Apologies for Absence Mrs. Stanley welcomed members to the meeting, apologies were noted and introductions were made.

Transcription

1 AUDIT & ASSURANCE COMMITTEE Minutes of the Meeting of the Audit & Assurance Committee of the Board of Directors of Sheffield Health & Social Care NHS FT Wednesday, 20 th January 2016 in the Rivelin Board Room, Fulwood House Open BoD Item 14 Present: 1. Mrs. Susan Rogers Non-Executive Director 2. Mrs. Ann Stanley Non-Executive Director (Chair) 3. Mr. Mervyn Thomas Non-Executive Director 4. Mr. Richard Mills Non-Executive Director 5. Cllr. Leigh Bramall Non-Executive Director In Attendance: 6. Ms. Tania Baxter Head of Integrated Governance 7. Mr. Clive Clarke Deputy Chief Executive 8. Mr. Phillip Easthope Executive Director of Finance 9. Mr. James Sabin Deputy Director of Finance 10. Mr. Tim Thomas Director, 360 Assurance (for part meeting) 11. Ms. Trudy Enticott Business Associate, 360 Assurance 12. Ms. Lisa Mackenzie Client Manager, 360 Assurance 13. Mr. Robert Purseglove Local Counter Fraud Specialist, 360 Assurance 14. Mr. Rashpal Khangura Director, KPMG External Audit Service 15. Mr. Ian Warwick Manager, KPMG External Audit Service 16. Ms. Lizzie Wharton Manager, KPMG External Audit Service 17. Mr. Anthony Clayton Trust Consultant 18. Mrs. Jeanine Hall PA (Minutes) Apologies: 19. Ms. Liz Lightbown Chief Operating Officer/Chief Nurse 20. Ms. Jill Dentith Interim Board Secretary Minute Action AA16.01 AA16.02 Apologies for Absence Mrs. Stanley welcomed members to the meeting, apologies were noted and introductions were made. Declarations of Interest No changes or additions to declarations of interest were reported. It was agreed that it would not be necessary for members of the Audit Service to leave the meeting during discussion under Matters Arising in respect of the Internal Audit Service tendering process. AA16.03 Minutes of the Audit & Assurance Committee held on 21 st October 2015 i. AA14.91c refers: AAC Self-Assessment Questionnaire (final paragraph) Mr. Clarke stressed the importance of the continued involvement.. ii. AA15.93 refers: 360 Assurance Progress Report (penultimate paragraph) Initials should read WODC. Following these amendments, the minutes of the meeting held on the 21 st October 2015 were accepted as a correct record and would be presented to the February Board of Directors meeting. AA16.04 Matters Arising a) 2014/2015 BAF Review of Workforce Indicators (AA15.91a/15.54b/15.68b refers) A&A January 2016 Page 1 of 9

2 Mr. Clarke confirmed that he had rather belatedly distributed the workforce indicators paper recently received at Workforce & OD Committee. Agreed that any comment regarding these indicators should be fed into the Workforce & OD Committee. b) Lessons Learnt from Overseas Contract/McIvor Review: Review of SFIs/Scheme of Delegation (AA15.91b/15.57/15.68d refers) Mr. Sabin advised that the review of the Trust s Standing Financial Instructions and Scheme of Delegation was planned to be received at the April AAC meeting. He assured members that the outcome of the McIvor Review would be incorporated into this piece of work. c) KPMG Report Data Analytics (AA15.91d/15.74 refers) Mr. Sabin advised that following the identification of an HR contact, this piece of work was progressing. There is no immediate concern, however, the outcome will be available for the April AAC meeting. JS JS d) SHSC Whistleblowing Policy (AA15.93 refers) Members noted receipt of the Trust s Whistleblowing Policy, which it was requested be received as part of the committee s assurance processes. Mr. Clarke confirmed that following the introduction of the Freedom to Speak Up initiative and the need for the Trust to identify a Guardian role, discussions are taking place within the Executive Directors Group and the wider Trust regarding SHSC s response and potential timeframe. It is also intended to review the relevant Trust policies to ensure they reflect what is happening nationally in respect of this issue and what impact (if any) this could have on the content of those policies. Mr. Clarke agreed to provide an update to the April AAC meeting. CC The Board of Directors are due to receive an update in due course. e) Progress Against 2015/2016 Internal Audit Plan & Identification of 2016/2017 Potential Audit Areas (AA15.94 refers) Confirmed that the meeting to discuss the identification of potential audit areas for next year s plan had been noted in diaries for Wednesday, 27 th January. Agreed that the 360 Assurance historic audit data would be available for this meeting. f) Corporate Risk Register (AA15.97 refers) Mrs. Rogers also confirmed that since the last meeting she has had the opportunity to discuss the concerns she raised regarding Forest Close and is reassured that good, positive progress is now being made and that the potential risks have been largely mitigated. g) Draft SHSC Anti-Bribery Policy (AA refers) It was confirmed that the policy had been amended as agreed at the last meeting and had been duly approved by the Executive Directors Group. The Chair requested that this Committee receives a copy of the final version of the policy for ratification prior to issue. RP h) Tender Process Trust s Internal Audit Service (AA refers) At the October meeting the Committee agreed to test the market for the provision of the Trust`s internal audit services by means of competitive tender. The main