Gloucestershire Hospitals NHS Foundation Trust

Transcription

1 Gloucestershire Hospitals NHS Foundation Trust Audit Planning Memorandum March 2009

2 Gloucestershire Hospitals NHSFT Audit Plan Contents Page 1 Executive Summary 1 2 Principal accounts audit issues and work programme 3 3 Use of Resources 6 4 Reporting 9 5 Audit Team, Administration and Fees 11 Appendices A Summary of Respective Responsibilities B Disclosure under ISA (Communication of audit matters to those charged with governance)

3 Gloucestershire Hospitals NHSFT Audit Plan 1 1 Executive Summary 1.1 Our responsibilities Our overall audit responsibilities are governed by the National Health Service Act 2006, supported by the Audit Code for NHS Foundation Trusts (the Code), as produced by Monitor, the Independent Regulator for NHS Foundation Trusts. The scope of our audit work for the financial year is intended to ensure: the annual accounts have been prepared in accordance with directions under paragraph 25 schedule 1 of the Act and that they comply with the requirements of all other provisions contained in, or having effect under, any enactments which is applicable to the accounts; proper practices have been observed in the compilation of the accounts; the Annual Report produced by the Trust is consistent with the financial information presented by the Trust; the Directors' report produced by the Trust is prepared in accordance with the requirements of the NHS Foundation Trust Financial Reporting Manual; completeness of the disclosures within the Statement on Internal Control in meeting the relevant requirements and identifying any inconsistencies between these disclosures and our work on the financial statements and other work; and that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. In planning our audit, we have used a risk based approach. This leads us to direct our work, each year, to those areas presenting the greatest risk to the Trust. The Code sets out our respective roles and responsibilities in relation to the Trust s financial affairs. These are summarised at Appendix A. We have issued to the Trust a separate engagement letter which reflects our duties under the Audit Code and sets down the legal basis for our working relationship with the Trust. 1.2 Our Audit Strategic Context The National Health Service Act 2006, established two regulatory bodies, which review and regulate the activities of Foundation Trusts; the Care Quality Commission (formerly Healthcare Commission) and Monitor. The Care Quality Commission s responsibilities cover both public and private sector healthcare. It has powers to encourage co-operation between regulators within the NHS and has taken over the Audit Commission s national value for money reporting function. Therefore, it has the powers to request the auditors of NHS Foundation Trusts to undertake national performance reviews, to facilitate national comparisons. The Care Quality Commission has not, to date, asked us to perform any work in respect of their duties for and therefore no work has been included in this plan.

4 Gloucestershire Hospitals NHSFT Audit Plan Reporting to the Governors and the Audit Committee Our overall audit responsibilities are to report on our work, and express our opinions, to the Governors of the Trust. We have made a number of presentations to the Board of Governors on our audit work completed since the Trust was licensed as a Foundation Trust, and will continue to attend Governors meetings, as required. However, we see that the body directly charged with the more detailed governance of the Trust is the Audit Committee. We have good working relationships with the members of the Committee, and the Governor representatives thereupon, and will continue to develop these further in In addition, we have developed and maintained effective relationships with other members of the Board and staff at the Trust. The way we propose to report to both Governors and the Audit Committee is set out in Section Our Fees Our fee for the audit of the Trust for the period ending 31 March 2010, as set out in our tender documentation, is 55,000 plus VAT ( ,000). This figure includes our audit fee for Charitable Funds ( 3,000 plus VAT). Further detail of our fee is set out in section 4 of this plan. We would like to emphasise that is the first year that the Trust's accounts will be prepared exclusively under International Financial Reporting Standards. We have absorbed any additional cost arising as a result of this transition within our fees. 1.5 The Managed Audit We have sought to apply the principles of the Managed Audit at the Trust each year. These principles involve close co-operation with management, and integration with internal audit, to ensure that the effectiveness of the overall governance and audit procedures are maximised. We will continue to work closely with the Trust s officers in to ensure that we use the Trust s systems and procedures, wherever possible, to minimise the extent of detailed audit work we perform. In particular, we plan to place assurance on the Trust s Internal Auditors. The Internal Audit Annual Plan is based upon the key risks identified at the Trust and we will share our understanding and planned response to risks with Internal Audit to ensure an effective and integrated audit approach in responding to the identified risk areas. In addition, we are required to provide assurance on the integrity of financial systems and controls to the auditors of the other NHS bodies within the local health community that utilise the services provided through Gloucestershire Finance Shared Services (GFSS).

