NORTHERN IRELAND HEALTH AND SOCIAL CARE

BUSINESS SERVICES ORGANISATION

GOVERNANCE AND AUDIT COMMITTEE

Minutes of the Governance and Audit Committee (GAC) which took place on Tuesday, 17January 2017 at 11:00am in the BSO Board Room, 2 Franklin Street, Belfast.

Present: / Robin McClelland (Acting Chair) / In / Wendy Thompson (Director of Finance)
Alan Hanna / Attendance: / Catherine McKeown (Head of Internal Audit)
Jeremy Stewart / Richard Ross (NIAO)
Martin Pitt (PwC)
Robert Bannon (Non-Executive Director)
Janine Watterson (Committee Secretary)
  1. Apologies

Apologies were received from Prof. Dorothy Whittington and Mr Mark Campbell.

  1. Conflicts of Interest Declaration

There were no conflicts of interest declared.

  1. Minutes of Governance and Audit Committee meeting held on 18 October 2016 –GAC 1/2017

The minutes of the meeting held on 18 October 2016were approved subject to the following amendment:

(a)Minute 7(a) iii – 2016/17 Payroll Shared Services Follow Up

The word ‘embedding’ in the fourth paragraph should be changed to ‘embedded’ and the words ‘giving a limited assurance’ in the sixth paragraph should be inserted after the word ‘consecutive’.

(b)Minute 7xii – FPS Ophthalmic Payments,

Mr Hanna referred to discussions at the previous meeting regarding risks associated with thepayment of a higher domiciliary rate to Ophthalmic Practitioners undertaking examinations at nursing homes and enquired if any communication had taken place with the DoH to highlight this potential weakness.

The Head of Internal Audit advised that the DoH would routinely receive BSO audit reports but, she would raise GAC concerns with the appropriate Ophthalmic Staff within BSO and report back to the Committee.

  1. Action Points arising out of Minutes of 18October 2016–GAC 2/2017

The Committee noted that all actions points had been completed.

  1. Chair’s Business

The Acting Chair welcomed the newly appointed Non-Executive Directors (NEDs) to the Committee and, in particular, wished Mr Stewart every success in his future role as GAC Chair.

The Acting Chair also indicated that he had received an email from Mr McMurray, previous Chair to the GAC, in reply to his letter of recognition dated 19 October 2016. In his response, Mr McMurray thanked the Acting Chair for his kind comments and also acknowledged the support he received from the BSO in carrying out his role as GAC Chair.

  1. External Audit

(a)BSO Audit Strategy for theAudit of the 2016/17 Financial Statements -GAC 3/2017

Mr Pitt, PwC presented the NIAO Audit Strategy for the audit of the BSO Financial Statements to 31 March 2017. He advised that the external audit approach was in two key parts, the audit of the BSO financial statements and also controls assurance work which would be undertaken in Shared Services. He explained that the results of the controls assurance work would be shared with other HSC auditors to provide an assurance over the services provided by BSO to other HSC Bodies.

Focusing on the audit of the BSO Financial Statements, Mr Pitt drew attention to the materiality threshold of 1.5 % (£2,250,000) which represents the figure which would qualify the financial statements as a result of an error. However, he clarified that a lower threshold exists in respect of the remuneration report. In terms ofthe GAC’s review of the Annual Accounts, he advised that any matter under £112,500 would be considered trivial and not reported to the Committee.

Mr Pitt then outlined the work to be undertaken in shared services in respect of controls assurance testing. He advised that this work involves the testing of all IT systems witha particular focus on Payroll and Recruitment as these two areas did not receive a clean opinion in the previous year. He also explained that, where an assurance could not be provided, the relevant HSC auditors would be informed and further substantive testing would be carried out by them. Further, he advised that controls assurance testing would also consider the quality of information provided to BSO for processing with any weaknesses highlighted in the Report to those Charged with Governance. He then highlighted the significant risks associated with both the BSO audit and the controls assurance work highlighting the Regularity (procurement) risk which was unique to BSO and the timetable for completion of the accounts.

In response to question from Mr Stewart, Mr Pitt advised that PwC would identify ownership of any weakness during the audit and the Director of Finance added that it was for BSO to encourage customers to work together to achieveimplementationof recommendations. The Director of Finance also advised that,in the event of recommendations not being progressed, BSO would take steps to identify resources to escalate the issue. She provided an example of the Recruitment Task and Finish Group which was initiated by BSO to prioritise and escalate recommendations within the Recruitment Shared Services internal audit report.

Mr Hanna enquired if BSO management are aware of the steps to be taken to progress from a limited to a satisfactory audit opinion. Mr Pitt advised that from an external audit perspective, control processes should be operational for one year before an unqualified opinion is given. The Head of Internal Audit advised that managers are informed of the steps to be taken to achieve an improved opinion and referred to recent limited audit reports, presented to the Committee, which clearly set out progress achieved.