reason for going out to tender was to ensure value for money. Following this agreement and further exploratory work it was determined that as the provision of the service by the present auditors is provided within a consortium, there would be an immediate and adverse financial impact on the present price if the Trust were to withdraw from the consortium. There was also the need to give 6 months notice on the present arrangement. Additional assurance has also been received in respect of value for money in terms of quality of output against a lower quartile market price per day. Following communication between AAC members, a decision was taken outside the meeting to rescind the October decision and to remain within the consortium for the time being. It was requested that the Committee receive periodic updates from the Consortium Board to demonstrate that value for money was still being achieved overall. PE A&A January 2016 Page 2 of 9

3 AA16.05 Internal Audit Outstanding Actions Follow Up Summary Mr. Clarke provided an update to the committee on the outstanding internal audit actions and the progress that had been made since the last update in October, noting that of the four outstanding actions one had now been completed and three remained outstanding. He confirmed that all of the three remaining actions are in progress and are considered to be low risk to the Trust. Following discussion regarding the purpose of this report and the need to be able to give an assurance to the Board that all outstanding internal audit recommendations are followed up, it was agreed that Mr. Clarke would review all actions from aged audit reviews and provide a report to the committee on any outstanding actions. In respect of the Audit Report Arrangements to Capture & Act on Staff Feedback: Mrs. Rogers felt that more pro-active follow up action could be taken by the Trust in respect of the level of infrequently used accounts. CC CC AA Assurance Internal Audit Progress Report Ms. Mackenzie presented the 360 Assurance progress report, which provided an update on progress made against the completion of the Trust s 2015/2016 Internal Audit Plan. Noted the completion of the following reports: Partnership Working Petty Cash Management & Patients Property and Monies She also confirmed that draft reports had been issued in respect of the following reviews: Trust Committee Governance Arrangements Members noted progress against plan and the expectation that by the next meeting in April the majority of audits on this year s plan will have been completed. Ms. Mackenzie advised that she intended to liaise with members to ensure that 360 Assurance is reporting in the way that meets the assurances required by the AAC and the Board. In response to a query from Mr. Mills, Mr. Clarke confirmed that he is the Trust lead for information governance and that the Quality Assurance Committee takes primary responsibility for this area. It was further confirmed that the outcome of any audit on information governance, including the IG Toolkit, would also be received by AAC members as a matter of course. Discussion then concentrated on the recent review of Committee Governance Arrangements within the Trust. Ms. Enticott from 360 Assurance introduced the report and confirmed that a number of meetings have taken place both prior to and following the issue of the draft report. She provided a verbal summary of the key findings report, which were included within the 360 Assurance Progress Report. Following discussion the following next steps were agreed: Confirm action plan and timescales; Ensure that all committee members understand the assurance review process; All committees to introduce meeting action logs; Terms of reference review for all Board sub-committees ensuring no duplication; Clarify and confirm Non-Executive Director membership on each committee; Review, clarify and publish the group and committee structure beneath both EDG and the Board sub-committees; Undertake a longer term piece of work to review the robustness of the assurance that is received at each committee (content and documentation). PE It was also agreed that a Board Development Session should be arranged to review the use of the Board Assurance Framework and Corporate Risk Register. CC It was confirmed that work has commenced on a number of these next steps, and Mr. Easthope advised that he would be finalising the management action plan and relevant timescales for these actions as quickly as possible. A&A January 2016 Page 3 of 9

4 Committee members expressed their thanks to 360 Assurance for providing a very clear and constructive report in respect of their review of Committee Governance Arrangements. Ms. Mackenzie referred members to section 6 of her report which noted that due to the departure of the Trust s Director of ICT, it is proposed that the IT Strategy audit be postponed until 2016/17 when the new Director will have been in post a number of months. It is also requested that the Service Development Initiatives review be postponed to due to there being minimal service development during this year. The committee formally approved the deferral of these items and noted that this deferral would be factored into discussions regarding next year s plan. AA16.07 KPMG External Audit Progress Report Members received the KPMG progress report. It was noted that this provided an overview of the work completed in