CWM TAF UNIVERSITY HEALTH BOARD MINUTES OF THE MEETING OF THE AUDIT COMMITTEE HELD ON 3 JUNE 2015 AT YNYSMEURIG HOUSE, ABERCYNON

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1 CWM TAF UNIVERSITY HEALTH BOARD MINUTES OF THE MEETING OF THE AUDIT COMMITTEE HELD ON 3 JUNE 2015 AT YNYSMEURIG HOUSE, ABERCYNON PRESENT Mr G Bell - Independent Member (Chair) Mr M Forey - Independent Member Dr C Turner - Independent Member IN ATTENDANCE Dr C D V Jones - Chairman, Cwm Taf UHB Mrs A Williams - Chief Executive, Cwm Taf UHB Prof. D Mead - Vice Chair, Cwm Taf UHB (observing) Mr S Webster - Director of Finance, Cwm Taf UHB Mrs A Lloyd - Chair, Welsh Health Specialised Services Committee (WHSSC) Mr T Davis - Associate Board Member, CTUHB (observing) Mr S Davies - Director of Finance, WHSSC Prof. S McClelland - Chair Emergency Ambulance Services Committee (EASC) Mr S Harrhy - Chief Ambulance Services Commissioner, EASC Mr M Jones - Wales Audit Office Mr D Burridge - Wales Audit Office Mr J Johns - Internal Audit Mr H Evans - Head of Corporate Finance Miss P Wenger - Committee Secretary WHSSC Mr R Williams - Board Secretary / Director of Corporate Services & Governance AC/15/116 WELCOME AND INTRODUCTIONS Mr G Bell, Chair welcomed everyone to the meeting and those present introduced themselves. Mr Bell welcomed in particular the Chair and Chief Executive, the Chair of WHSSC and the Chair and Chief Ambulance Services Commissioner, EASC. AC/15/117 APOLOGIES FOR ABSENCE Mrs M K Thomas, Independent Member and Mrs K Howell, Managing Director, WHSSC. 1

2 AC/15/118 DECLARATIONS OF INTERESTS There were none declared. AC/15/119 REPORT ON THE WHSSC/EASC FINANCIAL ACCOUNTS Mr S Davies presented the report on WHSSC/EASC Financial Accounts for Mr S Davies introduced the financial statements and advised that they are income and expenditure based statements. Mr Davies explained the statutory and legal requirement for the Cwm Taf Accounts and the consolidation of WHSSC / EASC financial statements, rests with Cwm Taf UHB. Mr Davies added that the total income and expenditure of the Joint Committees is added to that of Cwm Taf to produce consolidated Statutory Financial Statements covering all financial transactions of the three organisations. Members NOTED that in order to allow Cwm Taf to undertake this consolidation work, the Joint Committees must first produce their own financial schedules, in the same format, as determined by the Welsh government. Members NOTED that there was a requirement on the Audit Committee to review this information, provide assurance to the Joint Committees that they are satisfied that the accounts, as audited by the Wales Audit Office, represent an accurate summary of the financial activities of the Committees. Members NOTED the changes in movement during the year related to transfer of services to Health Boards, additional specific investments and minor technical changes. Members NOTED the reported break even positions and how additional funding for specialist services has been made available to NHS Wales organisations. Expenditure with NHS Wales providers had increased by 14.3m, this includes an additional 8m of Welsh Government assistance for Wales Ambulances Services NHS Trust. The Committee RESOLVED to; NOTE the contents of the report; and ENDORSE the consolidation of the WHSSC and EASC annual accounts into the Cwm Taf annual accounts for 2014/15. 2

