Report to the Oxford Health NHS Foundation Trust

PUBLIC

Report to the Oxford Health NHS Foundation Trust

Board of Directors

For Approval

29 July 2015

Standing Financial Instructions

Executive Summary

This paper summarises the approach taken to review the Trust’s Standing Financial Instructions (SFIs), the key changes proposed to the SFIs, feedback received following consultation and confirms the Audit Committee recommendation that the revised SFIs are approved by the Board of Directors.

Governance Route/Approval Process

The Trust’s governance framework requires any revisions to SFIs to be agreed by the Audit Committee who will recommend approval to the Board of Directors.

Strategic Objectives

This report relates to and provides assurance against the following Strategic Objective of the Trust:

2) Delivering Operational Excellence

(Goals: our services will be effective and efficient; information will be translated into knowledge; and our planned surplus will be delivered)

Review Process

A comprehensive review of SFIs has been undertaken to ensure that the Trust is operating within a robust financial control framework.

An initial review was undertaken within Finance to update the SFIs for references to statutory and other external guidance documentation, to update references to Trust committees and specific post holders and to provide a general update where necessary to enhance clarity. Specific areas were referred to lead officers for review and update, including:

• Chief Operating Officer
• Director of Estates and Facilities
• Director of Informatics
• Deputy Director of Human Resources
• Head of Information Governance
• Trust Secretariat
• Head of Financial Services
• Local Counter Fraud Specialist

In addition, the SFIs were reviewed against the Trust’s Constitution and Standing Orders, the Trust’s Scheme of Reservation and Delegation of Powers and other relevant Trust policies (including the Investment, Budgetary Control and Procurement Policies) to ensure consistency and appropriate cross referencing where necessary.

The proposed revisions were presented to the Executive Directors’ meeting on 29th June 2015, at which there was general support for the proposals with detailed comments to be provided by 14th July 2015.

The Proposed revisions were circulated to Audit Committee members on 30th June 2015 with comments invited by 14th July. Feedback received following consultation was reviewed and further amendments made where appropriate. The revised draft SFIs as amended following consultation were circulated to Audit Committee members on 16th July who confirmed by 20th July that they should be recommended to the Board for approval.

Summary of key changes and consultation

The key revisions proposed to the SFIs are summarised at appendix 1.

Comments received during the consultation period are summarised at appendix 2, together with a note against each comment as to any further changes made to the SFIs or the reason why a change has not been made. There have been no comments received resulting in any significant further changes; most of the feedback has related to wording changes to provide further clarification, inserting specific reporting requirements/time periods and a number of typographical corrections.

There is, however, one change to the SFIs that will require an amendment to the Trust’s Scheme of Delegation as follows

SFI section 9.1.2 currently refers to the requirement for the Remuneration Committee to make ‘recommendations’ to the Board regarding the remuneration and terms of condition for the Chief Executive, Executive Directors and senior managers. This has been changed to state that the Remuneration Committee will ‘determine’ the remuneration and terms of condition. This reflects current practise and given the membership of the Board and the Remuneration Committee is considered to be more appropriate. The Scheme of Delegation currently reserves this approval to the Board.

Approval process

The remaining timetable for approval of the revised SFIs is as follows:

• Circulation of final versionto Audit Committee16th July
• Audit Committee recommendation to approve20th July
• Approved by Board of Directors29th July
• Ratify at next formal Audit Committee meeting17th Sept

Recommendation

The Board of Directors are asked to approve the revised SFIs and approve the required amendment to the Trust’s Scheme of Delegation in relation to section 9.1.2 of the SFIs.

Author and title: Paul Dodd, Deputy Director of Finance

Lead Executive Director: Mike McEnaney, Director of Finance

1. A risk assessment has been undertaken around the legal issues that this report presents and there are no issues that need to be referred to the Trust Solicitors.

