APPROVED
NHS Grampian (NHSG)
Minute of the Audit Committee Meeting
Thursday 29 March 2012, 1000-1245
Conference Room, Summerfield House
Present
Mr David Anderson, Non-Executive Director, NHSG (Acting Chair)
Mr Terry Mackie,Non-Executive Director, NHSG
Mr Charles Muir, Non-Executive Director, NHSG
Mrs Christine Lester, Non-Executive Director, NHSG
Mrs Sharon Duncan, Employee Director, NHSG
In Attendance
Mr Richard Carey, Chief Executive, NHSG (Items 1-4 and 11)
Mr Alan Gray, Director of Finance, NHSG (Items 1-4 and 11)
Mr Garry Kidd, Assistant Director of Finance, NHSG
Mr Pat Kenny, Director, Deloitte LLP
Mr Douglas Gray, Senior Manager Audit, Deloitte LLP
Mr Mark White, Director, PricewaterhouseCoopers LLP (PwC)
Ms Trish Morgan, Primary Care Contracts Manager, NHSG (Item 6)
Mr Steve Glass, Head of Procurement and Logistics, NHSG (Item 7)
Mr Gary Mortimer, General Manager Facilities and Estates, NHSG (Item 10.1)
Anne-Marie Meconi, Minuting Secretary
Item / Subject / Action1 / Apologies and Welcome
Apologies were received from: Cllr Bill Howatson, Chairman, NHSG
Mr Anderson welcomed Sharon Duncan, the new Employee Director, to the meeting.
2 / Declaration of Interest
None.
3 / Minute of Meeting Held on 1 December 2011
The Minute of the previous meeting was approved.
4 / Matters Arising
4.1 / Action Log of 1 December 2011
The Committee reviewed the action log from the previous meeting and noted the following points not covered elsewhere on the agenda :
Risk Management: Mr Gray informed the Committee that corporate risk management arrangements were discussed at the Board Seminar in February and the output from this session will be used to inform an updated risk strategy and policy which will be considered at the June 2012 Board meeting.
The Head of Quality, Governance and Risk will be asked to attend the June 2012 meeting of the Committee to present the annual report on the effectiveness of risk management arrangements.
Clinical Guidance Intranet: Mr Gray informed the Committee that funding has now been approved on a "proof of concept" basis, with a full business case to be developed following evaluation of the initial rollout. The Clinical eHealth Lead (Steve Bagley) is chairing a Steering Groupof clinicians who will be responsible for overseeing the development of the business case for the CGI.
The Committee agreed that this action is now complete.
Dr Grays Internal Audit Review of Operational Systems – Infection ControlProcesses: Mr Carey informed the Committee that the findings of this report had been used to inform improvements to local processes and this is evidenced through the very good outcome following a recent HEI review at Dr Grays. The outcome report was particularly complimentary about communication processes.
The Committee agreed that this action is now complete.
Internal Audit Review of Information Technology General Controls: Financial Information – Mr Kidd reported that arrangements are now in place to ensure that the eHealth Committee receives the appropriate level of information on financial performance and resource allocation to aid their decision making.
The Committee agreed that this action is now complete.
Internal Audit Mid-Staffordshire Trust Inquiry – Learning Points: MrCarey confirmed that the Clinical Governance Committee now have responsibility for the monitoring and review of the action plan.
The Committee agreed that this action is now complete.
Internal Audit – PECOS Procurement System: Mr Gray confirmed that discussion is ongoing with Local Authorities to explore opportunities for joint service provision including joint procurement initiatives. Areas under consideration include linen services, vehicle maintenance and rounds maintenance. Cases to progress these initiatives will be taken forward through NHSG's established approval processes.
The Committee agreed that this action is for operational
management to pursue andshould now be removed from the
Committee action list.
Internal Audit – High Priority Recommendations – Health and Safety – Mr White informed the Committee that the high priority recommendations from the recent Health and Safety review will be included in the progress updateto the Committee from June 2012. / GK
GK
PwC
5 / Annual Accounts
5.1 / Draft Accounting Policies Note
Mr Kidd introduced his paper and asked the Committee to approve the changes to accounting policies to be applied in preparation of the 2011/12 annual accounts.
The Committee reviewed the changes to the accounting policies and approved the draft presented at the meeting subject to any changes agreed as part of the annual audit process. / GK
5.2 / Governance Statement
Mr Kidd introduced his paper and explained that an annual Governance Statement is now required to be included with the annual accounts. The Statement is to be signed by the Chief Executive and is similar to the Statement on Internal Control included with previous year's accounts.
The Chief Executive, prior to signing, will review various sources of assurance that internal control and risk management processes are operating effectively across the organisation. To support the Chief Executive in this review PwC have carried out an independent review of the Boards Governance arrangements and produced, for consideration, a draft Governance Statement.