3 AC/15/120 WHSSC ANNUAL GOVERNANCE STATEMENT Miss P Wenger presented the Annual Governance Statement for WHSSC and updated Members on the development of the statement which was also informed by the Head of Internal Audit Opinion and Annual Report for The statement summarised the overall summary of the results of the internal audit work undertaken during the year. Members NOTED the ongoing governance review of WHSSC by the Good Governance Institute, which is due to report in the summer Ms Wenger made reference to the Individual Patient Funding Requests (IPFR) audit review which concluded with a limited assurance rating and summarised the actions taken and progress made since the audit was reported. Members NOTED the significant governance risks identified, which related to renal transplantation, cardiac surgery waiting times for treatment and also the ongoing governance review and planned review by Healthcare Inspectorate Wales. Members NOTED that the status of the WHSSC Integrated Medium Term Plan and the actions being taken with Health Boards to ensure closer alignment. In considering the Annual Governance Statement the Committee RESOLVED to; RECEIVE and NOTE the WHSSC Annual Governance Statement for ; and ENDORSE that all Health Boards, as Members of the Joint Committee, should receive the Statement, to ensure the associated risks are known and owned by all. AC/15/121 EASC ANNUAL GOVERNANCE STATEMENT Mr R Williams presented the Annual Governance Statement for EASC and updated Members on the development of the statement which was also informed by the Head of Internal Audit Opinion and Annual Report for Members NOTED that with the establishment of EASC in April 2014, that this was the first Annual Governance Statement produced by the Emergency Ambulance Services Commissioner. The statement outlined the work undertaken to establish EASC and the related working of the Joint Committee and the sub group work supporting the Committees work. 3

4 Members NOTED the arrangements in place that established EASC and discussed the risks raised on the risk register. Mr S Harrhy explained that the risks raised were related to the last time the Committee had received the report and reflected the situation reported in November Members NOTED the importance of updating the risk register and that this would be undertaken in the summer. Members discussed the additional resource allocated by Welsh Government to support delivery of improved emergency service performance in the Welsh Ambulance Service and Mr Harrhy explained how this resource would be utilised within the CAREMORE framework going forward. In considering the EASC Annual Governance Statement , the Committee RESOLVED to; RECEIVE and NOTE the EASC Annual Governance Statement for ; and ENDORSE that all Health Boards, as Members of the Joint Committee, should receive the Statement, to ensure the associated risks are known and owned by all. AC/15/122 ANNUAL ACCOUNTS CWM TAF The report of the Director of Finance & Procurement, requiring the Audit Committee to scrutinise the Annual Accounts and Letter of Representation to the Auditors on behalf of the Board, and provide a recommendation to the Board as to their approval was RECEIVED. Mr H Evans explained as the host organisation for WHSSC/EASC and the considerable levels of income and expenditure managed through the WHSSC financial team that there was a requirement to show the related figures separately, in addition to the consolidated figures. Mr H Evans in summarising the Annual Accounts for , made reference to a small number of pages within the draft accounts that had been corrected and that tabled copies had also been provided. These specifically were pages 27, 42 and 49. 4

5 Mr Evans outlined the 2 key requirements of Welsh Government, which included to remain within the: Revenue Resource Limit (over a 3 year rolling period); and Capital Resource Limit. In relation to these 2 key requirements, the UHB was reporting that it remained within its Revenue Resource Limit achieving an underspend of 30k, shown on page 20 of the Accounts. There was also an under spend of 3k against the Capital Resource Limit, was also achieved, shown on page 20 of the Accounts. Mr H Evans explained that the UHB failed to meet the creditor payment target having paid 89.2% of non-nhs invoices within 30 days compared to a 95% requirement, shown on page 31 of the Accounts. Members NOTED that the reasons for this have previously been brought to the attention of the Audit Committee, and primarily relates to the Oracle system upgrade in the early months of the year. The reported issues are being addressed and performance is improving. In value terms, however, the UHB paid 95.4% of its non-nhs invoices over the financial year as a whole within 30 days. Members NOTED that primary healthcare services expenditure totalled m, an increase of 1.062m (0.8%) on the previous year. The main increase is in prescribed drugs up 0.977m. The detail of primary healthcare services expenditure is given in note 3.1 on page 22. Expenditure on healthcare from other providers totalled m, an increase of m (10.5%) on the previous year. Main movements are increased expenditure with WHSSC/EASC of 7.277m and a 4.720m increase in continuing care expenditure. Members NOTED the WHSSC/EASC increase was due to an 8m allocation received from Welsh Government and passed on to EASC. Continuing Healthcare (CHC) Expenditure increased by 1.8m in respect of new patients and a 0.6m additional provision for ongoing claims. The CHC expenditure included a credit of 2.4m for a write-back of provision that was no longer required thus exacerbating the increase between the 2 financial years. The detail of expenditure on healthcare from other providers is given in note 3.2 page 22. 5