1. This report satisfies or provides assurance and evidence against the requirements of the following Terms of Reference of the Committee:

• to review the establishment and maintenance of an effective system of integrated governance, risk management and internal control (clinical and non-clinical activities) that supports the achievement of the Trust’s objectives;

• to ensure that there is an effective Internal Audit function;

• to review the work and findings of the External Auditor and consider the implications and management’s response to their work;

• to ensure that the systems for financial reporting to the Board, including those of budgetary control, are subject to review as to completeness and accuracy of the information provided to the Board.

Appendix 1

Section / Description / Key revisions
1 / Introduction / Minor changes to external references and wording
2 / Audit and Counter Fraud / Fraud section updated for external references; inclusion of requirements for external audit engagement on non-audit consultancy
3 / Business Planning, Budgets and Budgetary Control / Remove references to PBL and WCF; revised wording for CIP accountability
4 / Annual Accounts and Reports / Minor wording changes
5 / Treasury Management / Minor wording changes
6 / Income, Fees and Charges and Security of Cash, Cheques / Amended definition/acceptance of unofficial funds
7 / Tendering and Contracting / Clarification of the Trust’s updated tendering process, including removal of requirement for Chief Executive and Director of Finance to be present for the opening of tenders over £500k; addition of bribery act references and 3rd party data protection information requirements. Threshold for a Non-Executive Director to be involved in tendering for in-house services increased from £500k to £1m.
8 / Contracting for Provision of services / Revised wording for partnership arrangements; delegated limits for signing contracts
9 / Terms of Service and Payment of Directors and Employees / Updated references and wording to provide clarity
10 / Non-Pay Expenditure / Minor wording changes
11 / External Borrowing and Investment / Minor wording changes
12 / Capital Investment, PFI, Fixed Asset Registers / Updated references and minor wording changes
13 / Stores and Receipt of Goods / Updated references and minor wording changes
14 / Disposals and Condemnations, Losses and Special payments / Updated references and minor wording changes
15 / Financial Information, Communications and Technology / Updated references and minor wording changes; inclusion of reference to 3rd data protection information requirements
16 / Patient’s Property / Updated references
17 / Funds Held on Trust / No changes
18 / Acceptance of Gifts by Staff / Updated references
19 / Retention of Documents / Updated references
20 / Risk Management and Insurance / Updated references
App1 / Financial Limits and Approval Matrix / Inclusion of financial limits and approvals matrix that was previously included in Procurement Policy; the only revision to financial limits is the introduction of delegated limits for signing Healthcare (income) Contracts