7.Internal Audit

(a)Progress report - GAC 4/2017

The Head of Internal Audit gave a progress report on internal audit work undertaken since the last meeting. She informed the Committee that she was presenting three reports for consideration: Financial Review, Risk Management and a jointHSCB/BSOreport on Clinical Negligence/Financial Planning.

The Committee noted each of the Reports presented and raised the following issues:

i.Financial Review

The Head of Internal Auditreported a satisfactory level of assurance with no priority one findings.

There were no issues raised by the Committee following presentation of this report.

ii.Risk Management

The Head of Internal Auditreported a satisfactory level of assurance with no priority one findings.

There were no issues raised by the Committee following presentation of this report.

iv.HSCB Clinical Negligence/ Financial Planning

The Head of Internal Audit reported a satisfactory level of assurancewithone priority one finding.

Mr Hannacommented that he was pleased to see the satisfactory assurance provided with this report given the volume of work undertaken by BSO’s Directorate of Legal Services.

8.Business Matters

(a) Revised Fraud Policy and Fraud Response Plan – GAC 5/2016

The Committee reviewed the revised BSOFraud Policy and Fraud Response Plan and, in addition to approving the proposed changes,requested the following additional amendments:

i.Fraud Policy

  • Paragraph 20 – expand the first sentence to clarify that the GAC review the Fraud Policy on behalf of the BSO Board.
  • Paragraph 22 – review wording in conjunction with the Head of Internal Audit to clarify internal audit’s responsibilities in relation to fraud in BSO.

ii.Fraud Policy and Fraud Response Plan

  • Annex A – in the penultimate line add the word ‘client’ after patient.
  • Apply consistent use of abbreviation for the Department of Health throughout document.

(b)Progress report on 2016/17 Controls Assurance Action Plans – GAC 6/2016

The Committee noted the Progress Report on Controls Assurance Standards as at December 2016. In response to a question from Mr Stewart, the Director of Finance advised that the status of actions in relation to the Information Management Controls Assurance Standard is reported to the Business and Development Committee by the Director of Human Resources and Corporate Services.

(b)Progress on 2016/17 Service Risk Action Plans – GAC 7/2016

The Committee noted the progress report on Service Risk Action Plans as at December 2016.

(c)Review of Schedule of Assurances by Service Area – GAC 8/2016

The Committee noted the Schedule of Assurance by Service Area.

The Head of Internal Audit commented on the usefulness of this Schedulefor newly appointed NEDs as it provided an insight into the documents which were due for presentation to the BSO Board and its sub committees. Mr Hanna also added that this should be read in conjunction with the BSO scorecard which is also presented to the Board.

(d) Quarterly Review of BSO Register of Direct Award Contracts/Single Tender Actions - GAC 9/2016

The Committee noted the BSO Register of Direct Award Contracts/Single Tender Actions.

Mr Hanna highlighted the term ‘Consultant of choice by HSC customer’ documented in the Register and suggested that this should be changed to ‘most qualified provider’ as the existing wording was open to interpretation. The Head of Internal Audit advised that the wording used was HSC wide and may be mandatory within the STA process but,suggested that a footnote could be added to the Register to further define the term.

Mr Bannon sought clarification on the background to STA 4996. The Director of Finance advised that this STA had been initiated following the postponement of a contract due to certain anomalies being notedat tendering stage.

(e)Monitoring of Audit Recommendations as at 31 December 2016 – GAC 10/2016

The Director of Finance presented a progress report on BSO’s internal and external audit recommendations. Going forward, Mr Stewart requested that this report included the datewhich the audit report was issued and this was agreed.

The Committee noted the report provided.

9.Director of Finance Updates

(a)Fraud Report to 31December 2016 – GAC 11/2017

The Secretary presented the BSO Fraud Register as at 31 December 2016and provided updates in respect of ongoing cases.

(b)Register of Departmental Finance Circulars - GAC 12/2017

The Committee noted the Register of Circulars which provided members with an overview of Financial Circulars receivedfrom the DoH following the last meeting.

10.Any Other Business

At the close of the meeting the Director of Finance highlighted that this would be last GAC meeting which the Acting Chair and Mr Hanna would be in attendance. She paid tribute to their contributions to the Committee particularly the Acting Chair who had served on the Committee since its inception in 2009. She wished them all the best for the future.

The Acting Chair and Mr Hanna thanked the Director of Finance for her kind comments and acknowledged the support of BSO staff during their time at BSO.

11.Date of Next Meeting

The date of the next meeting was confirmed as Friday, 11 April 2017.

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Acting Chair

Date______

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