6 Expenditure on hospital and community health services totalled m, down 5.543m (1.4%) on the previous year. Included within this is a net reversal of impairments of fixed assets of 6.336m compared with a previous year actual impairment of 7.639m (a downward movement therefore of m). Mr H Evans explained that the accounting for impairments and reversal of impairments to comply with International Accounting Standards is technically complex and the treatment has been agreed at an All-Wales level, addressing the issues raised by the auditors last year. The funding is neutral with the credit of 6.336m being removed from our Welsh Government allocation. The removal of this line of expenditure would result in a net in-year increase within hospital and community health services of 8.432m (2.2%). There was a 2.6m increase in staff costs (0.9%) and a 5.8m (14.9%) increase in clinical supplies and services expenditure. Secondary care drug costs account for 2.3m of this increase ( 1.2m of which relates to NICE). There was also a one-off purchase of beds of 1.6m, together with increases as a result of the PACS radiology managed services contract and laboratory equipment and appliances. The detail of expenditure on hospital and community services is given in note 3.3 on page 23. Miscellaneous income totalled m, down 2.436m. This is mainly due to a 2m reduction in income from Welsh Government as a result of them funding lucentis via the allocation process ( receipts were via an invoicing process and therefore classified as income). The detail on miscellaneous income is given in note 4 on page 24. Mr Evans outlined the significant capital programme progressed over the year and performance in relation to the Capital Resource Limit requirement. The Committee discussed key aspects of the summary presented which outlined the financial performance of the UHB and hosted bodies over the year. Members NOTED that the UHB has met the requirements of the Manual of Accounts issued by the Welsh Government, which includes the timetable for the production of draft accounts and the submission of audited accounts subject to Audit Committee approval. The accounts have been audited and an unqualified opinion is expected. 6

7 Audit of the Financial Statements (ISA 260) Draft Report Mr M Jones, Wales Audit Office, presented the Draft Audit of Financial Statements Report. Mr M Jones explained that related accounts audit work had progressed right up until the Audit Committee meeting and many of the issues raised had been resolved between Health Board staff and Audit staff. Mr Jones confirmed that presently, the Auditor General intends to issue an unqualified audit report on the UHBs financial statements, and this is supported by a substantive report. There are also some issues to report prior to their approval and these include; There are no misstatements identified in the financial statements which remain uncorrected, and which are above the level which we have determined to be trivial. Due to the new statutory duty to meet an aggregated three year resource limit from onwards we will be collating all uncorrected misstatements from the audits of years 1, 2 and 3 and considering their cumulative impact on the LHB s performance against the duty when it is measured at year 3, even if they are below our trivial level. For there were three trivial errors which in total would have increased the LHB s under-spend against its revenue allocation by 64,000. Corrected misstatements - There are misstatements that have been corrected by management, but which we consider should be drawn to your attention due to their relevance to your responsibilities over the financial reporting process. They are set out with explanations within Appendix 3 of the report. Other significant issues arising from the audit - in the course of the audit, we consider a number of matters both qualitative and quantitative relating to the accounts and report any significant issues arising to you. These include; o Accounting errors in relation to disposal of fixed assets; o Overpayment of staff salaries, who had left the employment of the UHB. Whilst recovery of salaries had taken place the matter raised identified control issues; and o Calculations of Continuing Healthcare (CHC) payments. Members NOTED the report as presented and the matters of concern whilst not material to the year end position, required further review and action. Following discussion, the Director of Finance recommended that Internal Audit review the arrangements in place for staff termination and provide a report back to the Audit Committee on its findings and recommended actions. 7

