• 7.6 Audit committee minutes

Report to Date of meeting Attachment number
Trust board 23 April 2009 Appendix 7.6
Title of paper
Audit committee minutes
Summary
Unconfirmed minutes of the audit committee meeting held on 12 March 2009
Action required / recommendation
For information to the trust board
Trust strategic aims and business planning objectives supported by this paper
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Core and developmental standards for NHS health care supported by this paper 1
C7
Risks attached to this project / initiative and how these will be managed (assurance)
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Equality assessment
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Public, patient and carer involvement
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Report From Audit committee
Date 14.04.09
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http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_4086057
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Unconfirmed minutes
Minutes of the Audit Committee
12 March 2009
Present:
Professor H Hodgson (HH), non executive director, audit committee chair
D Pascall (DP), non executive director
R Chada (RC), non executive director
In attendance:
H Blackwood (HB), deputy director of finance, RFH
I Doncaster (IV), chief internal auditor, ParkHill
P Johnstone (PJ), engagement lead, Audit Commission
K Oluwole (KO), engagement manager, Audit Commission
V Patel (VP), internal audit manager, ParkHill
A Patil (AP), local counter fraud, ParkHill
J Walbridge (JW), head of corporate affairs, RFH
A Way (AW), chief executive, RFH
ACTION
01/09 APOLOGIES FOR ABSENCE
T Bolot (TB), interim director of finance
02/09 Audit committee membership
The chair welcomed David Pascall as a member of the committee.
03/09 MINUTES OF THE LAST MEETING
The minutes of the last meeting of 26 November 2008 were approved as a
correct record subject to inclusion of apologies from I Doncaster and JW
amendment of minute 36.1/08 (26.1/08) to reflect that Mrs Leadbeater had
signed off the counter fraud plan.
04/09 Terms of reference
The terms of reference dated 22.06.07 were tabled for review. It was
noted that the chair and committee administrator needed to be updated
and agreed that reference to the counter fraud function of the committee
should be included.
Mr Doncaster to provide counter fraud paragraph for inclusion and ID/JW
agreement at the next meeting.
05/09 MATTERS ARISING
Matters arising other than those listed below were taken as substantive
items within the proceedings of the meeting:
23.1/09 Service line reporting update
Ms Blackwood explained progress made to date, essentially that
information could now be taken directly from the ledger to provide monthly,
year to date and full year forecasts for directorates showing contribution
rather than profit. In response to Mr Chada’s question regarding software
to allocate non-pay costs, Mr Way explained that the information presented
had been available for several years and that it was not currently possible
to include overhead costs. Cerner would help and the trust’s IT proposals
for investment were designed to capture patient level costs to charge to
the directorate over the next 18 months to 2 years.
25.1/08 Cerner implementation
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 Mr Way had discussed the following draft terms of reference with the
internal auditors to review governance processes and assurances
provided:
To review the processes the organisation undertook from the
identification of the need for a new PAS system through to decision
to go live with a view to assessing compliance with standing orders,
board decisions and the identification and recording of risk
To review the processes post go-live to identify the speed with
which problems were identified and solutions created and
implemented, assessing the identification, reporting and recording
of risk
To assess what assurances were sought and received and how
they have subsequently translated into reality.
It was noted that this work would be undertaken as a priority within the 40
allocated internal audit days. Mr Way had asked NHS London for their
view, given the commercial nature of the report to be prepared, who may
wish to involve their own auditors.
Mr Johnstone felt this was the appropriate course of action to be taken. Mr
Way confirmed that lessons for other trusts had already documented.
25.2/08 Internal audit terms of reference protocol 08/09
Ms Blackwood confirmed that the key performance indicators had been
prepared. Mr Doncaster would include these in the internal audit report for ID
June.
26.1/08 Counter fraud plan to 31 March 2009
See minute 04/09 above.
37.1/08
RFH clinical coding audit
Mr Patel confirmed that he had agreed the objectives of the audit with Mr
Fleming and would report findings to the next audit committee. VP
Fixed assets
Ms Blackwood confirmed that fixed assets were being kept up-to-date and
that the finance team had reconciled the ledger to the general ledger.
Auditors’ local evaluation(ALE) action plan
Ms Blackwood confirmed that the finance team were implementing the
action plan.