anticipation of the 2015/16 year-end audit. AA16.08 KPMG External Audit Plan 2015/16 Mr. Khangura advised that the plan presented to members provided the scope of work to be undertaken by KPMG as part of the 2015/16 year-end audit and highlighted the key elements of the financial statements audit. He advised that completion of the plan included the continued use of data and analytics, which allows the testing of whole population ranges rather than just picking a sample, thereby providing greater assurance over the outcome of the financial statements audit. A further important element of the planning stage is setting the materiality level and the report provides an outline of the approach taken in this respect which has resulted in the materiality level reducing to 2m (from 2.5m). Mr. Khangura confirmed that this was not due to any concerns regarding specific risk within the Trust, rather that it is a sector-wide approach and acknowledges the position within the NHS in general. As a result of the completion of the risk assessment as part of the planning processes, two significant opinion risks have been identified, namely the verification of land and building assets and recognition of NHS and non-nhs income. In addition to these risks the audit will also focus on two other areas required by the auditing standards - fraudulent risk of revenue recognition and management override of controls. The report provides an overview of all areas of risk which will be assessed as part of the year-end processes. Ms. Wharton noted that in terms of the reaching the use of resources conclusion, a key element of this is the value for money work and she confirmed that the value for money approach has changed from that adopted in 2014/15. The process now requires auditors to reach their conclusion on arrangements to secure value for money based on a single overall evaluation criterion that the Trust has arrangements in place to make the correct decisions about delivering value for money and that this is supported by three sub-criteria (informed decision making; sustainable resource deployment; working with partners and third parties). She confirmed that key risks identified in this element of the audit include financial sustainability and going concern; response to CQC inspection reports and compliance with additional requirements around authorisation and disclosure of senior pay and agency costs. Mr. Warwick confirmed that as in previous year s the Trust s Quality Report will be subject to review, although guidance on the content of this report has not been issued at this time. Until such time that the guidance is received, work will commence in line with last year s requirements. This work will ensure that the Quality Report is compliant with Monitor s requirements; checking for consistency of information that is shared with other bodies and the testing of three indicators gatekeeping (crisis resolution); 7 day follow up and a further indicator chosen by the Council of Governors. Members received and approved the External Audit Plan for 2015/2016. Members received assurance from the detail of the plan, although it was agreed that in order to provide additional assurance, KPMG would provide further detail on their guidance and the background to the individual Key Lines of Enquiry (KLOE) which inform and provide the basis for the assurances given in respect of the VFM/Use of Resources conclusions. KPMG A&A January 2016 Page 4 of 9

5 AA16.09 Local Counter Fraud Specialist Progress Report Mr. Purseglove presented his progress report, which gave an update on counter fraud work undertaken to date in respect of the 2015/2016 Counter Fraud Plan and provided members with an update on current level of reactive work being undertaken on behalf of the Trust. As previously requested, the report also includes an indication of the numbers of staff undertaking training in the period. Mr. Purseglove referred members to section 2 of his report in respect of contract performance and advised that he is closely managing contract delivery at the moment and that this is due to the time necessary to address the recent quality inspection and he has recently had referred a resource intensive investigation. He assured members that he would raise any issues regarding potential overrun on the programme with Mr. Easthope and Mr. Sabin as necessary and formally report back at the next meeting as appropriate. He noted the receipt of an NHS Protect Warning (ref ) which has been brought to the attention of Finance Directors. He confirmed that he had received acknowledgement of receipt and action taken from SHSC. Mr. Purseglove went onto provide members with the background to the current open investigations. Mr. Purseglove advised members that he is currently undertaken a staff awareness survey which addresses such areas as escalation of fraud within the workplace and he agreed to present the results of this survey to a future AAC meeting. The results will also inform the counter fraud work plan and identify potential risk areas for next year. It was noted that the Committee had discussed on numerous occasions the raising of awareness amongst staff about potential fraud/spam opportunities and it was agreed that perhaps the Trust s Workforce & OD Committee should consider during their discussions whether take up on Fraud Training is an area that could be incorporated into the identification