PUBLIC
Minutes of the Audit Committee,15 September2016
Audit Committee
Minutes of the meeting held on 15 September 2016 at 09:30 in theBoardroom, Warneford Hospital, Warneford Lane, Oxford OX3 7JX
Present:Alyson Coates / Non-Executive Director (Chair/AC)
John Allison / Non-Executive Director (JA)
Lyn Williams / Non-Executive Director (LW)
In attendance:
Mike McEnaney / Director of Finance (the DoF/MME)
Kerry Rogers / Director of Corporate Affairs and Company Secretary (the DoCA/KR)
Martyn Ward / Interim Director of Performance (MW)
Sue Barratt / External Audit Partner, Deloitte LLP (SBa)
Sharon Birdi / Internal Audit - Senior Audit Manager, TIAA Ltd
Gareth Robins / Local Counter Fraud Specialist, TIAA Ltd (GR)
Ian Sharp / Internal Audit – Regional Managing Director, TIAA Ltd (IS)
Hannah Smith / Assistant Trust Secretary (Minutes) (HS)
The meeting followed a private meeting held between the Committee members and the Internal and External Auditors.
a / Apologies for absence were received from: Anne Grocock, Non-Executive Director; and Sue Dopson, Non-Executive Director.
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d / Minutes of the meeting held on 19 May 2016
The Minutes of the meeting were approved as a true and accurate record.
Matters Arising
Item 11(a) Clinical Audit – proposals to change and pressure from increasing number of clinical audits
The Chair reported that she had discussed this further with the Director of Nursing and Clinical Standards and with the Medical Director, who were considering whether or not it would be possible to reduce the number of clinical audits conducted and focus upon the nationally mandated audits. Both Executive Directors had agreed to attend the next meeting of this committee in order to provide an update.
The Committee noted that the following action would be held over for a future meeting:
Item 2(b) (originally item 8(c) from the meeting in February 2016) Immigration and right to work in UK – report and recommendations
Once report and recommendations considered by the Executive, to provide an update to the Committee.
The Committee confirmed that the remaining items from the 19 May 2016 Summary of Actions had been actioned, completed or were on the agenda for the meeting: 6(a) and (c); 7(b); 8(b); 9(b); 10(a); 10(b); 10(c); 12(a); and 13(a). / Action
MHa/RA
MME
Business Items
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d / Agency Cost Accrual
The Director of Finance presented the report AC 34/2016 which set out the outcome of the review into the Trust’s agency costs and actions which had been taken to address an increase in agency spend from month 11 to month 12 of FY16. He highlighted the cumulative impact of a change in the agency system, new agencies being used and a change in the way in which accruals were being managed. Going forwards, any future such significant change would be reviewed and valued by the Financial Controller.
Sharon Birdi confirmed that the controls and actions referred to in the report were in place and operating; Internal Audit had undertaken a recent review of this area as part of the Temporary Staffing review.
The Committee noted the importance of risk assessment as part of any change management process.
The Committee noted the report.
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e / Losses and Special Payments Report
The Director of Finance presented the report AC 35/2016 which set out losses and special payments in the 8 months to August 2016. The Chair thanked the Finance Team for including reporting on constructive losses in the report. Sue Barratt noted that the immigration penalty may not be part of the category of constructive losses as a penalty could be interpreted as a more straight-forward type of loss. However, she noted that it was useful to report this now so that it could be considered at an early stage in the financial year.
Lyn Williams asked why a compensation payment had been made to a long term contractor for loss of office. The Director of Finance replied that they had worked for the Trust for sufficiently long that they were deemed to have accrued employment rights.
The Committee noted the progress which had been made by the payroll function in dealing with salary overpayments and that the Trust had therefore been able to release some of its bad debt provision for non-recoverable salary overpayments. The Director of Finance noted that he and the Trust’s payroll provider undertook an annual review of this type of issue and benchmarked the Trust’s performance; the Trust was no longer an outlier on overpayments.
The Chair cautioned that some of the instances of loss of cash which related to banks being unable to trace cheque payments may need to be reviewed further in case of fraud. The Local Counter Fraud Specialist to review the details of these cases with the Financial Controller.