Draft annual audit letter
The chair confirmed that the draft annual audit letter had been received by
the board on 29.01.09
06/09 EXTERNAL AUDIT
06.1/09 Updated audit plan 2008/09
Mr Johnstone explained that the work plan had been reviewed following
the trust’s decision to postpone its foundation trust application. The trust
would now undergo an audit of its accounts and ALE assessment. The
Audit Commission planned to focus on the impact of the care records
service implementation on the financial standing and performance
management of the trust. It was recognised that the consequences of the
implementation would impact on the ALE score for 2008/09.
Ms Blackwood confirmed that she would be able to provide the self
assessment information on internal control and financial management HB
requested by Ms Oluwole the following week.
The total audit fee (planned) was £183,200 for 2008/09, lower than the
actual fee for 2007/08 (£192,500).
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The committee noted the report and potential impact the CRS
implementation would have on the trust’s ALE score for 2008/09.
06.2/09 Supplementary opinion audit plan 2008/09
Following revision of the audit plan for 2008/09 five additional risks had
been identified. In response to Professor Hodgson’s question regarding
the finance team’s reaction to the risks identified, Ms Blackwood confirmed
that these had been recognised and were being addressed.
Mr Johnstone explained that valuations were included as a residual risk
due to the fall in land values; buildings for hospital use had not fallen
significantly. The trust would be required to determine a methodology for
ensuring that year end values for all asset values remain materially
accurate. Ms Blackwood confirmed arrangements regarding the valuation
(planning) of Coppett’s Wood confirming that the degree of risk was being
assessed. Professor Hodgson asked that communications between the
finance team and external audit remained timely.
The committee noted action being taken by the trust to address risks
identified in the supplementary opinion audit plan.
06.3/09 External audit progress report and briefing, March 2009
Ms Oluwole provided an update, including intended outputs for the
2008/09 audit and to highlight key issues and developments of interest.
International finance reporting standards (IFRS)
The arrangements review to identify material or high risks had been
undertaken and an audit of the restated balance sheet figures after
31.03.09 would be undertaken as part of the 2009/10 audit plan.
In response to Mr Chada, Ms Blackwood confirmed that issues relating to
the trust’s leases were being addressed.
The committee noted the progress report.
06.4/09 Care records service implementation cost
Following consideration of the facts presented relating to costs incurred
relating to training and to support the implementation of the system, Mr
Johnstone had listed a number of recommendations about future
procurement, agreements, use of waivers and approval limits in a letter to
the chief executive.
Professor Hodgson thanked the Audit Commission for the
recommendations noting that these had already been agreed for
implementation by the trust’s management team.
The committee noted the Audit Commission letter and
recommendations to be implemented from lessons learned.
06.5/09 Progress report – implementing recommendations made in annual
accounts report 2007/08
Ms Blackwood confirmed the trust’s position against the action plan at
February 2009 noting that while some had been implemented most would
be used when the accounts for 2008/09 were prepared.
The trust’s position against recommendation 15 (RESUS control account
reconciliation, review and sign off) was confirmed; all balance sheets are
being analysed monthly and could only be signed off only if appropriate the
back-up is available.
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07/09 INTERNAL AUDIT
07.1/09 Internal audit progress report on 2008/09 – 2010/11 plan
Mr Doncaster explained that the internal audit plan which commenced in
September 2008 had prioritised audits required by the external auditor.
Internal audit reviews had provided limited assurances for four areas
(financial ledger, income and debtors, creditor payments and treasury
management) against which prioritised agreed action plans were being
progressed linked to the trust’s risk register.
In response to questions asked about each of the four areas, Ms
Blackwood provided the trust’s current position including action taken to
secure back-up files, reconciliation of income and debtors at month end,
authorisation of new suppliers, verification of existing suppliers and
formalisation of local procedures for treasury management which it was
thought Mrs Leadbeater had approved and would therefore be compliant.
The committee noted the report which included four limited
assurances.
07.2/09 Progress report – implementing recommendations – internal audit
Ms Blackwood provided an update in response to recommendations made
to control risks identified by internal audit and had arranged a meeting the
following week for the internal auditors to review action taken, including
implementation dates. Mr Doncaster would follow this up with a letter to HB/ID
the chief executive copied to committee members.
