 Annual Audit Letter June Grant Thornton UK LLP Annual Audit Letter for Chorley and South Ribble CCG 13

14 2015 Grant Thornton UK LLP. All rights reserved. 'Grant Thornton' means Grant Thornton UK LLP, a limited liability partnership. Grant Thornton is a member firm of Grant Thornton International Ltd (Grant Thornton International). References to 'Grant Thornton' are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients. grant-thornton.co.uk 2015 Grant Thornton UK LLP The Annual Audit Letter for Chorley and South Ribble CCG June 2015