Aneurin Bevan University Health Board Minutes of the Audit Committee held on Tuesday 3 rd June 2014 Present: Phillip Robson - Chair Chris Koehli - Vice Chair Prof Janet Wademan - Independent Member (ICT) In Attendance: Kay Barrow - Corporate Services Manager (Secretariat) Richard Bevan - Board Secretary Alan Brace - Director of Finance Andrew Doughton - Wales Audit Office Estelle Evans - Head of Financial Services and Accounting John Herniman - Wales Audit Office David Jenkins - Chair, Aneurin Bevan Health Board Andrew Naylor - Assistant Director of Finance, Corporate Finance Judith Paget - Chief Operating Officer/Deputy Chief Executive Claire Worrall - Wales Audit Office Apologies: Martyn Edwards - Head of Counter Fraud Dr Andrew Goodall - Chief Executive Cllr Brian Mawby - Independent Member (Local Authority) Phil Sharman - Director of Audit & Assurance NWSSP Joanne Smith - Independent Member (Community) Kate Webb - Head of Internal Audit Steve Wood - Audit & Assurance NWSSP SSU Audit 06/14/01 Welcome and Introductions The Chair welcomed everyone to the meeting. Audit 06/14/02 Declarations of Interest There were no declarations of interest made by Members of the Committee. Status: DRAFT 1
Audit 06/14/03 Review of Final Accounts for 2013/14 Andrew Naylor presented the review of the final accounts advising that the audit process had gone very well this year which reflected the collaborative working between the Health Board and WAO. Andrew Naylor explained that following the presentation of the draft accounts at the last Committee, a number of adjustments that had affected the reported surplus at draft accounts stage had arisen and summarised those adjustments. Andrew Naylor explained that a number of changes to disclosure notes had been made and provided a brief summary of the most significant: Note 5.2 Average number of employees; Note 16 Trade and other payables; Note 39 Remuneration. Andrew Naylor confirmed that there were no unadjusted items arising from the audit process. Andrew Naylor confirmed that the Health Board had met its Revenue Resource Limit for the year delivering a surplus of 88k. The funding gap of 44.8m for the financial year with an associated savings programme reported at 16.9M at month 12. The residual financial risk of 28.4M was managed mainly through additional WG funding together with a number of other savings and cost avoidance schemes. This enabled the Health Board to deliver a small surplus of 0.1M. Andrew Naylor confirmed that the Health Board also achieved the following targets: Capital Resource Limit The target of 12.70M was met with a small under spend of 89k; Public Sector Payment Policy The Health Board achieved this target for both NHS and non-nhs invoices; and Status: DRAFT 2
Cash Balances The year-end balance was 0.745M. Andrew Naylor provided an overview and explanation to support the significant movements to the previous year s accounts and the issues raised by the Audit Committee at the draft accounts meeting on 19 th May 2014. The Committee were content with the report. Audit 06/14/04 Final Accounts for 2013/14 The Committee received the Final Accounts for 2013/14. WAO confirmed that they were content with the final accounts. The Chair and Committee were content with the final accounts for submission for approval by the Board. Audit 06/14/05 Governance Statement Richard Bevan presented the Governance Statement explaining that the comments made at the last meeting had been reflected in this version and provided an overview of the changes made which mainly related to the areas of focus for the Health Board in relation to the Standards for Health Services Governance and Accountability Module on pages 17 and 18. Richard Bevan said that following Kate Webb s presentation of the Head of Internal Audit Opinion at the last meeting, the Opinion was now included on pages 33 and 34. Richard Bevan made reference to the penultimate paragraph on page 32 under the section Additional Assurance Disclosures and asked for guidance on the form of words to be used following the Board discussion on the Three Year Plan. Alan Brace responded advising that the Board had approved the Three Year Plan recognising that it was not a balanced Plan. Status: DRAFT 3
David Jenkins explained that based on past experience of delivery of a balanced position, the Board would run the Plan at risk given that planning and the Plan were an evolving process. In answer to concerns around the imminent sign off of the Plan by WG John Herniman responded advising that the Governance Statement should reflect the position at Board sign off. The form of words agreed for the last sentence of the penultimate paragraph on page 32 to read The Health Board therefore approved an Interim Operational Financial Plan at its March 2014 Board meeting and agreed a Three Year Plan at its May 2014 Board meeting for submission to Welsh Government. Chris Koehli commented that he was disappointed with the small amount of text relating to the Quality and Patient Safety Committee would like to help reconcile this for next year s submission. Richard Bevan agreed to meet with Chris Koehli outside the meeting to revise the text to reflect the Quality and Patient Safety Committee s Annual Report for 2013/14. Action: R Bevan/C Koehli The Chair asked that any other comments to be made to Richard Bevan in readiness for Board sign off on the 5 th June 2014. Action: All The Committee received and noted the Governance Statement. Audit 06/14/06 Audit of Financial Statements Report John Herniman apologised for the lateness in the circulating of the report and wished to thank the Finance Team for their hard work and support and echoed Andrew Naylor s earlier comment that the audit process this year had gone very well. John Herniman presented the report advising that the audit of the Health Board s Financial Statements was substantially completed, and subject to some minor adjustments, the Auditor Status: DRAFT 4
