APPROVED
NHS Grampian (NHSG)
Minute of the Audit Committee Meeting
Tuesday 17 March 2015, 1000-1300
Conference Room, Summerfield House
Present
Mr David Anderson, Non-Executive Director, NHSG (Chair)
Cllr Barney Crockett, Non-Executive Director, NHSG
Prof Mike Greaves, Non-Executive Director, NHSG
Dr Lynda Lynch, Non-Executive Director, NHSG
In Attendance
Dr Nick Fluck, Medical Director (Item 4.4)
Mr Alan Gray, Director of Finance, NHSG
Dr Annie Ingram, Director of Workforce (Item 4.4)
Mr Garry Kidd, Assistant Director of Finance, NHSG
Ms Susan King, Manager, PricewaterhouseCoopers LLP (PwC)
Prof Stephen Logan, Chairman, NHSG
Ms Lindsey Paterson, Director, PricewaterhouseCoopers LLP (PwC)
Ms Jane Taylor, Deloitte LLP
Ms Karlyn Watt, Audit Manager, Deloitte LLP
Mr Mark White, Director, PricewaterhouseCoopers LLP (PwC)
Ms Tracey Leete, Minuting Secretary
Item / Subject / Action1 / Apologies
Ms Rhona Atkinson, Non-Executive Director, NHSG
Ms Sharon Duncan, Employee Director, NHSG
Mr Pat Kenny, Director, Deloitte LLP
Mr Jim Boyle, Partner, Deloitte LLP
Mr Malcolm Wright, Interim Chief Executive, NHSG
The Chair welcomed Ms Paterson to the meeting, who will succeed Mr White as Head of Internal Audit when he leaves PwC on 31 March 2015, and also Ms Taylor who was in attendance in the absence of Mr Kenny.
2 / Minute of Meeting Held on 9 December 2014
The Minute of the previous meeting was approved as an accurate record.
3 / Matters Arising
3.1 / Action Log of 9 December 2014
The Committee reviewed the action log from the previous meeting and noted the following points not covered elsewhere on the agenda:
9.12.14 – Item 4.2 – High Priority Recommendations – Delayed Discharge
Mr Gray confirmed that the continued delay in completion of actions arising from audit recommendations had been raised with the Executive team. Executive sponsors will, in future, closely monitor progress against all high risk actions arising which are not closed by the due implementation date. In addition, the Executive team had agreed to focus attention on the performance management of delayed discharges as a key priority.
The Committee agreed this action was complete and should be removed from the action log.
Actions referred to other Governance Committee’s
The Committee requested Mr Kidd/Ms Leete arrange for formal feedback from other Governance Committee’s on progress against specific actions referred to them by the Audit Committee and to amend the action log to report on progress at each meeting. / GK/TL
3.2 / Any other matters arising not on the action log
None.
4 / Internal Audit
4.1 / Progress Report
Mr White presented the report which detailed progress against the internal audit programme and advised that the 2014/15 programme of work remains on course for completion in line with the plan.
Procurement process
The review concluded that the overall control environment appears to be operating effectively, and did not identify any high or critical risk issues. However three medium risk recommendations were identified relating to the review and updating of contracts to reflect current market prices: retention of documentation in support of the ordering process, segregation of duties when authorising payment against manual orders and sourcing of competitive quotations to ensure value for money. Two low risks and one advisory recommendation were also identified relating to the extent to which orders are processed manually within service areas that are enabled for the electronic procurement system, PECOS, the complex authorisation process within PECOS and the overall process issues creating a delay in meeting the Scottish Government 10 day payment target.
Ms King stated that she was in discussion with procurement management regarding the required actions to address the recommendations.
Professor Greaves asked if it was always possible to obtain three quotes in line with the procurement process. Mr Kidd advised the Committee that this targeted audit review had been requested jointly by himself and the Head of Procurement to test compliance with current procedures. NHSG’s Standing Financial Instructions require that three competitive quotations are required for all orders in excess of £5k and below £50k. Above £50k a competitive tendering exercise should be undertaken. If, for any reason, it is not possible to follow this process then approval, in advance, from either the Chief Executive, Director of Finance or Head of Procurement (limited to £100k) is required.