Mr White summarised the findings of the review and highlighted that both the audit report and the Governance Statement are in draft form and required to be developed further prior to final approval by the Committee. Mr White confirmed that there were no significant issues raised in the report with only two low risk recommendations concerning the updating of the voicing concerns policy and the development of a corporate training plan for Board members and Executive Directors.
The Committee noted the findings in the draft audit report and agreed that a final draftof the Governance Statement be circulated to members for final agreement and inclusion in the 2011/12 annual accounts in advance of the June 2012 Committee meeting. / GK
6 / Payment Verification (PV) Assurance Group Annual Report
Ms Patricia Morgan presented the annual report on the work of the Primary Care Independent Contactors PV Assurance Group, which she chairs. The Group was set up to ensure that there were consistent processes in place for payment verification across the various contractors – covering medical, dental, pharmacy and ophthalmic practitioners. Membership of the Group includes primary care management and clinical representation from the CHPs and from the various contractor groups. Although the main focus of PV activity is the payment process there are often underlying clinical issues that are referred to clinical leadership or the relevant professional body as appropriate. A PV visit to a practitioner is carried out by a specialist team from Practitioner Services Division which always includes appropriate clinical representation.
Most challenges over the past year related to dental practices with concerns raised around six practices ranging from unsatisfactory clinical practice to potential fraud. Mr Anderson asked for clarification on the processes used to pursue suspected fraud. Mr Kidd stated that there are very good links between the PV process and NHS Counter Fraud Services (CFS). All suspected fraud issues are pursued aggressively with each case considered for action by CFS based on the availability of evidence to the required standard for a criminal prosecution. Normally a tripartite meeting involving the Board, Practitioner Services Division (who process payment on behalf of the Board) and CFS will be held at the outset to examine the quality of available evidence, if there are grounds for CFS involvement and how any investigation will be undertaken in parallel with any agreed management action.
The Committee thanked Ms Morgan for attending and noted the annual report.
7 / Single Tender Register
The Committee reviewed the single tender register with the following matters being discussed:
- Mr Glass explained tenders 25 and 26 were approved as single tenders due to the specific configurations required and the need for compatibility with existing equipment.
- Mr Glass explained the reasoning behind tender 27; however, the Committee sought further clarity regarding why other local educational establishments were not given the opportunity to tender. Mr Swann undertook to liaise help provide the required clarity. Mr Anderson requested that this was provided for the Committee’s next meeting and said that, if necessary, the person who had made this decision would be welcome to attend to explain the rationale. It was also noted that there was no value for the tender shown in the register.
The Committee noted the single tender action for items 25 and 26 on the register. Further details on tender 27 to be presented to the June 2012 Committee meeting.
Mr Jackson to update tender 27 on register with value £21,791. / GK
AJ
8 / Standing Financial Instructions (SFI’s)
8.1 / Revised SFI Document
Mr Kidd presented the revised SFI document and explained the key changes necessary to comply with the recent Bribery Act and changes in procurement guidance. The main changes include a strengthening of the standards of business conduct, fraud, procurement and supplies and services tendering sections.
Members discussed the potential impact of the Change Fund and Health and Social Care integration and agreed that these are evolving issues with existing arrangements adequately covered within the document as it stands. The impact on SFI’s will be considered as part of the agreement on implementation of the Health and Social Care integration across Grampian and any required changes will be incorporated in a future revision.
Mrs Lester questioned the £100 limit for retention of Patients Funds and the Committee agreed that this monetary limit should be removed from section 16.6 which should be reworded accordingly.
The Committee agreed to recommend the revised SFI’s to the NHSG Board for approval, subject to the amendment to section 16.6 as noted above. / GK
8.2 / Revised Schedule of Reserved Decisions (SORD)
Mr Kidd presented the revised SORD document and explained the key changes necessary to reflect changes in the Board’s management structure, authorisation to enter into contracts under the HUB initiative and to formalise the delegation of authority to designated deputies for the Chief Executive and Director of Finance.
The Committee agreed to recommend the revised SFI’s to the NHSG Board for approval, subject to the amendment to section 16.6 as noted above / GK
8.3 / Operational Scheme of Delegation
Mr Kidd informed the Committee that co-ordinating the implementation of the revised Scheme of Delegation had proved to be a much larger task than originally anticipated and implementation is likely to slip. A partial move to the new process is deemed too risky and he is now working to a new target date of 1 July.
The Committee noted the progress made to date and the revised implementation date. / GK
9 / Standing Orders
In Mr Jackson's absence, Mr Kidd introduced the revised Standing Orders document and explained that the only change over the previous version was provision to allow the formal appointment of a Vice-Chair and a request that the Standing Orders should be reviewed every two years.
