APPROVED

NHS Grampian (NHSG)

Minute of the Audit Committee Meeting

Tuesday 10 September 2013, 1000-1300

Conference Room, Summerfield House

Present

Mr David Anderson, Non-Executive Director, NHSG (Chair)

Cllr Barney Crockett, Non-Executive Director, NHSG

Mrs Jenny Greener, Non-Executive Director, NHSG

Dr Lynda Lynch, Non-Executive Director, NHSG

In Attendance

Mr Richard Carey, Chief Executive, NHSG

Mrs Sarah Irvine, Technical Accountant, NHSG

Mr Alan Gray, Director of Finance, NHSG

Mr Mark White, Director, PricewaterhouseCoopers LLP (PwC)

Mr Pat Kenny, Managing Partner, Deloitte LLP

Ms Karlyn Watt, Audit Manager, Deloitte LLP

Ms Angela Canning, Audit Scotland (Item 7)

Ms Claire Sweeney, Audit Scotland (Item 7)

Miss Tracey Leete, Minuting Secretary

Item / Subject / Action
1 / Apologies
Mrs Sharon Duncan, Employee Director, NHSG
Mr Garry Kidd, Assistant Director of Finance, NHSG
Mr Anderson welcomed Cllr Crocket and Mrs Greener, who have recently joined the Committee, to their first meeting of the Audit Committee.
Based on the Committee’s pre-meeting with the Auditors, Mr Anderson expressed his thanks to Mr Gray and his staff for all their work in relation to audit and commented on the valuable contribution this and the positive use of audit reports contributed to ensuring NHSG are a ‘learning organisation’.
2 / Declaration of Interest
None.
3 / Minute of Meeting Held on 25 June 2013
The Minute of the previous meeting was approved as an accurate record.
4 / Matters Arising
4.1 / Action Log of 25 June 2013
The Committee reviewed the action log from the previous meeting and noted the following points not covered elsewhere on the agenda:
  • 13 11 12 - Item 4.1 External Audit – Targeted Follow-up – Role of Boards/Review of Audit Committee effectiveness
Mr Anderson advised that the wider review of Committee structures and governance arrangements is still in progress and results will be available in March 2014. Mr Anderson welcomed input from any of the non-executives who wished to take part in the review.
  • 12 9 12 – Item 8.2 ePayroll System
  • 12 9 12 – Item 8.3HR System (eESS)
Mr Kidd to request an update on progress with implementation for the March 2014 meeting.
  • 26 3 13 – Item 5.3 – Feedback from Board Audit Risk Seminar
Mr White advised that PwC are still pursuing a joint workshop with both Aberdeen City Council and NHSG, with the long term aim of a joint audit covering health and social care functions in the city.
Mr White to progress with Aberdeen City Council and provide an update at the next meeting.
26 3 13 – AOCB – Audit Committee Workshop
Mr Anderson advised that he has agreed with PwC to arrange a further effectiveness workshop after the Audit Committee’s March 2014 meeting.
25 6 13 – Item 8 – Risk Management Annual Report
The Committee agreed that Mr Kidd develop a template to summarise issues presented at each of the key Governance Committees and present it to the December 2013 meeting. / DA
GK
PwC
DA/
PwC
GK
5 / Internal Audit
5.1 / Progress Report
Mr White presented the report which detailed progress against the internal audit programme and highlighted the following :
Post Project Evaluation
In line with recognised best practice and Scottish Government requirements, NHSG are required to undertake post project reviews to evaluate the delivery of the project aims and submit review findings to the Scottish Government. As part of this assignment PwC reviewed a sample of three PPE exercises undertaken by NHSG. The process that NHSG had in place differs from SCIM guidance particularly with template questionnaires and, whilst tailoring the approach is permitted, this could be further improved. The three projects were deemed to be successful however key lessons to be learned include clear and explicit documenting of projects.
Mr Gray advised that there has always been a process in place but agreed that this needs to be more robust and to build on effectiveness e.g. in line with the hub projects which have a very robust procedure. Mr Carey highlighted recent major projects which have concluded or are almost complete which it would be beneficial to evaluate including the ECC, Health Village and FWT.
Budgetary Control
This review focussed on how NHSG sets, reports and monitors the budget across the organisation. Areas of good practice identified included:
  • Budget Setting Guidance to ensure a consistent message is delivered.
  • Budget Steering Group which is chaired by the Chief Executive and includes all Executive Directors and Senior General Managers.
  • Budget setting and cost pressure bid templates, which are used consistently, ensuring a standardised approach.
  • Regular analysis which is reported to budget holders.