The Committee noted the report. / GR
Audit Reports
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b / External Audit update
Sue Barratt gave an oral update and tabled a sector development paper which provided a summary of: “Brexit” and the NHS; the consultation on the Group Accounting Manual which was set to replace the Annual Reporting Manual for NHS foundation trusts; the Single Oversight Framework; and the national Whistleblowing policy. She noted that the External Audit Plan would be presented to the next meeting.
The Committee noted the update.
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i / Internal Audit Progress Report
Ian Sharp presented the report AC 36/2016 which provided an update of progress against the 2016/17 Internal Audit Plan, high and medium priority recommendations, key extracts from recently finalised reports and a sector briefing. Although 8 audit reviews had been planned to have been completed and reported, 4 had been completed in time for this report; since the report had been written, the Temporary Staffing final report had also been completed. There had been delays in senior management signing off audit planning memoranda especially over the summer months.
The most delayed audit related to Incident Reporting and Management. Sharon Birdi noted that the Incident Reporting and Management audit had been intended by TIAA to be useful as part of assurance which could be provided to Mazars when Mazars undertook its own review. The Director of Nursing and Clinical Standards was agreeing the scope of that separate review with Mazars but TIAA was unclear when the Mazars review would take place. The Director of Finance noted that it may be premature to undertake the Incident Reporting and Management audit prior to the Mazars review. Lyn Williams noted that work should not be duplicated but that it should be possible to agree a scope for both reviews so that they could run side by side. The Chair requested that the Director of Nursing and Clinical Standards be informed that the Committee recommended that the Incident Reporting and Management internal audit review commence as soon as possible and that this be discussed further at the next meeting.
Ian Sharp reported that the Chief Operating Officer had requested that the review of the Cost Improvement Programme (CIP) be deferred until Q4. The Committee discussed the timing of this review. John Allison said that even a review in Q3 may be too late and noted that it was important for the review to cover the CIP-setting process from target setting and identification of items through to the present position and forecasting. The Committee agreed that the CIP internal audit review should therefore not be deferred until Q4.
The Committee asked for a preliminary assessment of the most recent Internal Audit reviews where the reports were now at draft stage. Ian Sharp noted that although most were anticipated to achieve reasonable assurance, the review of Data Quality was likely to receive limited assurance. Sue Barratt noted that the Data Quality review would be relevant for the Quality Account. The Chair reminded the Committee that Internal Audit reviews which received limited or lower assurance would be received in full at the next available meeting. The Interim Director of Performance noted that data quality was a challenging aspect and he would welcome the opportunity to discuss this further with TIAA and with the Committee at the next meeting in December 2016.
The Committee discussed seeking independent audit assurance around the Carenotes implementation process. Lyn Williams noted that the Finance and Investment Committee and the Board in private session received regular reports on Carenotes implementation and development. However this Committee had a separate responsibility to seek independent assurance of project management processes and whether more could have been done to prevent some problems occurring so that, if applicable, lessons could be learnt to inform future projects. The Committee noted that some flexibility on the timing of a Carenotes review should be allowed for so as not to interfere with current development and improvement work which was taking place. However, the Carenotes review should take place within the 2016/17 Internal Audit programme using some of the available contingency days. The Director of Finance supported this and noted that development and improvement work had now become part of business of usual so the review should not interfere with this. He suggested that the review could take place during Q3. The Interim Director of Performance noted that he was separately considering options for a centralised project management function and that he could work with TIAA on this as part of this audit.
The Chair noted that it may also be useful to consider a view of the overlap of Carenotes implementation with the CUBE and allied systems. The Data Quality Internal Audit review had not included the CUBE. The Interim Director of Performance replied that he would be working closely with the Director of Finance and the Chief Information Officer to consider the CUBE and related systems. The Director of Finance added that the Interim Director of Performance would be considering the business requirements for business intelligence tools and the Trust’s needs in this respect before an evaluation of the current position and an analysis of any gaps to requirements could be undertaken. The Committee acknowledged that this work may take some time to complete and requested that the Interim Director of Performance report back on his findings in relation to the Trust’s requirements for business intelligence tools in due course.