of training requirements. WODC AA /2016 Board Assurance Framework Members received and noted the 2015/2016 BAF. It was confirmed that following discussion at the October AAC meeting, receipt of the BAF was deferred from December to January s Board meeting to enable further work to be carried out on its content. Ms. Baxter has also had discussions with the Interim Board Secretary following that Board meeting, although she had not had the opportunity to reflect Board discussions in the BAF received by members today due to time constraints, however, work had taken place to develop the BAF further since its last receipt at this committee. Ms. Baxter confirmed that the BAF had been reviewed to ensure that all assurances provided are appropriate to the current year, the only exception being those relating to the CQC inspection report. The committee were informed that work has commenced on reviewing the strategic objectives and the impact of these new objectives with regards to the creation of the new BAF. Preliminary discussions have been held and an initial mapping exercise undertaken to determine which risks carry forward from the current BAF. Mr. Clarke confirmed that the BAF had been reviewed by the Executive Directors Group and that group acknowledged the ever developing nature of this document. He also noted the clear identification of Executive leadership within the BAF. SA34 (Staff Wellbeing) A request was made to revisit this risk with a view to reviewing the potential gaps in control. SA41 (Collaborative Working) A request was made to review this risk to determine its status and whether it is a risk at all. SA123 (Quality of Care) - It was noted that there have been a number of discussions with regards to establishing peer reviews and how we move forward to ensure CQC compliance amongst other areas. This is a key area for this BAF item. The importance of ensuring there is clarity regarding the purpose and remit of each visiting team was stressed. Confirmed that once these visits are underway and feeding back through the A&A January 2016 Page 5 of 9

6 appropriate processes they will show as an additional control in this area. It was agreed that there needs to be clarity on where feedback from such visits should be directed. In the absence of this clarity, however, Mr. Clarke agreed that he would act as the conduit for any feedback following visits. The Chair noted that a recent cleansing exercise had been undertaken on the BAF and number of amendments/controls added following discussion at various meetings. From the perspective of this committee, however, an assurance is required that it can have some input in to the quality of the controls that are included and that the controls will actually mitigate the risks. Whilst there is a lack of clarity at the moment on how this will happen, it may become clearer as the work on the Committee Governance structure and the review of committee terms of reference progresses. Mr. Easthope confirmed his previous agreement at the recent Board meeting to draft a pro-forma for use when identifying risk, and that it is intended that this will give a clear indication of what should be included and the assurances required. The Chair referred to a previous agreement to arrange a Board Development Session to review the use of the Board Assurance Framework and Corporate Risk Register and it is hoped that this session can start to assist in providing the clarity required. It was also agreed that there needs to be clarity for each committee on the actual assurances it is seeking and that this can be further developed at the Board Session. AA16.11 Corporate Risk Register Ms. Baxter presented the Corporate Risk Register and confirmed that changes to the register since it was last received by the Committee were indicated on the summary. She advised members that she had recently been notified of two new risks which are not reflected on the register received by members. These relate to the Community Directorate reconfiguration this is a risk on the Directorate level register that may be escalated to the Corporate Risk Register following consultation with EDG members; and potential gaps in the Trust s Clinical Audit Processes and the need to strengthen this process. Ms. Baxter noted that she would be discussing with EDG the possible transfer of risk 2125 onto the BAF. She believes this is a gap that we are not fully reflecting on the BAF and there is a need to fully describe the way we engage and involve service users. Two further changes have recently been made to the Register, which are not reflected on the version received by members due to timing constraints, and these relate to risk 2375 where additional information has now become available and will be reflected in the revised version of the register; and risk 2385 which appears on the Trust s regulation dashboard and is flagged as red due to the Trust s NHSLA claims history. She provided the background to the rating of this risk and confirmed that whilst it will still remain a red risk, the circumstances surrounding the risk will be appropriately reflected in the scoring on the register. Members noted and agreed the suggested changes to the Corporate Risk Register. AA16.12 Annual Report & Accounts Production Timeline The Committee received and endorsed the schedule for the production of the Annual Report and Accounts. Mr. Easthope confirmed that the schedule identifies the key deadlines for review periods, consistency checking and final sign off by this Committee, Auditors and the Board, the timeline also includes the dates for upload to Monitor and receipt in Parliament AA16.13 Briefing Paper: FT Annual Reporting Manual Changes Mr. Sabin presented the FT Annual Reporting Manual Changes to the Committee and reported on the impact the changes will have on the production of the Annual Accounts. He confirmed that the changes have been considered and appropriate action taken to implement the changes in the production of the 2015/16 Annual Report and Accounts. The Committee received the paper and agreed to endorse the recommended actions. A&A January 2016 Page 6 of 9

