APPROVED
NHS Grampian (NHSG)
Minute of the Audit Committee Meeting
Tuesday 24 June 2014, 1000-1300
Conference Room, Summerfield House
Present
Mr David Anderson, Non-Executive Director, NHSG (Chair)
Prof Mike Greaves, Non-Executive Director, NHSG
Mr Terry Mackie, Non-Executive Director, NHSG
In Attendance
Mr Jim Boyle, Audit Partner, Deloitte LLP
Mr Richard Carey, Chief Executive, NHSG
Mr Alan Gray, Director of Finance, NHSG
Cllr Bill Howatson, Chairman, NHSG
Mr Garry Kidd, Assistant Director of Finance, NHSG
Ms Karlyn Watt, Audit Manager, Deloitte LLP
Mr Mark White, Director, PricewaterhouseCoopers LLP (PwC) – via teleconference
Ms Tracey Leete, Minuting Secretary
Item / Subject / Action1 / Welcome
Mr Anderson welcomed Professor Greaves, who had recently joined the Committee as a replacement for Mrs Greener and thanked Mr Mackie for attending in Mrs Duncan’s absence.
Apologies
Cllr Barney Crockett, Non-Executive Director, NHSG
Mrs Sharon Duncan, Employee Director, NHSG
Dr Lynda Lynch, Non-Executive Director, NHSG
2 / Minute of Meeting Held on 18 March 2014
The Minute of the previous meeting was approved as an accurate record.
3 / Matters Arising
3.1 / Action Log of 18 March 2014
The Committee reviewed the action log from the previous meeting and noted the following points not covered elsewhere on the agenda:
10 12 13 – Item 5.1 – Progress Report – Theatre Utilisation
Cllr Howatson advised that the recommendations and associated management action arising from the internal audit review of Theatre utilisation were considered at the meeting of the Performance Governance Committee (PGC) held in March 2014. Afurther progress report setting out the productivity of the theatres at ARI and Woodend Hospitals and detailing the specific actions that will lead to an improvement in overall performance will be available for consideration at the September meeting of the PGC.
Mr Kidd to request an update on progress for the September 2014 meeting of the Audit Committee.
10 12 13 – Item 5.3 – Waiting Times Progress Report
Mr Gray stated that effectiveness of monitoring arrangements to measure the timing and quality of follow up treatmentwere now being considered by a short life working group which includes representation from Non Executive Board members. A detailed action plan has been developed and the PGC will monitor progress against the agreed actions on an ongoing basis..
The Committee agreed that as this issue is now being progressed under the oversight of the PGC it should be removed from the Audit Committee action list.
183 14 – Item 7.1 – External Audit – External Auditor Progress Report
Ms Watt explained that the best value report on Health and Social Care Integration will now be available for consideration at the September 2014 meeting.
183 14 – Item 11.2 – Single Tender Register – Extension of Measured Term Contract
Mr Gray advised that although NHSG are fully involved in discussions to establish a national framework there is still no assurance that this can be in place by March 2015 when the existing extension to local arrangements runs out. Accordingly, in line with the Committee’s previous agreement, NHSG will proceed to advertise and appoint a local framework of Measured Term Contractors. This local framework will not be exclusive and NHSG will retain flexibility to move to a new National Framework should this option become available in future.
The Committee agreed that this action was complete and should be removed from the action log.
183 14 – Item 13.1 – Primary Care Practitioners – Payment Verification Assurance Annual Report
Mr Kidd explained that he was in the process of seeking clarification regarding the extent of involvement of NHSG’s local Dental clinical lead in all matters raised through the Dental Reference Service.
Mr Kidd to provide an update for the September meeting. / GK
Deloitte
GK
3.2 / Other matters arising not on the action log
None.
4 / Internal Audit
4.1 / Annual Report for Year Ending March 2014
Mr White explained that the purpose of the report was to present PWC's opinion, as internal auditors, of NHS Grampian's systems of internal control. Mr White asked the Committee to note that the terminology used for the audit opinion had been updated, compared to previous years, in order to comply with 2013/14 Public Sector Internal Audit Standards.
The opinion for the year ending 31 March 2014 was that there is some risk management’s objectives may not be fully achieved. This opinion was based upon the work conducted during the year in line with the annual internal audit plan agreed by the Committee. Identified findings were rated as low, moderate and high and actions for improvement were identified in these areas to enhance the adequacy and/or effectiveness of governance, risk management and control.