The Committee reviewed the status of progress in actioning high and medium priority recommendations and expressed disappointment at the percentage of high and medium recommendations which had become outstanding. The Committee was concerned about the speed with which recommendations were being progressed.
Ian Sharp noted that the draft Internal Audit Plan 2017/18 would be presented to the next meeting. The Chair recommended that TIAA refer back to the three-year rolling plan which had already been developed as a starting point for this.
The Committee noted the report. / IS/SBi/
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d / Counter Fraud Progress Report
Gareth Robins presented the report AC 37/2016 which summarised counter fraud activity for the period 01 April to 19 August 2016 against the 2016/17 Counter Fraud Plan. In accordance with the NHS Protect “Standards for Providers” the self-review tool had been submitted by the end of May 2016 and the preliminary rating for the work conducted was “green”.
The Committee reviewed the summary of investigations at Appendix A. Gareth Robins noted that the first case on the list (reference 74783) in relation to suspected working whilst sick had been proven not to be the case and had therefore been closed. Anne Grocock referred to the list of enquiries received and asked about the case of an agency staff member who had not disclosed they were subject to ongoing criminal proceedings. Gareth Robins replied that the individual had made a false declaration to the agency when applying for work. The Director of Finance confirmed that a detailed investigation and report had been conducted into this case and the issue traced back to the sub-contracted agency.
The Chair drew the Committee’s attention to page 8 of the report and the review of controls around key procurement fraud risks, including tender waivers to establish reasons for waivers and to check for trends in relation to companies for whom waivers applied. She highlighted that in some cases the review had identified that waiver documentation was lacking in sufficient detail to provide assurance of accountability and transparency, although overall waiver documents had improved markedly over the last two years and the new Procurement Strategy would strengthen existing controls and further reduce the opportunity for fraud. She emphasised the importance of the Committee’s continued focus on Single Action Tender Waivers.
The Committee noted the report.
Assurance items
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e / Single Action Tender Waivers (SATWs) –01 April to 31 July 2016
The Director of Finance presented the report AC 38/2016 which reported on: (i) SATWs over £25,000 during the period; (ii) Single Action Quotation Waivers (SAQWs) between £5,000 and £25,000; and (iii) invoices without a purchaser order over £25,000. He highlighted that overall the process was working and stabilising SATWs at a lower level than previously. However, he suggested that the process may need renaming and further revising as a number of SATWs were valid, especially in the cases of specialist interim contractors who may not be part of standard frameworks. He expressed concern at NHS Improvement’s move towards central approval for management consultancy appointments over £50,000. There was not yet a general requirement for NHS foundation trusts to seek this central approval; it was enforced for NHS foundation trusts in special measures but other NHS foundation trusts were being encouraged to seek central approval in any event.
The Chair emphasised the importance of robust processes in relation to SATWs and management consultancy appointments for the Trust as a whole and also for individual Executives. She noted that robust processes here would help to demonstrate Value For Money, provide assurance to auditors and support financial governance in assisting assessments to be made of whether contracts were delivering as expected and with appropriate business cases and approvals in place. She noted that the period of the report was only up until the end of July 2016 and that more SATWs and appointments had been entered into between then and this meeting in September.
Sue Barratt suggested that a key control was around ensuring that processes were joined up and subject to central scrutiny otherwise there was a risk of duplication or projects not interacting effectively if individual Executives were acting in isolation. The Committee noted that business cases needed to exceed a threshold of £500,000 before they were subject to scrutiny by the Finance and Investment Committee and that the Audit Committee was the key Board sub-committee with an aggregate view through this reporting on SATWs, SAQWs and high value invoices. The Director of Finance emphasised the importance of appropriate scrutiny and decision-making without delaying processes.