7 AA16.14 Briefing Paper: Accounting Policies Review 2015/2016 Mr. Sabin presented the Accounting Policies Review to the Committee for endorsement prior to inclusion in the Annual Report and for ratification for use during the 2016/17 accounting year. For ease of reference, changes have been highlighted in the report. A specific request was made for early review of these changes by KPMG to ensure that all appropriate changes have been made to the relevant accounting policies prior to the commencement of the 2015/16 audit. The Committee received the paper and agreed to its endorsement. AA16.15 Quarter Three Losses & Special Payments Report Members noted receipt of the quarter 3 Losses & Special Payments Report which was due to be received and considered by the Finance & Investment Committee at its meeting on the 25 th January Mr. Sabin confirmed that this paper is received for the committee s awareness of the level and scope of losses and special payments across the Trust and an assurance on the level of effective internal controls in place to manage and record such losses and where necessary identify potential trends to enable corrective action to be taken to minimise future claims. He advised that the Finance Department will be reiterating policy requirements to approving staff to clarify that damage to staff property and the payment of staff parking fines are not the responsibility of the Trust unless caused by client interaction. Following a query from the Chair regarding the level of service user property going missing, Mr. Sabin confirmed that this falls under the remit of a specific patients property policy and that it is intended to reissue and reaffirm the accountability levels and rules under which patients property should be handled at all times during any admission. Members were assured that the relevant systems are in place to monitor the Trust s losses and special payments. AA16.16 Quarter Three Aged Accounts Receivable & Payable Report Members received and noted the position in respect of aged accounts receivable and payable over quarter 3, which it was confirmed would also be received by the Finance & Investment Committee at their meeting on the 25 th January Mr. Sabin confirmed that this report is brought to this Committee to provide an assurance that the appropriate controls are in place to review and where appropriate ensure action is taken to chase outstanding debts. He confirmed that action continues to be taken by the Finance Department to follow up all outstanding debt. Main area of concern continues to be the level of outstanding debt with the Sheffield City Council and, although some progress has been made recently, there are still delays in the system and action would continue to be taken. Cllr. Bramall declared an interest in this element of the report. He stated that he had noted the comments made and would follow them up within the Council. Noted that Self Directed Support payments continue to be an on-going problem in this area and it was confirmed that the Finance Department are working closely to understand the systems in place and to work with those systems. However, it is acknowledged that this is a changing environment and changes are being made to systems which are outside of the control of the Trust. Mr. Easthope confirmed that upon receipt of this report, he had requested that all appropriate escalation processes are in place, both internally and externally to the department and the organisation. AA16.17 Briefing Paper: Standing Financial Instructions (SFI) Breaches Members received and noted the briefing paper, which was received for information at this stage. Mr. Sabin confirmed that the paper will also be received for review by the Finance & Investment Committee prior to any proposed amendment to the SFIs being finalised and recommended back to this committee for review and ratification. A&A January 2016 Page 7 of 9

