AUDIT COMMITTEE MEETING Minutes of the meeting held on Thursday 18 March 2010, at 9:30 a.m. in the Boardroom, Mamhilad House Present: Chris Koehli - Chair Peter Sampson - Vice Chair Wendy Bourton - Independent Member (Third Sector) Prof Janet Wademan - Independent Member (ICT) In Attendance: Richard Bevan - Board Secretary Alan Brace - Director of Finance Vicky Davies - Internal Audit (Tribal) Joanne Harris - Secretariat John Herniman - Wales Audit Office David Jenkins - Chair of Andrew Naylor - Assistant Director of Finance (Corporate Finance) Anne Phillimore - Director of Workforce & OD Lisa Winstone - Internal Audit (RSM Tenon) Steve Wood - Internal Audit (Capital & PFI) Apologies: Prof Helen Houston - Independent Member (University) Helen Cargill - Internal Audit (RSM Tenon) Dr Andrew Goodall - Chief Executive Helen Higgs - Acting Head of Internal Audit David Thomas - Wales Audit Office Claire Worrall - Wales Audit Office Status: DRAFT 1
Audit 03/10/09 Declarations of Interest The Chair recorded a potential interest in the workforce modernisation report as his wife is employed in the Cardiology Department. There were no other declarations of interest made by Members of the Committee. Audit 03/10/10 Action Sheet from Meeting on 19 February 2010 The Director of Finance advised that he has received reference costings as a starting point for benchmarking work and this, together with work with Cardiff and Vale University and Cwm Taff Health Boards, will enable him to provide an update at the next meeting. Action: AB Audit 03/10/11 Action Sheet from Meeting on 1 March 2010 The Chair asked that the additional work on analysis and information on medical staffing be tied into the benchmarking work referred to above. Action: Medical, Nurse and Therapies Directors. The Chair asked that the update report from the Nurse Director be scheduled on a future agenda and asked that agendas be drawn up for the next few meetings. Action: AN / JH. Audit 03/10/12 Minutes of the Meeting on 19 February 2010 The minutes of the meeting on 19 February 2010 were approved as a true record. There were no matters arising. Audit 03/10/13 Minutes of the Meeting on 1 March 2010 The Chair requested clarification on the paragraph at the top of page 3 with regard to a comment by the Independent Member (ICT) on demographics and continuing healthcare. The Independent Member (ICT) explained her concern was that the continuing healthcare deficit could become worse as the effect of demographic changes were felt. Status: DRAFT 2
The Director of Finance added that the Nurse Director had in response provided an overview of how packages of care are managed and services delivered. Subject to amending the paragraph referred to above, the minutes of the meeting on 1 March 2010 were approved as a true record. Action: JH The Independent Member (Third Sector) asked for an update on the Frailty Programme. The Director of Finance advised that a meeting with the Assembly went well and a further meeting was scheduled next week, with formal feedback expected by the end of March 2010. Audit 03/10/14 Financial Performance as at Month Eleven (February 2010) and Financial Plan 2009-10 The Director of Finance introduced this report noting the improvement in month 11 of nearly 0.5m. He highlighted: Continuing healthcare had improved results despite a high volume of activity; Primary care costs had improved; Operational divisions, including unscheduled care, had contained their costs despite winter pressures. The Director of Finance advised that, compared to other Health Boards, the organisation had less volatile figures and the Assembly had indicated that funding would be released in March, leaving approximately 2m cost pressures for 2009-10. The Independent Member (ICT) queried the current position with continuing healthcare and if it was sustainable. The Director of Finance explained that the unit cost of packages was relatively low with fewer high cost packages. He added that the Mental Health Division now had direct responsibility for their elements of continuing healthcare. The Vice Chair noted his concern that any additional funding in March could undermine Status: DRAFT 3
messages given earlier in the year on managing costs and a concern that the majority of the deficit was being associated with continuing healthcare as this could detract from the full picture. The Chair commented that the bar charts at the end of the report indicated fundamental issues across the organisation and he would like to see budget holders empowered by the release of central contingencies to specific budgets. The Director of Finance acknowledged the concerns and explained that with continuing healthcare the organisation had learned from its experience as initial assumptions had proven to be wrong. He also highlighted the culture of budget setting with reviews during the year and the need to move away from historic practices. John Herniman (Wales Audit Office) noted that this year was unusual due to the transition and it was important that accountability for the delivery of budgets was clear as was the need to track performance. The reporting framework was important to support any shift in culture. The Independent Member (ICT) commented that budget setting usually happened a few months into the financial year and the Director of Finance advised that the Chief Executive expected budgets to be in place and adhered to from 1 April. The Chair summarised the discussion by noting that the Committee welcomed the improving financial position and recorded its appreciation to the Executives and staff for their work. He added that the Committee would want to see budgets in place from 1 April 2010. Audit 03/10/15 Workforce and Organisational Development Workforce Modernisation Initiatives The Director of Workforce and OD introduced this paper providing an overview of the key areas that her Directorate were considering as part of the financial recovery plans. Status: DRAFT 4