The Committee discussed management consultancy appointments and the risk of extensions to appointments which would otherwise have been below the £50,000 threshold. The Director of Finance expressed concern that extensions may be sought either because the work had not been scoped effectively or decisions had not been evaluated effectively. The Chair cautioned that the Trust also needed to be assured that extensions were not being sought as a way of avoiding certain levels of scrutiny. She recommended that any contract extensions in relation to management consultancy should be included in this report to the Committee. She noted that it may also be useful for the Board to be more aware of additional management consultancy resource which was being contracted in order to support normal business. John Allison added that he would be more assured if he had a more detailed understanding of the overall volume of expenditure upon management consultancy, what it was for and how much value it had delivered. He suggested that there should be a presumption against management consultancy contracts unless they were justified. The Director of Finance to report back on his review of SATW processes and to provide reporting on management consultancy appointments and contract extensions.
The Committee noted the report. / MME
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e / Whistleblowing/Freedom to Speak Up arrangements
The Chair asked the Director of Corporate Affairs and Company Secretary to remind the Committee of its responsibilities in the area of whistleblowing, as summarised in the coversheet to the report AC 39/2016. The Director of Corporate Affairs and Company Secretary reminded the Committee of high profile whistleblowing cases and the requirements in professional codes and the NHS Audit Committee Handbook. The Committee’s role was to: review the effectiveness of arrangements by which staff may raise concerns in confidence; and ensure arrangements were in place for proportionate and independent investigation and appropriate follow-up.
The Chair noted that the Committee had not yet received a route map of how the whistleblowing process worked or a view from the Freedom to Speak Up Guardian on his role. The operational detail which had been provided in the report had already been reported into the Well Led and Effectiveness quality sub-committees which reported into the Quality Committee. The Committee discussed what assurance was available in relation to whistleblowing arrangements outside of the report which had been provided. Lyn Williams noted that he was the Non-Executive Director with a special interest in whistleblowing and that he had had meetings with the Acting Director of HR and with the new Freedom to Speak Up Guardian. Although he had received assurance from these meetings, the Committee also needed assurance. He suggested that when the arrangements for the Incident Reporting and Management Internal Audit review were discussed at the next meeting, whistleblowing arrangements also be considered for inclusion in that Internal Audit review. The Committee agreed with this proposal as a way forward and requested that the Director of Finance bring a report on whistleblowing arrangements to the next meeting together with the revised draft Management of Concerns (Whistleblowing) policy which was referred to in the report.
The Chair asked Sue Barratt whether she could think of examples of other organisations and audit committees which had acquitted their responsibilities well in relation to whistleblowing. Sue Barratt replied that the Committee was asking pertinent questions and making appropriate challenges in this area.
The Committee discussed how whistleblowing was distinct from other processes such as those relating to raising grievances or complaints. The Committee noted that, from the report, it was surprising that there were not more potential whistleblowing investigations. This contrasted with the incidents of bullying and harassment which had been reported in the staff survey, although the Committee noted that “bullying” was not a defined term in the staff survey and so this could be interpreted in a variety of ways and could include instances where the issues were more around management capability and skills. The Director of Finance noted the importance of the Trust also capturing those issues which did not escalate to become formal grievance or whistleblowing processes but which were “near misses” as these could still be informative. John Allison added that culturally it could be difficult to be a whistleblower and that whistleblowers may need to be protected. He noted that it would be useful to know how whistleblowers in the Trust had fared and whether it had been necessary to protect them or to assist them to move jobs or sites. The Committee noted that the new Freedom to Speak Up Guardian may become instrumental in advising on whether cases were more appropriate to be dealt with through whistleblowing or other procedures but that it would be useful for the Committee to understand: how this process could work; and who made decisions about taking a case down a whistleblowing route, where there may be more protection available for the individual involved, or down a grievance or other route.
The Committee noted the discussion. / MME
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a / Quality Committee minutes of the meetings held on 12 May 2016 and 14 July 2016
The Committee received papers AC40-41/2016, the minutes of the Quality Committee meeting and noted the discussions on clinical audit.
Any Other Business
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a / Any Other Business
None.
The meeting was closed at: 10:54.
Date of next meeting: Wednesday, 07 December 2016 10:00-12:30
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