Mr White highlighted that the number of high risk rated findings had increased from zero in 2012/13 to 7 in 2013/14 but that he considered this was an indication that the internal audit activity was focused on the right areas of the organisation. Professor Greaves asked how the Committee could be assured that this wasn’t indicative of many other high risk areas which had not been reviewed. Mr White responded by explaining that the annual operational internal audit plan was based on a full risk assessment and agreed by the Committee at the beginning of the year with progress reviewed on an ongoing basis by the Committee throughout the year. Mr Gray stated that Committee members and executive Management have the opportunity to inform the development of the internal audit plan. Mr Kidd added that the Boards key governance and financial processes are a standard component of the annual audit plan.
The Committee noted the report.
4.2 / Progress Report
Mr White presented the report, which detailed progress against the internal audit programme and highlighted the following :
Key Financial Controls
The report concluded that key financial controls in place have been operating effectively and are designed suitably. No critical or high risk recommendations were identified.
Risk Management
The report concluded that NHSG has a relatively mature risk management plan, with appropriate risk register software and a detailed formal strategy. No critical or high risk issues were identified.
There were three medium risk recommendations relating to the ownership, monitoring and reporting of risks for which an associated action plan has been agreed with management.
Mr Anderson noted that the number of strategic risks highlighted within NHSG was lower than in peer Boards and asked if this was an area for concern. Mr White responded that the NHSG risk register was well “tuned” with no obvious omissions.
Board Governance
The report concluded that NHSG has a functional and compliant governance structure and a Committee framework which is in line with recognised best practice and peer organisations.
No critical or high risk findings were identified. There were four medium risk recommendations relating to the regular review of role, remit and membership of key governance committee’s, alignment of strategic risks and the ongoing review of effectiveness by each Committee.
Mr Carey stated that the review exemplifies how high performing organisations continually improve their performance.
Cllr Howatson welcomed the review and informed the Committee that he would be meeting with Mr Anderson in the near future, supported by Executive Management, to review the recommendations arising from the report and agree necessary action for consideration at the Board development day scheduled for September 2014.
Mr Anderson and Cllr Howatson to provide an update on progress at the September 2014 Meeting.
Complaints
The review highlighted a number of improvements which are required to achieve the performance targets set by the Scottish Government. No critical issues were identified. There were two high risk and four medium risk recommendations relating to compliance with response timescales set by the Scottish Public Service Ombudsman, process for use of feedback on lessons learnt to drive improvement,assessment of severity of complaints, access to training, availability of management information and effectiveness of local operating procedures.
The findings had been agreed with management who were in the process of finalising an action plan to meet the key recommendations.
Mr Carey welcomed the report and informed the Committee that he personally reviews all responses and the quality is generally high. The key issue, is availability of clinical time to respond to complex complaints which require thorough investigation and retrieval of notes in order to ensure a quality response. The key challenge is to raise the profile and priority of complaint handling with clinicians. . Professor Greaves stated that this issue was not widely understood by clinicians and some further education in this area may be beneficial.
Mr Anderson asked if staff receive the necessary training in the key skills required to support effective communication and report writing and whether a lack of training/familiarisation in the Datix system may be contributing to the problems. Mr Carey responded that individual responses are prepared separately to the Datix system, which is an incident recording system only. All responses are quality reviewed with feedback to the originator regarding lessons learned.
Mr Carey also acknowledged that NHSG have a light staffing complement dedicated to complaints handling when compared to other NHS Scotland Health Boards.
The Committee noted that an action plan was under development by management and requested that Mr Gray liaise with Executive colleagues to provide an update on progress at the September 2014 meeting.
Delayed Discharge
The review highlighted a number of improvements that are required to help NHSG more effectively manage delayed discharges. No critical issues were identified. There were two high risk and four medium risk recommendations relating to the appropriateness of the current joint adult Health and Social Care discharge policy and procedure, timing of social work involvement in assessment for discharge, recording of information to support discharge and co-ordination and attendance at joint working groups.
Mr Carey welcomed the report but highlighted that some of the recommendations related to actions that were influenced by progress on closer integration of Health and Social Care and in some cases by Government policy.
The Committee noted that an action plan was under development by management and requested that Mr Gray liaise with Executive colleagues to provide an update on progress at the September 2014 meeting.