Mr Johnstone confirmed it would be useful if progress could be KO
demonstrated, Ms Oluwole added that the internal control assessment
would be undertaken now and revised after the results of the internal audit
was complete.
The committee noted the report and action being taken to address
the limited assurances referred to under 07.1/09.
08/09 COUNTER FRAUD
08.1/09 Counter fraud service progress report
Ms Patil provided an update on work undertaken since July 2008. Four
investigations, including PAA 2462 had been closed. Four other
investigations, including one new investigation, were being pursued. A
series of fraud awareness publicity initiatives, including a staff survey with
cash prize, had been introduced to raise awareness and 2000 staff had
now received training. Eight protocols to support and formalise work
between the local counter fraud service and the trust had been prepared, 3
of which had now been agreed.
Ms Patil to share staff survey result with Ms Oluwole. AP
Members considered and approved the counter fraud policy and AP
response plan for implementation.
The committee noted the report and action taken to create an anti- AP
fraud culture for which it was anticipated the trust would achieve a
compound indicator of 3.
09/09 HEALTHCARE GOVERNANCE COMMITTEE
The unconfirmed minutes of the healthcare governance committee
held on 13 January 2009 were noted.
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10/09 WAIVER TO COMPETITION REGISTER
The chair noted that details of waiver 464 had now been provided.
Ms Blackwood reported that the trust’s standing orders and standing
financial instructions were being reviewed and, subject to board approval,
in future waivers relating to framework agreements, national contracts and
consortium products would not be included in the waiver register.
Ms Walbridge confirmed that the register had been updated to reflect
recommendations made by the Audit Commission (see agenda 06.4/09)
and would be used for all future reports.
Ms Walbridge to ask procurement team to confirm cost of mattress JW
disposal (waiver 653).
The waiver register was noted, it was agreed that in future reports
would include only those waivers which had not already been
reported to the audit committee.
11/09 LOSSES AND SPECIAL PAYMENTS
11.1/09 – Recovery of salary overpayments
Ms Blackwood provided an update on the trust’s debt recovery processes.
In response to Mr Chada’s questions regarding policies and action to be
taken to prevent overpayment of staff salaries, Ms Blackwood confirmed
that the director of workforce development was looking at the underpinning
processes. It had been identified that one of the main problems was
ensuring that leaver information is reported promptly to payroll to avoid
overpayment.
The total outstanding debt for salary overpayments had reduced from
£191,000 to £144,000 as a result of improved collection processes.
Losses amounted to £22,000 for debts considered irrecoverable or
uneconomic to pursue.
The committee noted the report and action being taken to recover
debt and avoid overpayment of salaries.
11.2/09 – Losses report, January 2009
Ms Blackwood reported that the losses to 31 January 2009 (£541,023)
included write offs for the past 6 years. Following this clearance of the
back log, it was anticipated that the trust would be able to demonstrate an
incremental improvement in reducing losses.
It was noted that ex-gratia payments for 2008/09 included three
compromise agreements.
The committee noted the report.
12/09 SECURITY MARKING OF ASSETS
Mr Way provided an update on the trust’s 3 year security plan which was
being led by the director of nursing and healthcare governance together
with a much wider review of the trust’s security arrangements to inform the
operational plan. Given that there had been virtually no losses over the
past few years, security marking was not a high priority.
13/09 ANY OTHER BUSINESS
13.1/09 Financial controller
Ms Blackwood reported that Aneel Pattni, who had experience of working
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 for both KPMG and Monitor, had been appointed as financial controller and
would take up post on 23.03.09.
13.2/09 Year end stock counts
Ms Oluwole had recommended that the trust’s proposed approach to stock
counts at year end, in effect a change in accounting policy, be agreed by
the audit committee.
It was agreed that ward stock, which was expensed at point of issue,
would no longer be included in the stock count at year end.
DATE OF NEXT MEETINGS 2 Deadline for papers
Monday, 8 June 2009 3 at 1600 hours, Marsden room, ground floor 25.05.09
Tuesday, 8 September 2009 at 1600 hours, board room, level 2 26.08.09
Thursday, 3 December 2009 at 1600 hours, board room, level 2 18.11.09
Thursday, 4 March 2010 at 1600 hours, board room, level 2 18.02.10
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Agreed with Professor Hodgson
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Trust board meeting to consider draft annual accounts 11 June 2008
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