However the report noted that the organisation was reliant on underspending within a number of sectors (especially GP prescribing) to achieve a balanced budget.
Mr Carey advised that new financial rules resulting from Health and Social Care integration could reduce the Board’s ability to maintain a balanced budget, with GP prescribing likely to be included in the new health and social care partnerships.
Mr Gray stated that NHS Grampian were moving further away from NRAC parity, which is likely to cause problems over the next few years until full funding is available. Mr Carey agreed confirming that in 2015/16 NHS Grampian will be the only health board significantly away from their NRAC funding position but the board will still be required to deliver against their targets in line with other boards.
Mr Carey stated that a board discussion was required to agree how NHS Grampian would deal with these problems going forward, including raising the issue to the Scottish Government so NHSG not at a disadvantage. It was agreed that the issue would be raised formally with the wider Board at the March 2014.
Award of Dental Grants
It was recognised that NHSG has been proactive with increasing numbers of patients now registered with dental services. There are established arrangements in place to monitor the achievement of target NHS patient numbers throughout the 7 year period of a grant, and an annual report providing information on compliance prepared for each practice. It was recommended that documentary evidence could be improved; although there were no specific implications and information was available, this needs to be tightened. The process for awarding grants has been reviewed and now robust.
Property Transaction Monitoring
Five property transactions were concluded by NHSG in 2012/13, all of which were disposals. All transactions have been graded ‘A’ based on information provided, indicating that they are all up-to-date, recorded and complied. Two low risk recommendations have been raised and actions have been agreed with management to implement these.
The Committee noted the report. / AG
5.2 / High Priority Recommendations
Mr White introduced the report summarising progress in relation to the implementation of high priority internal audit recommendations.
The Committee noted the report.
5.3 / Award of Internal Audit Contract
Mr Gray was pleased to advise that PwC have been selected as NHSG’s preferred bidder for the provision of the internal audit service until 31 March 2017.
This was duly noted by the Committee.
6 / External Audit
6.1 / Best Value Toolkit – Efficiency
Mr Kenny presented the report to the Committee for discussion and approval. Mr Kenny outlined the findings of Deloitte’s assessment of the work done to date within NHSG community health services to identify and make efficiency savings. The following key matters were highlighted:
  • There is high awareness within the CHPs of the need to continually identify efficiencies in community services and a number of areas of work have been progressed; however, there is more that could be done, particularly if extra resource was invested.
  • Health and Social Care Integration is acknowledged as key to efficiency and should be prioritised.
  • During 2011 each of the 3 CHPs undertook a “14 day challenge” as part of the Releasing Time to Care project and it was recommended that this be re-performed to compare results and identify any areas for further development. It was noted that Aberdeen City has developed a caseload tool which could be embedded across the organisation.
  • There is further scope for skill mix analysis to provide additional productivity and efficiencies. Benchmarking of skill mix should be carried out against other teams and external data.
  • Each of the CHPs meet on a regular basis with their respective Finance Managers; however, there is scope for further meetings.
  • Deloitte have made a number of recommendations and actions agreed with Mr Gray.
Mr Gray welcomed the review and stated that it was a useful time to revisit the issue with the ongoing Integration agenda. The review has undertaken through CHPs rather than Finance to allow for more ownership and commitment. Mr Carey highlighted that the Health and Social Care Integration is to run in shadow form from April 2014 therefore local authority involvement will be vital to exploit potential opportunities and avoid duplication of work. Mr Kenny advised that Deloitte has produced a separate paper for Mr Gray with a future plan.
The Committee approved the report and asked to be kept up-to-date with progress and requested that Dr Strachan is kept informed also. / SI/GK
6.2 / Progress Report
Ms Watt updated the Committee and advised that a meeting has been arranged in October with Mr Gray and Mr Kidd to agree the 2013/14 audit plan which will be available for the December meeting.