General for Wales (AGW) was in a position to issue an unqualified audit opinion and was also planning to issue a substantive report alongside his opinion, to highlight the fact that in line with the requirement the NHS Finance (Wales) Act 2014, the Health Board had not yet received Ministerial approval of its integrated medium term plan. John Herniman explained that should approval of the Health Board s Three Year Plan take place prior to the 24 th June 2014 then this substantive report would not need to be issued. John Herniman advised that there were no uncorrected misstatements but highlighted to the Committee that the Health Board shares financial risks relating to WHSSC with all LHBs in Wales and until the figures relating to WHSSC in Cwm Taff had been audited and any required amendments made, the impact of those amendments on the Health Board remain unknown but WAO would be in a better position by Thursday, 5 th June 2014. John Herniman advised that the corrected misstatements had already been highlighted by Andrew Naylor which related to the adjustments which had impacted on the reported surplus for the year. John Herniman confirmed that there were no significant issues arising from the audit but highlighted the concerns on an All Wales basis in respect of the Public Sector Payments Policy prompt payment code in relation to disputed invoices. John Herniman highlighted the last paragraph on page 6 which related to the Public Accounts Committee and the review of the salary bandings for Executive Directors currently in post and confirmed that he had received evidence to support three out of the five banding and anticipated that the documentation to support the remaining two Directors would be received prior to the Board sign off of the Accounts on Thursday, 5 th June 2014 and as such the report would be amended to reflect this. Status: DRAFT 5
Both Chris Koehli and Professor Janet Wademan commented that they remembered the discussions relating to Executive Directors salary bandings at the Remuneration and Terms of Services Committee at the Health Board s inception. Richard Bevan raised concerns that the request for the evidence had been received very late which unfortunately coincided with the annual leave of the Director of Workforce and Organisational Development however the request was responded to as soon as was practicably possible. David Jenkins advised that the position of Chief Operating Officer was incorrect and this should be Director of Primary Care, Community and Mental Health. Action: WAO John Herniman confirmed that there were no other reporting inconsistencies which affect the bottom line however, one issue arose in respect of the accounting treatment of indexation across Welsh NHS bodies and the Health Board has accepted that indexation may not currently be treated consistently but had discussed and had agreed with WG at the time of implementation. John Herniman provided an overview of the Letter of Representations making reference to the specific representation for treatment of indexation and the review with WG to ensure full and appropriate disclosure in the 2014/15 financial statements and beyond. John Herniman provided an overview of the Proposed Certificate of the AGW and advised that as the Annual Report for 2013/14 was not available at the time of the audit could not provide an opinion on consistency in relation to the audited financial statements. John Herniman provided an overview of the Proposed Report of the AGW highlighting the financial planning and implications for 2014/15. Alan Brace commented that he was not sure about Status: DRAFT 6
the figure for the unidentified gap. John Herniman agreed to check the figure from last year and amend as necessary for the Board submission. Action: WAO The Chair, on behalf of the Audit Committee wished to formally thank John Herniman, Claire Worrall and their team and Andrew Naylor, Estelle Evans and the Finance team for their hard work and support given the short amount of time to undertake the auditing of the accounts and acknowledged the considerable pressures for both WAO and the Health Board and recognised their good working relationship. The Chair and Committee recommended the accounts for Board approval. The Chair acknowledged that the Health Board had met its challenge to deliver a balanced financial position and could now go forward with a degree of confidence. Chris Koehli commented that the Board need to be made aware of the changes to the Governance Statement in relation to the areas of focus for the Health Board in relation to the Standards for Health Services Governance and Accountability Module and that progress needed to be shown. Action: R Bevan Audit 06/14/07 Draft Minutes of the Draft Annual Accounts Meeting held on 19 th May 2014 The minutes of the Audit Committee held on 19 th May 2013 were approved as a true and accurate record of the meeting. Audit 06/14/08 Date of Next Meeting The next meeting of the Audit Committee is scheduled to take place on Thursday, 21 st August 2014 at 13:30 in the Large Meeting Room, Headquarters, St Cadoc s Hospital, Caerleon. Prior to the Audit Committee there will be an opportunity for Committee Members to have Status: DRAFT 7
private discussions with members of Counter Fraud at 13:00 in the Meeting Room, Headquarters, St Cadoc s Hospital, Caerleon. Status: DRAFT 8