The Chair suggested a need for clarity on where resources were invested to obtain efficiencies and the Director of Workforce and OD referred to the need for a more formal Committee or Group to consider workforce issues, be clear on priorities and how resources were utilised to ensure value for money. The Independent Member (ICT) commented on the size of the agenda and the fact that not all of the areas were within the organisation s control, such as KSF. The Director of Workforce and OD acknowledged the concern and the need to be realistic about targets and cultural change. She added that some initiatives were nearly complete and resources then reallocated to address newer initiatives, with Divisional and Locality Directors engaged in the workplan. The Independent Member (Third Sector) noted the huge mosaic of activities within the report and commented that it would be useful for the Committee to see how they fit within the financial plan alongside a process of continual improvement. The Director of Workforce and OD explained the detail behind individual initiatives that can be tracked to the high level financial plans by Executive Lead. The Director of Finance added that the Delivery Group meeting the previous day worked through some practical examples for budget holders to see how the financial plan affected their area. The Vice Chair commented on the risk of lots of small plans not being fully implemented or measured, with a need to recognise the impact on patients experiences and clinical governance matters, querying whether the organisation would be able to demonstrate better decisions as a result of this work. The Chair noted the risks on waiting list initiative incentives ending in March 2010 and, while the Partnership Forum was supportive, it was likely that some individuals would not be. This posed a risk that waiting time Status: DRAFT 5
targets may not be met in the first quarter of 2010-11. The Director of Finance added that this was another example of the cultural shift required to ensure staff felt empowered to take decisions and implement new ways of working. The Chair requested that future update reports on the Workforce Modernisation include clarity on where resources go, how areas were targeted, links to the Annual Plan, a focus on outcomes and how capability and capacity were managed. Audit 03/10/16 Why Don t We Campaign This report had been included for information. The Chair commented on the need to ensure that ideas generated by staff were acted upon and feedback was given. The Director of Workforce and OD assured the Committee that this was happening. The Vice Chair noted his concern that the process did not become too bureaucratic and, where possible, changes were made quickly. The Independent Member (Third Sector) agreed and noted the need to empower staff, support lean thinking and mainstream ideas. The Chair indicated that the Committee endorsed an approach that encouraged managers and staff to implement and experiment with new ideas without the need for formal approval mechanisms from the top of the organisation. Those items requiring action from the Executive Team or Board should be escalated promptly so that momentum is not lost. The Director of Workforce and OD left the meeting. Audit 03/10/17 Accounts 2009-10 Closedown and Approval Process The Assistant Director of Finance (Corporate Finance) introduced this report providing an overview of the timescales for the year end Status: DRAFT 6
accounts. He highlighted the proposal to bring the draft accounts to the May Committee meeting and the need for an extra Board Meeting in June to approve the accounts. There was discussion on the Board date in June and whether to schedule an extra meeting immediately after the Audit Committee meeting on 25 June. Action: RB. Audit 03/10/18 Asset Lives Review Update The Assistant Director of Finance (Corporate Finance) introduced this report and the Director of Finance added that the accounting issue was being discussed at an all Wales meeting the next day. John Herniman (Wales Audit Office) advised that this was a technically complex accounting and value for money issue which essentially resulted in the deferment of costs which may not be good use of public money. Audit 03/10/19 Statement on Internal Control: A Guide for Audit Committees This National Audit Office report had been included for information. It was agreed to use the checklist in part three of the report when considering the draft accounts at the May Audit Committee meeting. Action: AB / AN. Audit 03/10/20 Financial Action Plan 2010-11 The Director of Finance introduced this report and explained the work of the Delivery Group which included all Executive, Divisional and Locality Directors. He referred to the need to change the culture of budget setting and financial planning to ensure that change happens, noting that plans need to be in place from 1 April 2010. The Independent Member (ICT) noted the absence of reference to ICT in the plan and the Director of Finance confirmed that ICT is a key enabler for Status: DRAFT 7