Mr Kidd also explained that the current process, within PECOS, ensures that all orders in excess of £30k are escalated to the procurement team for review. Current procedures involve a check on the appropriateness of the transaction i.e. the type of product and whether the originator has followed the correct process for authorisation and in selection of the preferred supplier. This is carried out on a “question and answer” basis rather than a physical review of evidence. To introduce a physical verification process, even on a sample basis, would create resourcing issues. Mr Kidd went on to explain that the review had also highlighted the number of manual orders that were still being processed within areas fully enabled for PECOS. These orders by pass the procurement team and are subject to a different set of controls.
Dr Lynch asked why these areas persist with manual orders rather than use the PECOS system. Mr Kidd responded that PECOS is a cumbersome and not particularly user friendly system which is designed for simple ordering activity. More complex orders require a significant amount of, often retrospective, intervention in the process to ensure that the order price and goods/services receipt record transfer across the interface to the finance system in the correct order and can be matched to the invoice to enable payment. The main reason for payment delays were because the pricing/receipt record transferred from PECOS did not match the invoice received from a supplier. A single order can have as many as 100 individual order lines all requiring to be separately matched. It is often much less time consuming for busy service areas simply to by pass PECOS and manage the process manually for these complex orders.
Cllr Crocket stated that he was aware of similar issues in other organisations using PECOS and questioned whether it was the system that best fit NHSG’s requirements. Mr Kidd responded that use of PECOS was a national directive and a mandatory requirement for on NHSG. There is significant national pressure to maximise the use of PECOS and the onus was on local management to build efficient processes around use of the system.
Dr Lynch asked if all suppliers understood the importance of issuing clear and accurate invoices and of responding to queries in a timely manner. Mr Kidd responded that supplier’s credit controllers generally are focused on securing payment and have little interest in the underlying reasons, including when the fault lies with them. Examples of regular supplier issues include wrongly priced goods, invoices sent before the goods are dispatched, wrong order number on the invoice and wrong quantity invoiced.
Mr Kidd explained that the audit review covered only a subset of the wider issues affecting the purchase to pay process. In 2014/15, despite all of the problems encountered, NHSG achieved 87% of invoices paid within the 30 day contractual terms and 75% within the Scottish Government 10 day payment target. There is room for improvement but it is important to note that this performance compares very favourably to private sector performance. A significant amount of work is underway to implement a number of initiatives aimed at improving performance and to agree joint protocols for query resolution across the whole process. All of these initiatives were being consolidated in to a joint action plan to cover the key audit actions and also the wider plans for improvement of the overall process. The action plan will be available for the June 2015 meeting of the Committee.
The Committee noted the underlying issues affecting the purchase to pay process and agreed that the wider action plan should be considered at the June 2015 meeting.
Governance Statement
The review assessed the arrangements in place to ensure the Chief Executive has sufficient oversight to comply with the reporting requirements of the Scottish Government in relation to production of a Governance Statement for the financial year 2014/15.
The review did not identify any significant issues. There were 2 low risk recommendations found relating to timely policy approval and regular update of guidance which is currently being discussed with management.
The Committee agreed that the full report should be circulated to members as part of the evidence supporting the Governance statement covered in agenda item 6.1 below. / PwC/
GK
PwC/
GK
4.2 / High Priority Recommendations
Ms King introduced the report summarising progress in relation to the implementation of high priority internal audit recommendations and highlighted the following key areas:
Theatre Utilisation
Management had confirmed that the remaining action to establish an agreed dataset for management reporting on specialty utilisation, booking and use of sessions should be fully implemented by the revised target date of April 2015.
The Committee noted that implementation had been delayed due to capacity issues within the Business Objects team and requested an update on progress for the June 2015 meeting.
Delayed Discharge
The action to update the Grampian Joint Adult Health and Social Care Discharge Policy and Procedure was not implemented and the actions to ensure alignment of Social Carers, attendance at MDT’s and prioritisation of Social care needs were only partially implemented.
Management had previously indicated a revised target date of March 2015 for all recommendations to be complete. Following further consideration however, the Chief Officers had indicated that resolution of the issues identified formed part of a longer term strategic and operational planning process and it was not possible, in their view, to set a fixed target date by which all actions will be complete.
Cllr Crockett advised that, in some cases, a lack of clarity over lead agency could cause confusion leading to delays in the process. Mr Gray responded that NHSG and local authority partners had joint responsibility and the Shadow IJB Chief Officers were accountable for the effectiveness of the process.
Mr Anderson advised that an “ongoing” timescale for High risk audit recommendations was not acceptable. All key actions must be specific and measurable with agreed target implementation dates. Dr Lynch advised that it is a responsibility of management to ensure that auditor’s recommendations are fully understood and that definitive action plans exist to ensure timely implementation.