The Committee thanked Mr White for his update and noted the key issues highlighted to date. / DA/BH
AG
AG
4.3 / High Priority Recommendations
Mr White introduced the report summarising progress in relation to the implementation of high priority internal audit recommendations and highlighted the following key areas :
Theatre Utilisation
One of the three actions is fully implemented with the remaining two actions relating to establishment of an agreed dataset for BOXI reporting and development of standard operating procedures partially in place.
Mr Gray stated that there is regular management oversight to ensure delivery of the various improvement actions and that formal reporting on progress to the Performance Governance Committee is now in place.
The Committee noted the position and requested an update on progress against the remaining action for the September meeting
Budgetary Controls
Four out of five actions are fully implemented with the remaining action relating to the development of a corporate cost reduction plan partially implemented. Individual Sectors are still in the process of refining their cost reduction plans.
The Committee noted the position and requested an update on progress against the remaining action for the September meeting.
The Committee noted the report. / PwC
PwC
4.4 / 2014/15 Operational Audit Plan
Mr White presented the 2014/15 Internal Audit Plan which has been updated to include the following requirements discussed at the March 2014 meeting:
- Clinical participation in leadership and management of the organisation (Francis Report);
- Partnership working with Universities and other third parties (Innovation);
- Health and Social Integration (Major Change Programmes); and
- The impact of access to diagnostic tests on in-patient length of stay (Emergency Care Centre – PPE).
The Committee agreed the following actions :-
- Approval of the internal audit plan for 2014/15;
- Future updates to include only relevant changes to the plan;
- Mr Whyte to prepare a summary version of the plan for circulation to all Board members; and
- The draft scope for all future internal audit reviews to be circulated to Committee members for comment prior to finalisation.
4.5 / Medical Staffing – Job Planning Update
The Committee noted the paper prepared by the Director of Workforce detailing NHSG’s 2013/14 Job Planning Submissions andrequested Mr Kidd invite the Boards Director of Workforce and Medical Director to provide a further update on progress at the September 2014 meeting. / GK
5 / 2013/14 Annual Accounts
5.1 / Annual Accounts
Mr Gray presented the 2013/14 annual accounts for consideration and highlighted the following key matters:
- The Board’s external auditors, Deloitte LLP, had issued an unqualified audit opinion (presented under item 5.2 below).
- For 2013/14 the annual accounts were required to consolidate the results of Grampian Health Board and Grampian Health Board Endowment Funds in line with Government Financial Reporting Manual (FReM) and International Accounting Standard No. 27.
- Deloitte LLP were also the appointed auditors for the NHS Grampian Endowment Funds and had issued an unqualified audit opinion on the Endowment Funds accounts also.
- The Board had achieved the three financial targets set by the Scottish Government Health and Social Care Directorate (SGHSCD). The results of the Endowment Fund did not form part of these statutory financial targets.
- The accounting policies under which the accounts were prepared were previously approved by the Audit Committee in March 2014.
- The Chief Executive had confirmed his approval of the Governance Statement on pages 20 to 22. The Statement sets out his review of the adequacy and effectiveness of the Board’s system of internal control.
The Committee noted the paper.
5.2 / Annual Audit Report
Mr Boyle presented the report from the Board’s external auditors and informed the Committee that Deloitte LLP were content to sign a clean, unqualified audit opinion.
The Audit close out meeting was held on Friday 13th June with Mr Gray and Mr Kidd in attendance and no significant issues were identified.
Mr Boyle highlighted the following points relating to the 2013/14 accounts:
- Consolidation of NHSG Endowments Funds for the first year with net assets of £42.6m
- The Aberdeen Health and Community Care Village, the first Hub contract in Scotland, was brought on balance sheet at a valuation of £14.6m.
- NHSG exceeded a turnover in excess of £1billion for the first time in 2013/14..
- First year there has been a requirement for a strategic report.
- Changes in format and presentation of the remuneration report with inclusion of a single total figure of remuneration for the first timw in 2013/14.
The Committee noted the report and thanked Mr Boyle and his team who had worked extremely well with the Board Finance team to deliver a thorough and professional audit within very tight deadlines.
5.3 / Recommendation to NHSG Board for Approval of the Accounts
The Committee agreed to recommend the 2013/14 annual accounts to the NHSG Board for approval.