delivery. The Independent Member (ICT) asked for a discussion at the next Information Governance Committee meeting on how IT can support the plan. The Director of Finance noted that the Medical Director is the Executive Lead for this area. Action: AB / Medical Director. The Independent Member (Third Sector) referred to a lack of reference to partnership working in the plan and noted the critical role of other public sector and third sector organisations. The Director of Finance advised that partners were included in the more detailed plans, for example around continuing healthcare. There was discussion on the language and style of the plan and whether this was easily accessible to partners and staff. It was agreed that further thought was required as to how the Plan was disseminated to staff and partner organisations. Audit 03/10/21 Internal Audit Reports (In-house / Tribal) The Chair commented that in general the assurance provided by the reports was adequate or high and there were few significant recommendations. 1. Expenses. The Independent Member (ICT) noted the existence of different policies across Wales in terms of deadlines for submission and commented that six months appeared to be a long period and could indicate poor controls. The Director of Finance confirmed the need for core systems, such as those around expenses, to improve beyond adequate and referred to the proposed introduction of electronic expenses. The Independent Member (ICT) queried the position with Independent Members expenses and the Board Secretary advised that guidance was about to be issued to Members. Action: RB. Status: DRAFT 8
2. Accounts Payable (ABHB) The Independent Member (ICT) queried the current position with the Scheme of Delegation and the Assistant Director of Finance (Corporate Finance) replied that it was being reviewed and updated. The Director of Finance added that work on Oracle would ensure a clear hierarchy for approvals and prevent inappropriate approvals. The Assistant Director of Finance (Corporate Finance) explained that contracts where the value exceeds that permitted by the Scheme of Delegation will in future be reported to the Audit Committee. Action: AN. 3. Information Governance Vicky Davies (Tribal) introduced this report. She highlighted the risk of a Civil Monetary Penalty for serious breaches of the Data Protection Act. It was agreed that this report be submitted to the Information Governance Committee and an Internal Audit representative be invited to attend. Action: RB. 4. Infection Prevention and Control It was noted that this report had been considered by a recent meeting of the Patient Quality and Safety Committee. 5. Recruitment, Receiving and Appraisal of Bank and Agency Nursing Staff The Chair requested that this report be forwarded to the Patient Quality and Safety Committee. Action: RB. 6. Income and Debtors (GHCT) 7. Accounts Payable (GHCT) 8. Treasury Management 9. Ordering and Receipting 10. Fixed Assets 11. Income and Debtors (ABHB) Status: DRAFT 9
The above Internal Audit reports were noted and received by the Audit Committee. Vicky Davies (Tribal) queried the role of Internal Audit in highlighting operational issues on strategic themes to the Audit Committee, for example during their current review of continuing healthcare. It was agreed for a summary report of any such issues to be provided by the Internal Auditors at each meeting. Action: Internal Auditors (In-house / Tribal). Audit 03/10/22 Internal Audit Progress Report (RSM Tenon) Lisa Winstone (RSM Tenon) introduced this progress report advising that audit work was in progress at the five localities. She highlighted the change to the plan in respect of work on the healthcare standards improvement plan and confirmed that a report would shortly be available. Audit 03/10/23 Internal Audit Reports (Capital & PFI) Steve Wood (Capital & PFI) introduced two reports, a progress report against the audit plan and an energy management report. He highlighted a number of areas in the energy management report where only limited assurance had been provided (energy strategy and policy, energy performance and energy budget). The Independent Member (Third Sector) queried how the organisation compared to other Health Boards and if good examples from elsewhere could be used to improve performance. Steve Wood advised that was 9 th (out of 14) and confirmed that there were examples of good practice that could be used, for example MRIs. The Independent Member (ICT) asked for clarity on whether the new builds had been developed in line with best practice and Steve Wood confirmed that audit work indicated they had been. Status: DRAFT 10
