Audit Committee Update

Board of Directors Meeting

30 October 2014

Reports:

Interim Audit Committee Report (October 2014)

Proposed Updates to Committee Terms of Reference


  1. Risks & Assurances[1] - Governance
  2. Annual review -Audit Committee Terms of Reference

A covering note and proposed updates for the Audit Committee Terms of Reference (ToR) are included with this interim report.

1.2.Awareness, briefing resources for Membership Council

Contrary to the guidance of the Monitor Code (updated July 2014), the membership council is not consulted on the ToR.

The trust has a robust, long-standing process to raise awareness, provide appropriate information and regular briefings to the membership council. Documents and other resources relating to the work of the committee are formally collated and maintained by the Director of Corporate Governance (DoCG) to support induction, continued learning and development of individual governors and the collective membership council. The ToR is included in this information.

This reference information, together with the annual end of year briefing session is the appropriate, effective approach preferred by the membership council. The process evidences how the trust supports the governors and collective membership council with sufficient resources to undertake its duties. The process provides a route for the membership council to continually update its skills and knowledge, become familiar with the NHS foundation trust and the obligations of this committee. This process also supports the membership council as it evidences its duty to hold the non-executive directors individually and collectively to account for the performance of the board of directors.

The board is hereby requested to authorise the proposed changes to the Audit Committee Terms of Reference.

  1. Risks & Assurances - Quality[2]

The trust received significant assurance for the review of NHS Guidance mapping. Management is to consider options for a practical and comprehensive approach to receive and effectively disseminate the many items of guidance received from the varied regulatory and other bodies that interact with the trust.

The board continues to receives direct reports and seek assurances on both data quality and RTT from management. No other reviews were due from the committee.

  1. Risks & Assurances- Financial
  2. External Audit: 2014/15 Year End Audit Plan

In line with other industry sectors, FTs will receive an ‘enhanced’ audit report for the 2014/15 year. Further information will be provided by Deloitte in due course.

3.2.Financial Management: Procurement

The trust receivedsignificant assuranceforthe Procurement systems of internal controls.The members note the scale and scope benefits to be achieved should UCL Partners Procurement Service agreed to internal audit and counterfraud reviews across all of its members, rather than the current piecemeal approach.

  1. Risk & Assurances – IT Implementation

The committee will receive the report from KPMG on an independent IT programme assurance (IPA) review.

In addition the committee has committed to consider relevant issues and management reporting for the ongoing IT implementationof the HR/Payroll system (significant assurance opinion received) and OpenEyes internal implementation.

  1. Risk & Assurances - Fraud and Bribery

The committee received the standing information on counterfraud, the agreed workplan for the year and the current log of investigations byTIAA.

  1. Risks & Assurances - Other Corporate
  2. Commercial Services: Moorfields Pharma–governance proposal

The members responded to the consultation request from MEH Pharma. It was noted that the trust should confirm the authorities and responsibilities are appropriately matched and do not impinge on those of the trust board.

6.2.Other Risks

Management continues to be aware that symptoms of over-stretch can present in various forms of policy non-compliance, delayed response for information or non-performance. The board should continue to seek assurances as to top team and management resourcing, scale and pace of change, communication to further embed ownership and accountability for service delivery, financial challenge and quality issues.

Theapproach will support management as they identify and resolve ongoing data quality, RTT and service redesignchallenges whilst the Trust continues performance of clinical and corporate service delivery.

The board should continue to rigorouslyevaluatemanagement assurances in relation the Trust’s capacity to take forward both service redesign and the financial strategy necessary to address our future funding challenges.

Updates proposed for the Audit Committee Terms of Reference

Background

The Terms of Reference (ToR) had not been updated since the duty was transferred from the Audit Committee Chair to the Director of Corporate Governance (DoCG) in December 2010. Since that time there have been updates to statute relating to Whistleblowing and public interest disclosures, Health & Social Care, the Monitor Code of Governance and the trust’s internal governing documents.

There have also been changes to the functioning and authorities of the Quality & Safety Committee, the Patient Experience Committee and the range of commercial service activities undertaken by the trust.

The attached ToRwas updated with assistance from external consultants ECS Ltd, who have conducted a similar activity for other NHS Trusts/ NHS Foundation Trusts. The ToR now reflect the latest updates to statute and the Monitor Code (July 2014) and is compliant with latest versions of the Trust’s Constitution and Standing Orders.

Number of Members for the Audit Committee

The board should note theproposed change with respect to membership has been amended to allow ‘at least three members, all of whom must be independent Non-Executive Directors of the Trust Board. The rationale for this recommendation is supported by the committee; restrictions as to who can be members were confirmed by ECS Ltd and were noted by the Audit Committee Chair and DoCG.

A Note on Whistleblowing and the Audit Committee Responsibilities

The board should note that the Audit Committee has an explicit duty in relation to whistleblowing.

The trust has implemented a system of Contact champions to receive issues where staff may have a ‘niggling worry’ or ‘nagging doubt’ and wish to raise this concern for attention. The champions network (approximately 10 persons at last report) provide an alternative support for staff that may not feel confident to raise issues directly with their line manager. The committee aims to recognises this structure and consider how it wishes to gather assurances from this function in addition to the standard whistleblowing function in operation.

A Note about ERRA (2013) and PIDA (1998)

The key piece of whistleblowing legislation is the Public Interest Disclosure Act 1998 (PIDA) which applies to almost all workers and employees who ordinarily work in Great Britain. The situations covered include criminal offences, risks to health and safety, failure to comply with a legal obligation, a miscarriage of justice and environmental damage.

The Enterprise and Regulatory Reform Act (ERRA),came into force in June 2013 and made changes to the whistleblowing legislation including:

  • replacing the requirement for a disclosure to be “in good faith” ie disclosures will no longer have to be made in good faith.This means that a ‘worker’ will no longer be able to bring a whistleblowing claim for purely private matters, such as for example any problems they have with their own employment contract
  • For a worker to disclose a whistle-blower will also now need to show that he or she reasonably believed that the disclosure was ‘in the public interest ‘.
  • Further, whistle-blowers now have the right not to be subjected to a detriment such as bullying, coercion or harassment by co-workers or their employers’ agents for having blown the whistle. An employer will be vicariously liable for a detriment by a co-worker where the detriment is done in the course of the co-worker’s employment with the employer. An employer will also be liable for a detriment by an authorised agent such as a contractor.
  • The ERRA extends the definition of “worker” for the purposes of whistleblowing protection. It now includes under the definition of worker:
  • contractors in various parts of the NHS who would not otherwise be workers.
  • The ERRA also grants the Secretary of State the power to add further categories of worker later on if this is considered appropriate.

The DoCG has confirmed that this is reflected this in the proposed updates to the Terms of Reference.

Note: Update to the Whistleblowing Policy

It has been brought to the attention of the DoCG that Whistleblowing Policy (2012) will need to be updated to reflect latest statutory requirements that came into force in 2013. This is currently in hand and any draft updates will be completed in due course.

The proposed updates to the Terms of Reference are attached.

Recommendation:

To authorise the proposed changes to the Audit Committee Terms of Reference.

Gifty Poku

Audit Committee Secretary

22 October 2014

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[1] In order to correlate the work of this committee with the Trust’s corporate strategy and corporate risks (within scope of this committee), assurances are now received and reported by risk theme.

[2]‘QUALITY’ defined as Delivery, Outcomes, Patient Safety and Patient Experience (D.O.S.E)