Mr Gray responded that the Executive Team had recently introduced enhanced scrutiny of the management arrangements for the delayed discharge process, with a key focus on the quality of care the patient receives while they remain in hospital. A paper outlining progress against the delayed discharge target and any required actions will be discussed at the June 2015 Board meeting.
The Committee noted that the audit recommendations were to be incorporated in a wider series of actions prioritised by the Executive Team but agreed that Ms King should continue to report back on progress against the specific audit recommendations at each meeting.
The Committee also agreed that the Shadow IJB Chief Officers should be asked to attend the June 2015 meeting to provide a full brief on progress and the speed of implementation.
Complaints
All actions relating to compliance with the SPSO requirements were complete and firm plans were in place to introduce revised reporting arrangements to improve feedback within the service from 1 April 2015.
Mr Gray updated members that NHSG had made significant progress with the handling of complaints and was now recognised as one of the best performing Boards, in terms of meeting the key timescales for responding to complaints required by the Scottish Public services Ombudsman.
The Committee expressed their thanks to staff at all levels for the significant effort to deliver such an improvement in our complaints handling arrangements. / PwC
PwC
TL/GK
4.3 / Internal Audit Programme 2015/16
Mr White presented the Draft Internal Audit Risk Assessment and Plan for 2015/16 which had been updated to incorporate all comments received on the draft previously circulated to Board members.
The Committee considered the programme in detail and discussed the balance between assurance on the effectiveness of core governance and financial processes and other organisational components that add value, such as Leadership and Staff Management. The Committee requested that the following points were addressed :-
- The detailed scope of the Management and leadership audit should, in addition to the vision set out by the Board and Exec Management, include an assessment of leadership style and philosophy and the effectiveness of the approach used to cascade information to staff.
- The Interim Chief Executive should be asked to comment and help structure the scope of the Management and Leadership audit.
- The detailed scope of the planned audit of Health and Social Care Integration should be consistent with the recent guidance on financial assurance for IJB’s issued by the Scottish Government and co-ordinated with each of the Local Authorities and the shadow IJB’s to ensure maximum efficiency from the audit process.
4.4 / Health and Safety Management
Dr Ingram, Director of Workforce, presented a paper to update the Committee on the current health and safety management arrangements and highlighted the following key points:
- A new, soon to be advertised, Deputy Head of Health and Safety post to ensure appropriate senior cover of key areas of Health and safety management. The requirement for this post was identified following the recent absence of the Head of Health and Safety which highlighted the unacceptable level of dependency on individuals in some areas.
- The proposed redesign of the corporate Health and Safety Department to ensure that there is an appropriate focus on compliance and the need for intervention as well as the traditional training role.
- Establishment of an Executive Health and Safety Oversight Group with membership including the Director of Workforce, Director of Finance, Director of Modernisation, General Manager for Facilities and Estates, the Head of Health and Safety and the Assistant Director of Finance. The role of this group is to provide assurance to the Executive Team through the regular review of compliance risks and to make recommendations to the Board on appropriate intervention and associated resources required to manage these risks.
- Integration of Fire risks in to the corporate health and safety risk line on the risk register to ensure an appropriate focus on fire code compliance.
Professor Logan informed the Committee that he had asked the Interim Chief Executive to ensure that the Health and Safety agenda, a key priority for the Board, was at the forefront of all planning and decision making.
Dr Ingram informed the Committee that a report specifically covering Fire risks will be considered at the June 2015 Board meeting.
The Committee thanked Dr Ingram for an informative update and welcomed the revised focus and proposed redesign of the Health and Safety Department.
The Committee noted that the planned internal audit review of Health and safety arrangements will be carried out in the first quarter of 2015/16 and agreed that PwC should report the findings to the September 2015 meeting.
Medical Staff Job Planning
Dr Ingram, Director of Workforce and Dr Fluck, Medical Director, presented their report which updated the Committee on progress regarding medical job planning and highlighted the following points :-
- Improved performance with the NHSG job plan submission rate at 82% compared to 64% for 2013/14;
- Only 77 consultants were without job plans as of 5 March 2015;
- Within the overall performance figures emergency medicine was a key area of focus at only 64% compliance;
- Performance monitoring reports, introduced by the Workforce team in September 2014, now ensure that there is full knowledge of the gaps in compliance and the underlying reasons.