Appendix 2

Name / SFI reference / Change requested / SFIs amended? / Comment
John Allison / 7.10 / I am surprised that we would countenance PFI funding. / N / All financing options would be considered
Anne Grocock / 8.3 / A limit would be useful for reports to Board on contracts. I would be happy for [this] to be reported to F&I. / N / The refers to income contracts which will be reported in total within the board finance report and then commented on by exception if large variances occur
John Allison / 1.1.3 / line 4 (new text) would read better as "if it is considered….." / Y
Anne Grocock / 10.3.2 / I would like to see somewhere a specific item on authorisation to ensure that one person could not authorise and sign off on the same item and what the limits are. I don’t think they are the same as the limits in appendix 1. / Y / Wording amended to include segregation of duties
John Allison / 10.3.2a / period not specified. / Y / Reviewed at the same time as the SFIs
Anne Grocock / 11.1.4 / I don’t like periodically reporting - better to say at least every 6 months or something like that. / Y / Amended to monthly - included within the board finance report
Anne Grocock / 11.2.4.2 / duplicates the FDs responsibilities set out in 5. But 11.2.4.3 does not appear earlier in 5 and perhaps should do. / Y / Duplications removed
Alyson Coates / 14.2.1 / This section needs to refer to the requirement to report losses and special payments to the audit committee (and I think frauds need to be reported to the chair of the audit committee in addition to the external auditor in section 14.2.3?). It also needs to reference the new responsibility to report constructive losses to the audit committee. / Y
Anne Grocock / 14.2.5 / Is the delegation for the limits for write off the same as the approval limits in Appendix 1? / N / Yes they are
John Allison / 15.1.3 / Duplicates 7.11.5. Also the text at line 3 has lost its way. / Y / Duplication removed
Anne Grocock / 17.1.1 / Charity Commission not Charities / Y
John Allison / 2.3.2 / line 1 better if "independently verify that the…." / Y
Lyn Williams / 2.3.5 / I think we should make it clear that the Head of Internal Audit is accountable to the Director of Finance for day-to-day matters, but is otherwise accountable to the Audit Committee, including for audit strategy and planning, and for the timeliness and quality of its work. / Y
Anne Grocock / 2.4.2 / and 2.4.3 refers to Board of Governors - should be Council of Governors and it is right later in the paragraph / Y
Alyson Coates / 2.4.7 / Could we please [include a] new section 2.4.7 that deals with the procedures for approval of external audit providers providing non-audit services? I think this needs to state the requirement for audit committee approval and give more details as to the assurances sought from the external auditor. / Y / Suggested wording included
John Allison / 2.5.2 / line 3 I am not sure what is meant by "and guidance". / Y / Reference removed
Anne Grocock / 2.5.2 / I think the LCFS has always been from Internal Audit since I have been on the Board. Is this a likely connection in future and is there any merit in linking counter fraud with Internal Audit? / N / It is possible that the LCFS would not be linked to Internal Audit
John Allison / 2.5.4 / To whom should the Local Counter Fraud Specialist submit his report? / Y / Audit Committee
John Allison / 2.6.2 / Should this clause say who in the Trust has the responsibility for nominating the LSMS (CEO, presumably)? / Y / CEO
Alyson Coates / 2.6.3 / I think this section is now out of date (we do not, in so far as I am aware, have a nominated NED/Exec for security management – I think I recall this was old guidance that was withdrawn? This section should probably be re-drafted to reflect that the NED oversight of this activity is discharged through the Audit Committee?) / N / Trust Secretary has advised that Mike Bellamy is the nominated security management NED
Anne Grocock / 3.4.2 / vii I was a little confused about 1%. It can’t be 1% of total turnover (I assume) so is it 1% of individual budgets or directorate budgets or something else? / Y / Amended to comply with the Budgetary Control Policy
John Allison / 3.4.4 / The wording in line 3 is strange - who/what "can demonstrate"? Also I am surprised that the Chief Executive is made responsible for the Cost Improvement Programme. Even accepting that the CEO carries ultimate responsibility for most things, all that I have seen in board meetings has indicated that the Director of Finance runs the CIP. Delegation to the COO is mentioned next, correctly, but my observation has been that she cannot act without approval from the Director of Finance. / N / CEO as accountable officer maintains overall responsibility for CIP. The DoF will recommend the CIP target for approval by the Board and the CEO has delegated responsibility for delivery against this target to the COO.