The Committee agreed to recommend the revised SFI’s to the NHSG Board for approval. / AJ
10 / Asset Management
10.1 / Backlog Maintenance
Mr Mortimer gave a presentation to the Committee on progress against the backlog maintenance programme.
Mr Muir raised the issue of HMO regulations as they affect NHSG properties and who is the enforcement agency. Mr Mortimer explained that the local authority are the enforcing agency and the HMO regulations apply to two properties. NHSG’s strategy is to withdraw completely from the provision of residential accommodation by 31March 2013 when the existing certificates expire.
The Committee noted the presentation and requested Mr Mortimer attend the September 2012 Committee meeting to provide a further update on progress. / GM
10.2 / Transfer of Expenditure from Assets Under the Course of Construction to Operating Costs
Mr Kidd presented a paper which set out the basis on which £1.6m previously categorised as capital expenditure and held on the balance sheet as assets under the course of construction had been re-categorised as revenue expenditure in 2011/12. Mr Kidd confirmed that this adjustment was identified following a review of the nature of the costs incurred which determined that the expenditure related mainly to option appraisal, design and cost estimation in support of business case development rather than on activities directly attributable to the build project itself. The impact of this adjustment has been factored into budgetary estimates for the year and will not adversely affect achievement of the Board’s financial targets
The Committee noted the report.
11 / Internal Audit (considered after item 4)
11.1 / Progress Report
Mr White reported on the findings of the internal audit reviews which had been completed since the last Audit Committee. The key matters discussed by the Committee were as follows:
Prisoner Healthcare Transfer: Mr White noted that the review had found the transfer to have had good project management but highlighted the financial risks associated with higher than budgeted costs in the initial few months. Mr Gray explained that whilst there may be cost pressures that will arise the funding allocated to NHSG is being managed in partnership with SGHD. Furthermore, arrangements exist to ensure that any financial implications arising from the building of the new prison will be reflected in future financial plans. Mr Muir confirmed that the Clinical Governance Committee had had a full development session on the implications of the transfer of responsibility. Mr Carey also confirmed that Board management are sighted on potential cost implications of the service.
Carbon Reduction Commitment (CRC): Mr White reported that the audit field work is now complete and findings are being discussed with management.
The final outcome of the CRC review will be reported to the Committee at the June 2012 meeting.
Mr Kidd highlighted the importance of being able to understand the complexity of arrangements now being implemented to account for CO2 emissions and the potential costs to the organisation. A Carbon Reduction Commitment Group has been set up to co-ordinate our approach and environmental management is a key component of all property projects.
The Committee requested that Mr Kidd prepare a briefing on the extent to which legislation relates to NHSG and the associated costs for the September 2012 Committee meeting.
Key Financial Controls: Mr White reported that key financial controls were generally operating effectively and no critical or high risk recommendations were identified. Two medium risk areas for management to consider were identified relating to the retention of purchase orders and authorisation of debtor requests and appropriate action has been agreed with management. Mr Kidd informed the Committee that another key area of concern is the number of purchase invoices that cannot be processed for payment because no receipt record exists on the PECOS system and that he has requested PwC to carry out a further targeted audit of these processes to determine where the issues lie.
The findings from this additional audit of receipting processes will be reported to the June 2012 Committee meeting.
Leasing Arrangements: MrWhite reported that the review hadidentified no high or significant risk issues. The review had however highlighted the importance of having business cases to support lease decisions and the need to maintain the register of current leases. Management have accepted the findings of the report and are in the process of agreeing an appropriate action plan.
The final outcome of the review of leasing and associated management action plan will be reported to the June 2012 Committee meeting.
Pharmacy and Prescribing: Mr White explained that initial fieldwork is complete for consideration by management.
The final outcome of the review of pharmacy and prescribing and associated management action plan will be reported to the June 2012 Committee meeting.
NHS Medical Remuneration: Whilst a detailed management action plan was still being developed with the auditors, the review had highlighted the importance of building on the work already commenced by the Medical Director to improve current arrangements and increase the completion rate of job plans. Every consultant is contractually responsible to complete an annual job plan with their objectives, resources required to meet these objectives and all commitments. MrWhite noted that the challenges facing NHSG in relation to job plan completion were similar to those faced in other territorial boards in Scotland.
Mr Carey also noted that the use of locum doctors was a challenge for all Boards but that within NHSG such appointments are managed followed a clear HR process, references are actively sought and GMC registrations verified.
Junior Doctors: Mr White presented the draft findings from the review.
The Committee requested that Mr Carey, Dr Dijkhuizen and DrIngram work together to finalise the two medical staffing reports (Medical Remuneration and Junior Doctors) with the internal auditors and agree a detailed management action plan.