8 Noted that there were two types of compliance issues; those that result from managers taking action that Finance considers to be the most appropriate, but technically a break of Standing Orders and SFIs and for which an update to these documents will be recommended; and secondly those that result from a lack of awareness or understanding of the rules and for which improved education and awareness will be put in place. Mr. Sabin confirmed that the paper outlined specific areas of non-compliance, all of which were being followed up as a result of this review. He also noted that all identified breaches relate to the second category noted above and the required additional training/awareness is being addressed. Whilst members acknowledged that this paper was received by this committee for information, it was felt that AAC needed some assurance regarding the action being taken to address the breaches/non-compliance issues. It was confirmed that following review by the Finance & Investment Committee and ratification of the paper s recommendations, amendments will be made to the Standing Orders and SFIs as appropriate to ensure future compliance with Trust processes, and that these will ultimately be received by this committee for approval. The committee also requested an assurance that where breaches/non-compliance issues are increasing, then the appropriate processes are being followed to escalate these. It was confirmed that both these requests would be addressed as part of the recommendations to this committee, following review of this paper by the Finance & Investment Committee. Mr. Thomas left the meeting at this stage. AA16.18 Cashiering & Petty Cash Policy and Procedures Update 2015/16 Members received the updated Cashiering and Petty Cash Policy and Procedures, and noted that this was received under the committee s responsibility to maintain a system of internal control, that assets are safeguarded and that value for money is continuously sought. It was confirmed that further discussion regarding the updates will take place at the Finance & Investment Committee and following approval, the policy will be issued and a training package put in place to ensure all staff are aware of their responsibilities under the policy. Members were assured that the relevant processes were in place. AA16.19 AA16.20 Audit Self-Assessment Questionnaire It was agreed that all members/attendees should complete the annual self-assessment questionnaire and return to Jeanine Hall by the 19 th February Any recent member or new attendee of the committee should not feel obliged to complete this self-assessment, if they feel unable to do so, on their knowledge of the committee to date. The results of the questionnaire will be received at the next meeting of the committee. Any Other Business a) Assurances to the Board of Directors The Chair noted that there has been a concern in the past that, due to the time delay between these meetings and the receipt of approved notes by the Board, it is not always possible for timely and effective reporting into the Board of Directors by this committee. Following recent discussion regarding the audit review of Committee Governance arrangements and previous general discussion regarding the need for sub-committees to communicate effectively to the Board, a template has been drawn up which it is proposed that this committee uses to provide the necessary assurance to the Board that the AAC has discharged its duties as directed by the agreed terms of reference by the timely reporting of items of significance discussed at their meetings. It also suggested that other bi-monthly committees consider utilising this form of reporting All A&A January 2016 Page 8 of 9

9 into Board. b) Action Log Per agreement following receipt and discussion of 360 Assurance Committee Governance Review report, it was agreed that an action log would be drawn up from today s meeting. AA16.21 Assurance Review It was confirmed that the AAC does not have any specifically assigned risks as part of the recently revised assurance review process. It was felt that whilst there had been lengthy discussion regarding the BAF and Risk Register, this discussion had not resulted in any changes to the BAF. It was also considered that discussion regarding the Whistleblowing Policy did not specifically affect items of control on the BAF or Corporate Risk Register. Ms. Baxter felt that the availability of a best practice framework for governance arrangements as raised in the 360 Assurance Progress Report, should be reviewed and whether this is appropriate to consider for implementation and as an added control within the BAF. She also noted that the Progress Report referred to future audit review of waiting times and nutrition and hydration and felt it was important that this is followed through and ensure the correct assurances or gaps are recorded once the review is completed. Mr. Easthope questioned, following receipt of the 360 Assurance Committee Governance Report and the highlighted potential control weaknesses in that report, whether this report raises a sufficient level of concern to consider changes to the BAF. It was agreed that this would be discussed further at the Board Development Session to be arranged specifically to discuss the BAF and the Corporate Risk Register. AA16.22 Chair s Report/Provision of Assurance into the Board of Directors In respect of today s meeting it was agreed that the Chair would highlight the following items in her report to the Board of Directors: Tender for Internal Audit Services Whistleblowing Policy External Audit Plan Year End Financial Statements Audit Approach Committee Governance Internal Audit Report AA16.23 AA16.24 Formal Private Discussions: Members of AAC & Audit Representatives Although there was time allocated on the agenda for a formal discussion to take place in private between the members of the AAC and Audit representatives, it was agreed that there were no specific issues to raise and this discussion would not be necessary. Date & Time of Next Meeting Wednesday, 20 th April a.m. Rivelin Board Room, Tudor Building, Fulwood AS/jch/January 2016 (Approved) A&A January 2016 Page 9 of 9