The Vice Chair commented that Clinical Futures had assumed a number of new builds and some of the poor performance could be due to the age of some of the estate. He also noted links to clinical care, such as radiator covers, and historic ways of working between works and estates staff and staff in operational teams. Audit 03/10/24 Internal Audit Reports (Business Services Centre) These reports had been included for information and no matters were raised. The Internal Audit representatives (Vicky Davies, Lisa Winstone and Steve Wood) left the meeting. The Vice Chair left the meeting. Audit 03/10/25 External Audit Update John Herniman (Wales Audit Office) introduced the report providing an update on financial and performance External Audit work. The Chair queried the current status of performance audit work on learning lessons from clinical negligence incidents, accuracy of waiting list information and management of emergency admissions. John Herniman advised that the reports had been issued in draft and were being finalised. It was agreed that these reports go to the Patient Quality and Safety Committee and a representative from the Wales Audit Office be invited to attend. Action: RB. The Independent Member (Third Sector) left the meeting. Audit 03/10/26 External Audit Report Overview of Outpatient Management Arrangements John Herniman (Wales Audit Office) introduced this report explaining that a number of issues had been raised and audit follow up work would take Status: DRAFT 11
place in April and May 2010, after which time a revised report, including management responses, would be issued. The Independent Member (ICT) noted the statement in the report on performance management information being inadequate and asked how Gwent compared to elsewhere. The Director of Finance confirmed that Gwent was an outlier in outpatient services performance. The Chair noted the following areas for specific management response to the Committee: There is evidence of good practice in some areas so how can this be replicated throughout; Project management arrangements appear poor and how was this being addressed over the next five years; and Clinical engagement. Action: Director of Planning and Operations. The Chair noted that a Board Meeting presentation from the Radiology Department demonstrated that teams can address issues with in-house skills. It was agreed that the External Audit follow up work should take place and, for the next meeting, a joint report (External Audit and the Director of Planning and Operations) should be provided outlining progress made. Action: Wales Audit Office and Director of Planning and Operations. Audit 03/10/27 Single Tender and Single Quotation Actions This report had been included for information. The Chair queried whether the information was complete and why there were no items from the localities. The Director of Finance replied that the Head of Procurement provided advice and guidance as required and procedures have been tightened. Audit 03/10/28 Update on Financial Control Procedures Status: DRAFT 12
The Assistant Director of Finance (Corporate Finance) introduced this report providing a summary of progress with revised financial control procedures, which would come to the next Audit Committee. Action: AN. John Herniman queried review dates and the Board Secretary advised that the Board s Policy for the Management of Policies and Procedures set out details of the frequency of review, leads and relevant Committee or approval mechanism. The Independent Member (ICT) queried the position of Independent Members with regard to the Charitable Funds and the Director of Finance advised that the Board is a corporate trustee, with powers delegated to the Charitable Funds Committee. Audit 03/10/29 Losses and Special Payments The Chair asked that this paper be deferred to the next meeting to be considered with the draft accounts, asking that a summary of the appendices be provided. Action: AN. John Herniman queried whether approval was required for write offs prior to the year end and the Director of Finance agreed to check the position, while noting that the Scheme of Delegation should cover these amounts. Action: AB / AN. Audit 03/10/30 Internal Audit Services Specification The Board Secretary introduced this report providing an overview of the work to date and the work required to complete the specification. The Independent Member (ICT) queried the process for a Development Day and the Board Secretary confirmed the principle of equity in terms of providing information to all potential tendering organisations. The Committee approved the proposals for the: Finalisation of the tender specification; Status: DRAFT 13
Audit 03/10/31 Further engagement of the Audit Committee; Timetable and arrangements for the tendering process; Interim roll-over of externally sourced internal audit contracts; and Proposals and approach for development of the in-house internal audit team. Action: RB Private Discussion for Members with Wales Audit Office The remaining Officers left the meeting to enable the Chair, Independent Member (ICT) and Chair of to meet in private with John Herniman (Wales Audit Office). Audit 03/10/32 Date of Next Meeting The date of the next meeting was agreed for Wednesday 19 th May 2010 at 9:30 a.m. in the Boardroom, Newport Locality Office. Status: DRAFT 14