Lyn Williams / 5.1.3 / I thought the Finance & Investment Committee approved the banking arrangements. / N / Not included within FIC terms of reference, scheme of delegation reserves approval of banking arrangements to the Board
Anne Grocock / 5.1.3 / risk averse / Y
Lyn Williams / 5.2.1 / As for section 5.1.3. / N / Not included within FIC terms of reference, scheme of delegation reserves approval of banking arrangements to the Board
Anne Grocock / 6.3.3 / One of several points where I think there should be a timescale. Recovery should be initiated within a specified time scale / Y / within a month
John Allison / 6.4.1c / line 3 - ensuring that employees obtain safes etc is hardly "provision". / Y / Reworded
Anne Grocock / 6.4.3 / Same point. Money should be banked within a specified time scale - and not as recently left in a safe for a year! / Y / within a week
John Allison / 6.4.4 / I am surprised that we accept deposits of unofficial funds at all. / Y / Amended to reject unofficial funds
Anne Grocock / 6.4.4 / Do unofficial funds include donations to the Charity? / Y / Amended to reflect that charitable donations are considered official funds if they relate to Oxford Health Charity.
John Allison / 7.1.3 / lines 3 to 4 I suspect this actually means "is broadly defined in" / Y
John Allison / 7.1.4 / line 2 suggest "into" rather than "in". / Y
John Allison / 7.1.4 / lines 3 to 5 If they are in breach of the Act then presumably automatically vulnerable to the forfeits specified in the rest of the passage, making lines 4 and 5 redundant. / Y
Anne Grocock / 7.10.1c / Board of Directors / Y
John Allison / 7.11.5 / This is duplicated at clause 15.1.3. / N / 15.1.3 removed
John Allison / 7.14.1a / In my experience, competitive tendering generally ends up as a negotiation (with the winning tenderer). / N / Tendering is taken to be on a fixed price quotation basis, though we accept that tendering can often result in further negotiation on price
John Allison / 7.14.1c / Period not specified - could be every 100 years! / Y / Reviewed at the same time as the SFIs
Anne Grocock / 7.15.2 / If it is suggested that NEDs should be involved with in house services tendering above £500K ( which I am doubtful about) then the limit for 7.6.7 should be £500k / Y / NED involvement threshold increased to £1m
John Allison / 7.4.1 / lines 4 and 5 surely guidance is optional and compliance is not mandatory. / Y / Reworded
Gareth Robins (TIAA) / 7.5.2 / Future proofing SFIs with reference to Public Contract Regulations 2015 / Y / Suggested wording included
John Allison / 7.5.5b / viii First word should be "when" / Y
Lyn Williams / 7.6.1 / halfway down this paragraph, there's a mention of "concode", which I've never heard of before. But then, in paragraph 10.6.2, I note that "Concode" has been changed to "Estate Code" - should that be the case here as well? If not, should there be a fuller name for it? / Y / Concode reference removed as outdated
Anne Grocock / 7.6.7 / Tender reports surely should come to the Board over a certain amount - otherwise activities go on which we NEDs don’t know about (extra audit work for example). / Y / Board approval required over £2m hence this limit is now stated
Lyn Williams / 9.1.2 / paragraph a. talks about "advising" the Board; paragraph b. about "making recommendations" to the Board; and paragraph c. about "advising on...appropriate contractual arrangements". If my memory is still functioning reasonably, we've always made decisions on these matters in the Remuneration Committee and have not received recommendations from the Committee at Board meetings. Are these not powers delegated to the Committee? / Y / The scheme of delegation requires this matter to be referred to the Board by the Remuneration Committee. In practice, as all NEDs sit on the Remuneration Committee this matter is determined at the Committee which is appropriate. The SFIs have been updated to reflect this however the scheme of delegation now requires updating.
John Allison / 9.1.2 / sub para d has no text. / Y
Anne Grocock / 9.4.1 / It would help to have something to reflect the procedures for dealing with overpayments here / Y / Salary overpayments now included
Anne Grocock / 9.4.3 / Not sure what immediately means - within 24 hours, 2 days, a week? see also 6.3.3 etc. / Y / Amended to within 2 working days
Laura Rogers (Deloitte) / All / None / N/A
Lyn Williams / Appendix 1 / The F&I Committee has the authority to approve expenditure (both capital and revenue) above £500k and up to £2 million, with the Board alone approving expenditure above £2 million ; I think that should be reflected in the appendix. / N / Note inserted in appendix 1 to refer to business case approval limits contained in the Budgetary Control Policy
John Allison / General / I think that the document might be enhanced by an annex entitled "Summary of Individual Responsibilities" or similar. / N / The scheme of delegation forms a summary of individual responsibilities
Lyn Williams / Various / Typos / Y