Southport and Ormskirk Hospital NHS Trust. Annual Audit Letter 2011/12 12 September 2012

Transcription

1 Southport and Ormskirk Hospital NHS Trust Annual Audit Letter 2011/12 12 September 2012

2 Contents The contacts at KPMG in connection with this report are: Page Tim Cutler Engagement Lead, Manchester, KPMG ELLP (UK) Tel: Introduction 2 Headlines 3 Appendices A. Summary of Reports Issued 6 Amanda Latham Senior Manager Tel: amanda.latham@kpmg.co.uk This report is addressed to Southport and Ormskirk Hospital NHS Trust (the Trust) and has been prepared for the sole use of the Trust. We take no responsibility to any member of staff acting in their individual capacities, or to third parties. The Audit Commission has issued a document entitled Statement of Responsibilities of Auditors and Audited Bodies. This summarises where the responsibilities of auditors begin and end and what is expected from the audited body. We draw your attention to this document. External auditors do not act as a substitute for the audited body s own responsibility for putting in place proper arrangements to ensure that public business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. If you have any concerns or are dissatisfied with any part of KPMG s work, in the first instance you should contact Tim Cutler who is the engagement lead to the Trust or Trevor Rees, the national contact partner for all of KPMG s work with the Audit Commission. After this, if you still dissatisfied with how your complaint has been handled you can access the Audit Commission s complaints procedure. You can contact the Complaints Unit by phone ( ), by (complaints@audit-commission.gov.uk), through the audit commission website ( by textphone/minicom ( ), or via post to Complaints Unit Manager, Audit Commission, Westward House, Lime Kiln Close, Stoke Gifford, Bristol, BS34 8SR. 1

3 Introduction Background This Annual Audit Letter (the letter) summarises the key issues arising from our 2011/12 audit at Southport and Ormskirk Hospital NHS Trust (the Trust). Although this letter is addressed to the directors of the Trust, it is also intended to communicate these issues to key external stakeholders, including members of the public. It is the responsibility of the Trust to publish the letter on the Trust s website at In the letter we highlight areas of good performance and also provide recommendations to help the Trust improve performance. A summary of our key recommendations is summarised in Appendix A. We have reported all the issues in this letter to the Trust throughout the year and a list of all reports we have issued is provided in Appendix B. Scope of our audit The statutory responsibilities and powers of appointed auditors are set out in the Audit Commission Act Our main responsibility is to carry out an audit that meets the requirements of the Audit Commission's Code of Audit Practice (the Code) which requires us to report on: Use of Resources (UoR) Financial Statements including the Statement on Internal Control We conclude on the arrangements in place for securing economy, efficiency and effectiveness (value for money) in the Trust s use of resources. We concluded that the Trust has put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. We provide an opinion on the Trust s accounts. We issued an unqualified opinion on the Trust s accounts on 31 May This means that we believe the accounts give a true and fair view of the financial affairs of the Trust and of the income and expenditure recorded during the year. Fees Our fee for the audit in 2011/12 was 134,500 plus VAT. This includes 12,500 for the external assurance on the Trust s quality account. This fee was above that highlighted within our auditplan because of the issue of late guidance on the quality account. The fees have been communicated to the Audit Committee. We have also completed a piece of non audit work at the Trust during the year. This work reviewed the Trust s quality governance arrangements against Monitor s Quality Governance Framework. The fee for the work was 15,000 plus VAT. 2

4 Headlines Use of Resources We concluded that the Trust has put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. External Audit Progress We have completed the work highlighted within our audit plan. This includes following up on reports produced in 2010/11 on Governance arrangements and Securing Financial Resilience. We found that good progress had been made with the recommendations made. A separate report will be issued to the audit committee to outline our findings. Throughout the year we have continued to review the Trust s financial standing and its delivery of its cost improvement programme (CIP) alongside other risks identified at the planning stage such as embedding the community services into the Integrated Care Organisation (ICO). We provide further details our findings on page 5 but we have not identified anything significant which we need to bring to the audit committee s attention. Financial Statements including the Annual Governance Statement We issued an unqualified opinion on the Trust s accounts on 31 May This means that we believe the accounts give a true and fair view of the financial affairs of the Trust and of the income and expenditure recorded during the year. We have also confirmed that the Trust have complied with the Department of Health requirements in the preparation of the Trust s Annual Governance Statement (AGS). Weare pleased to report that there were no material adjusted items or unadjusted audit differences arising from our work. Recommendations We have not raised any high risk recommendations as a result of our 2011/12 audit work. The recommendations we have made during the year are included within the reports outlined in Appendix A. The Trust has made good progress at implementing agreed audit recommendations from prior years. We have identified only one prior year recommendation that still require further action by management which relates to the achievement of the Better Payment Practice Code. 3