The Committee noted the report.
7 / Audit Scotland Performance Audit Presentation
The Committee welcomed Ms Canning and Ms Sweeney to the meeting. Ms Canning tabled Audit Scotland’s ‘Performance Audit Programme 2013/14’ and led a discussion on the Scottish Government spending plans and some of the issues that may affect NHSG.
The Committee were asked what they believed should be included in the programme. Mr Gray highlighted modernisation and innovation and that he was keen for the programme not to separate A&E and Unscheduled Care as this was seen as one area. Ms Canning advised that Audit Scotland is going to do short-term work looking at A&E which would then feed into the Unscheduled Care work. Mr Carey felt that the review of A&E would provide limited benefits and a wider piece of work looking at the whole of Unscheduled Care would be more valuable. Mr Anderson agreed saying a wider review including the GP system would be more useful.
The Committee asked Audit Scotland to ensure their reports reflected the sensitivities of the local area and provided a relevant context in which the report could be considered.
Ms Sweeney thanked the Committee for providing useful feedback and advised that Audit Scotland would consider this in their work. In terms of the national review, the Committee were asked if it would be useful for Audit Scotland to return and discuss as they were keen to continue to engage with NHSG. The Committee agreed it would be beneficial to continue to liaise and share.
The Committee noted the report.
Ms Canning and Ms Sweeney left the meeting.
8 / Single Tender Register
The Committee noted the single tender action authorised since the last meeting (No 45).
9 / Patients’ Funds Banking arrangements
Mr Gray outlined the paper and the Committee were asked to approve the following actions:-
  • Note the current situation and options available for patient’s private funds banking arrangements.
  • Develop the option to use the Government Banking Service Investment Account from February 2014 as the preferred option with an update on progress to be available for the December 2013 meeting.
Mrs Greener sought clarity that the money is accrued to the patient and not NHSG. Mr Gray confirmed that the NHS does not receive any benefit from the money that is held and the primary focus is that money is safeguarded and returned.
The Committee noted the alternative arrangements available and approved the recommendation with a request for an update at the March 2014 meeting. / GK
10 / Counter Fraud arrangements
Mr Gray gave a summary of the paper which provided an update on progress against the specific requirements outlined in CEL 11 (2013). The Committee were advised that a Counter Fraud Steering Group (CFSG) has been established to progress the main themes within the circular.
The Committee :-
  • Agreed the formal establishmentof a Counter Fraud Steering Group with a line of Accountability to the Audit Committee
  • Noted the role and remit of the Counter Fraud Steering group would be available for approval at the December 2013 meeting.
  • Noted the draft gap analysis at Appendix B to the paper and that a full fraud gap analysis and risk assessment exercise would be undertaken in February 2014 with an associated action plan to be available for review by the Committee at the March 2014 meeting.
  • Agreed Counter Fraud activity would become a standing agenda for all future Audit Committee meetings.
  • Considered the format/content of the Counter Fraud Progress Report at Appendix A as a standard reporting format within NHSG.
The Committee were reassured that a group of Board Executives has been established to ensure NHSG complies with requirements and approved the recommendations. / GK
11 / Health and Social Care Integration – review of Governance arrangements update
Mr Gray outlined the paper to brief the Committee on the role and remit of the short life working group established to lead the review of NHSG’s internal governance structures and assurance framework and to provide an update on progress to date.
It is anticipated that NHS Boards and their partners may be required to have implemented the new partnership arrangements by April 2015. It is therefore imperative that NHSG has a ‘fit for purpose’ internal system of governance and assurance in advance of 31 March 2015.
The Committee noted the paper.
12 / AOCB
None.
13 / Report to the NHS Grampian Board
The Committee agreed that the following items would be of interest to all Board members :
  • Budget Allocation
  • Efficiency Toolkit
  • Engage with Audit Scotland
/ DA
12 / Date of next meeting
The next meeting will be held on Tuesday 10 December 2013 at 1030 hours in the Conference Room, Summerfield House.

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