8 In relation to CHC, Members NOTED that following further work only one of the three cases looked at identified concern with calculation of payment, and it was therefore agreed that the Director of Nursing would review the current arrangements against the concern raised with the one case. The Audit Committee RESOLVED to; Recommend that the Board ENDORSE the consolidation of the WHSSC and EASC annual accounts into the Cwm Taf UHB annual accounts for 2014/15 and APPROVE the Annual Accounts for together with the letter of representation to the Auditors. AC/15/123 CWM TAF UHB ANNUAL GOVERNANCE STATEMENT Mr R Williams presented the Annual Governance Statement , explaining that the draft had been developed through the work of the Audit Committee and the requirements of the Manual for Accounts. Members NOTED that comments raised by auditors and Welsh Government had also been reflected in the final draft. The statement outlined progress in relation to the Board s governance arrangements, the outstanding HIW follow up governance review, expected to report soon, and made reference to the key risks being managed by the Board, which included; The HSE improvement notices and the actions concluded and being taken to address compliance issues; Fire Enforcement Notice relating to the refurbishment and improvement actions necessary to address ground and first floor fire safety at Prince Charles Hospital; Implementation of the South Wales Programme and related issues and mitigating actions taken associated with Paediatrics, Obstetrics and neonatal services; Emergency Ambulance Service performance and implications for compliance with Category A targets; Ophthalmology service pressures as a consequence of unprecedented staff absence and the actions taken by the Board to redirect reduced resource to areas of highest risk; Legal disputes relating to the construction of new hospitals at Rhondda and Mountain Ash and related processes; GP out of hours service and related pressures and the need to remodel and redesign the service. 8

9 Mr R Williams made reference to the Limited Assurance reports received by the Audit Committee during the year, which specifically were; Incident Reporting and Management and Business Continuity Planning. Members NOTED the action plans in place to address the recommendations made. The Chief Executive summarised the overall governance statement and following discussion the Committee RESOLVED to; RECEIVE and NOTE the Cwm Taf Annual Governance Statement for AC/15/124 HEAD OF INTERNAL AUDIT OPINION The Head of Internal Audit Report presented by Mr J Johns, was RECEIVED by the Committee. Mr J Johns explained that the purpose of the annual Head of Internal Audit opinion is to contribute to the assurances available to the Accountable Officer and the Board which underpin the Board s own assessment of the effectiveness of the system of internal control. The approved internal audit plan is restricted in scope and therefore the Board will need to integrate these results with other sources of assurance when making a rounded assessment of control for the purposes of the Annual Governance Statement. Members NOTED that to provide improved definition and interpretation the overall opinion has been formed by summarising audit outcomes across eight key assurance domains. The overall opinion is then based upon these grouped findings. Mr J Johns confirmed that in his opinion the Board can take reasonable assurance that arrangements to secure governance, risk management and internal control, within those areas under review, are suitably designed and applied effectively. Members NOTED that in receiving this opinion, that some matters require management attention in control design or compliance with low to moderate impact on residual risk exposure until resolved. Members NOTED that there were two reports on incident reporting and business continuity planning (BCP) that contributed to 3 limited assurance ratings within the report. The Committee Chair sought clarity as to the presentation of the limited assurance ratings on BCP and felt that there was learning for Internal Audit to reflect on and consider going forward. 9

10 Members NOTED the review of the Standards for Health Services which was concluded as Reasonable Assurance and that in addition an assessment against the Governance and Accountability Module had also been undertaken by the Board. The Committee RESOLVED to; RECEIVE the Head of Internal Audit Opinion. Members of the Audit Committee extended thanks for all the work put into preparing the Accounts, particularly to Internal and External Auditors and to Mr Webster and his team and also Mr Stuart Davies and the Finance team at WHSSC. AC/14/125 ANY OTHER URGENT BUSINESS None. AC/14/126 DATE OF NEXT MEETING Monday 6 th July 2015, at 9.00 am, Rhondda & Cynon Rooms, Ynysmeurig House. Mr Geoff Bell, Chair 10

CWM TAF UNIVERSITY HEALTH BOARD MINUTES OF THE AUDIT COMMITTEE HELD ON 18 MAY 2015, AT YNYSMEURIG HOUSE, NAVIGATION PARK, ABERCYNON PART 1 CWM TAF

AI 5.1 APPENDIX 15 CWM TAF UNIVERSITY HEALTH BOARD MINUTES OF THE AUDIT COMMITTEE HELD ON 18 MAY 2015, AT YNYSMEURIG HOUSE, NAVIGATION PARK, ABERCYNON PART 1 CWM TAF PRESENT: Mr G Bell - Independent Member