The Committee thanked Mr Kidd and the Finance Teamfor all the hard work and effort made to finalise the annual accounts within very tight timescales and asked that Mr Kidd ensure the whole Finance Team are aware their work is appreciated. / DA
GK
6 / Audit Scotland National Studies - Update
Mr Kidd presented an update on the status of recent national study reports prepared by Audit Scotland including any agreed local management action.
Me Anderson asked if the recommendations from the report on managing early departures from the Scottish Public sector had been implemented within NHSG. Mr Carey responded that this report had been considered by the Remuneration Committee and that consequently tighter controls are now in place regarding settlement agreements.
The Committee noted the report and asked Mr Kidd to invite the General Manager for Facilities and Estates to discuss progress on the recommendations from the report on Renewable Energy alongside backlog maintenance and other energy efficiency measures at the September 2014 meeting. / GK
7 / Service Audit Reports
Mr Kidd presented a paper to update the Committee on the key points arising from the 2013/14 service audit reports relating to services provided by NSS and NHS Ayrshire and Arran. Each of the services provided to NHS Grampian by NSS during 2013/14 (Practitioner Services and National IT Services) and by NHS Ayrshire and Arran (Financial system) received an unqualified audit opinion.
The Committee noted the reports.
8 / Risk Management Annual Report
Mr Gray presented the annual report on the effectiveness of risk management arrangements.
Mr Carey welcomed the reformatted report and asked that further work is undertaken to develop the reporting of the impact of mitigating action on risk classification as a source of assurance on the effectiveness of the risk management arrangements to the Board.
Professor Greaves asked if an assessment of risk classification post mitigation is available. Mr Gray responded that this was not currently available but it is an area targeted for future development.
The Committee
- Noted the arrangements in place to provide assurance on the effectiveness of risk management arrangements during 2013/14;
- Noted the actions planned to improve existing processes during 2014/15.
- Asked Mr Gray to provide an update on progress at the September 2014 meeting.
9 / Single Tender Actions
Mr Kidd presented the single tender actions authorised since the last meeting, together with a summary of the justification.
The Committee noted the single tender actions authorised since the last meeting (No 110 – 119 inclusive).10 / Counter Fraud, Losses and Special Payments
Mr Kidd presented the counter fraud progress report.
The Committee:-
- Noted progress on counter fraud matters during 2013/14;
- Noted the comparative information on clinical negligence/employer liability claims across NHS boards available for 2013/14;
- Authorised submission of the monitoring information for the first two months of 2014/15 to NHS Counter Fraud Services.
11 / Patients Private Funds – Abstract of Receipts and Payments
Mr Kidd presented a summary of the 2013/14 abstract of receipts and payments for Patients Private Funds, which has been independently audited, for the Committee’s review before formal approval by the Board.
Mr Anderson asked for an update on progress with the Government Banking Service. Mr Kidd responded that the National tendering exercise did not include the facility for an interest bearing current account, contrary to the information previously provided to NHSG. An exercise is underway to review options for both Patients Private Funds and Endowment banking services.
The Committee requested Mr Kidd provide an update on progress to the September 2014 meeting.
The Committee agreed to recommend the 2013/14 abstract of receipts and payments for Patients Private Funds to the Board for approval. / GK
DA
12 / Letter of Notification from Sponsored Body Audit Committees
Mr Anderson advised that, as Chair, he had been asked to notify the Scottish Government Health and Wellbeing Audit and Risk Committee of any significant issues or frauds which arose during 2013/14.
A draft response, confirming that there have been no significant issues or frauds identified by or reported to the Committee, was approved for submission. / DA
13 / Audit Committee Development Sessions Feedback
The Committee considered the minute of the development session held on 18 March 2014 and noted the agreed actions.
The Committee agreed to hold an annual development event after the March meeting and to invite Delioitte LLP the Boards external auditors to facilitate the session in March 2015. / DA/GK
14 / Report to the Board
The Committee agreed that the following items would be of interest to all Board members :
- Governance Review
- Complaints and Feedback Review
- 2014/15 Audit Plan
- Delay Discharges
15 / Future Meeting Dates
The list of future dates up to and including March 2016 circulated was approved by the Committee.
16 / AOCB
None.
17 / Date of Next Meeting
The next meeting will be held on Tuesday 30 September 2014 at 1000-1300 in the Conference Room, Summerfield House.
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