5 Headlines (cont.) Whole of Government Accounts We issued an unqualified confirmation to the National Audit Office regarding the Whole of Government Accounts submission, made through the Trust s submission of the summarisation schedules to the Department of Health. Quality Accounts Based on the work we performed you have achieved a limited assurance opinion on the content of your Quality Account. Our indicator testing identified no improvements needed in the process for C Difficile and Caesarean and Labour induction rate indicators. However, we did identify the need for the Trust to make improvements in its processes for the VTE risk assessment indicator in order to gain a limited assurance opinion in the future. The Trust has worked hard in implementing our recommendations resulting form the work we carried out on the Trust s Quality Account in 2010/11. We made two further recommendations in order to improve the Trust s readiness for securing the relevant assurance opinions in future periods. Public Interest Reporting We have a responsibility to consider whether there is a need to issue a public interest report or whether there are any issues which require referral to the Secretary of State. We did not issue a report to the Secretary of State or a report in the public interest in 2011/12. Fraud This work is complete and has not identified any matters which we wish to draw to your attention. Payment by Results (PbR) Data Assurance This review followed up recommendations arising from previous local work delivered by the PbR data assurance framework. Our work highlighted good practice in relation to the progress made across the Trust through the implementation of controls around PbR and reference cost related data quality. This is regulated through regular internal audits of data quality, with the Data Quality Group coordinating and monitoring the outputs of this control framework. 4

6 Headlines (cont.) High profile issues Economic Downturn and pressure on the public sector Integrated Care Organisation (ICO) The efficiency savings outlined within the Operating Framework continue to be a significant challenge for the sector going forward. In addition there is considerable organisational transformation in the NHS with the abolition of Primary Care Trusts from 1 April 2013 and the transfer of commissioning powers to GP led Clinical Commissioning Groups. The 2012/13 budget forecasts a year end surplus of 1.7m. This surplus incorporates a Cost Improvement Plan (CIP) target of 6.6m. The Trust has successfully achieved CIPs in the past but achievement of the 2012/13 CIP continues to represent a significant challenge to the Trust given the continued financial pressures. The ICO was formally created on the 1 April 2011 with the integration of elements of the community services from NHS Sefton and NHS Central Lancashire as part of the Transforming Community Services programme. The Trust s revenue increased by approximately 23m. As part of our use of resources work we also reviewed the Trust s progress in embedding the community services into the ICO. We reviewed the Business Transfer Agreement to ensure that the transfer of services was in line with our understanding. We reviewed the integration project plan and Board minutes to ensure that actions were being taken, completed and monitored in a timely manner and that risks associated with the transfer were evaluated appropriately. We did not identify any significant areas of concern that require reporting to the audit committee. The Trust correctly followed the Treasury guidance and accounted for the transferred activity in full for the period (and the original provider for none) to reflect the position had the transfer always applied. Therefore the restatement is effected by an adjustment to 1 April 2011 opening balances rather than full restatement of comparators. Foundation Trust application The Trust is planning to become a Foundation Trust from April It has produced its Long Term Financial Strategy in order to achieve this. The Strategy outlines generating surpluses of 1% of turnover and to increase its cash balances by 1.2m in 2011/12 onwards in order to secure the financial ratios required for application. Given the uncertainty around the structure of the NHS, the current economic environment and the integration of community services into the ICO this will be a significant challenge. The Trust will submit its final Integrated Business Plan in October

7 Appendix A Summary of reports issued 2011 Audit Plan (December 2011) The Audit Plan set out our approach to the audit of the PCT s Use of Resources and Financial Statements (including the annual governance statement). January February March PbR Data Assurance follow up (February 2012) This report provided comment on the Trust s progress in implementing recommendations arising from previous local work delivered by the PbR data assurance framework. Audit Report (May 2012) 2011/12 External Assurance on the Quality Account (June 2012) Follow up report (September 2012) Follow up report (September 2012) The Audit Report provides our audit opinion for the year, the Value for Money conclusion, and our Audit Certificate. This report outlines our findings in relation to reviewing the content of the Trust s Quality Account and the preparation of specific indicators. This followed up the recommendations from our use of resources report from 2010/11. This followed up the recommendations from our governance review from 2010/11. April May June July August September October November Audit Highlights Memorandum (May 2012) Quality Governance Review (September 2012) Annual Audit Letter (September 2012) The Audit Highlights Memorandum provides details of the results of our audit for 2011/12 including key issues and recommendations raised as a result of our observations. We also provided the mandatory ISA260 declarations as part of this report. This review provides an assessment of the Trust s systems and processes against Monitor s Quality Governance Framework This Annual Audit Letter provides a summary of the results of our audit for 2011/12. December 6

8 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International Cooperative (KPMG International).