5 Gloucestershire Hospitals NHSFT Audit Plan 3 2 Principal accounts audit issues and work programme 2.1 Risk Based Planning Our audit plan will need to be kept under review, in order to take account of emerging issues arising during the year. Our proposed work programme may be influenced by our continuing assessment of local areas of risk, identified through discussions with Trust management, the Audit Committee and the Trust s Governors, and the need to respond to any work mandated by Monitor and the Care Quality Commission. Any variation to the planned work will be discussed with management and the Audit Committee. 2.2 The audit of the accounts In order to gain sufficient assurance to support our opinion on the financial statements, we will carry out a review of: the Trust s arrangements for the preparation of its Statement on Internal Control; the Directors' report produced by the Trust to ensure that it is prepared in accordance with the requirements of the NHS Foundation Trust Financial Reporting Manual; internal audit, to determine the extent of reliance we can place on it for the purposes of our audit; the internal control framework for key financial systems; the materiality of balances and transactions impacting on the financial statements; and the key risks relevant to the preparation and audit of the financial statements. Audit of IT and outsourced systems Our audit approach requires a review of the Trust's internal controls in the IT environment, as the Trust uses a computer system for accounting applications that process a large number of transactions, including transactions processed by local shared services arrangements. As in previous years' we will involve one of our Technology Risk Services (TRS) specialists to undertake this element of the audit. Reliance on internal audit We will assess your internal audit function to identify where we can gain assurance on internal audit work and will continue to liaise with internal audit throughout the audit. Internal controls We are required to evaluate the design of the Trust's internal controls over risks, which could lead to a material misstatement in the financial statements, and determine whether they have been implemented effectively. Our emphasis will be on identifying and obtaining an understanding of control activities that address the areas where we consider material misstatements are more likely to occur.

6 Gloucestershire Hospitals NHSFT Audit Plan 4 As in previous years, we will undertake this work as part of our interim audit. Our audit is not designed to test all internal controls or identify all areas of control weakness. However, where, as part of our audit, we identify any control weaknesses, we will report these to the Trust. In consequence, our work cannot be relied upon necessarily to disclose deficiencies or other irregularities, or to include all possible improvements in internal control that a more extensive special examination might develop. Our audit approach Our audit approach is based on an assessment of the audit risk relevant to the individual characteristics of the balances within the financial statements. Areas of potentially high audit risk in terms of susceptibility to material misstatements are categorised as critical. Our work in other areas will typically be proportionately lower than for critical areas. Current issues and developments We have not carried out a detailed risk assessment for our audit of the accounts, as we have yet to undertake the audit of the accounts. There are however a number of factors that we have taken into account in our risk assessment of the audit of the financial statements at the year end: is the first year that the Trust will be required to prepare a full set of accounts, with comparatives, under International Financial Reporting Standards (IFRS). We will continue to liaise with the Trust's finance team to ensure that any issues identified from the audit of the restated comparatives are addressed and where new disclosures and further changes are required; the introduction of IFRS is expected to have an impact across the Trust's business and functions. Modifications to the Trust's accounting systems will be required and the Trust will need to implement procedures to gather new information requirements across a number of departments including HR, estates and procurement to support the accounts production process; under International Accounting Standard 27, NHS foundation trusts will be required to consolidate their charitable funds where specific control tests are met. HM Treasury has agreed a dispensation to defer the application of this standard until The Trust is recommended to review their charitable trust funds in light of these control tests, prior to April 2010, to determine whether future consolidation in to the Trust's accounts is required; the agreement of year end balances with NHS commissioners has become increasingly difficult in the light of the pressures of earlier closure timetables and the financial challenges facing many Trusts; and there is scope to introduce improvements in controls arising from the work undertaken by Internal Audit, in particular relating to payroll services. We recognise that arrangements are being put in place to ensure that these areas are addressed and the control environment is being strengthened in future.

7 Gloucestershire Hospitals NHSFT Audit Plan Audit of the Charitable Fund Accounts The Trust produces Charitable Funds accounts for those funds it holds, which will also require an audit. The audit of the charitable funds is a separate engagement to the audit of the Trust and as such is subject to a separate engagement letter. The fee for the audit of the Charitable Funds is 3,000 plus VAT. This fee is based on the prior year audit. NHS Charitable Funds are now required to fully comply with Charities Commission and the 2005 Charities Statement of Recommended Practice (SORP).

8 Gloucestershire Hospitals NHSFT Audit Plan 6 3 Use of Resources 3.1 Introduction Our use of resources work will focus on the underlying arrangements supporting the Statement on Internal Control (SIC). The Audit Code for NHS Foundation Trusts emphasises the need to avoid duplication between auditors and regulatory bodies and we will be seeking to rely on work completed by the Trust s Internal Auditors in relation to the SIC. Our own review will consider the arrangements put in place by the Trust to secure economy, efficiency and effectiveness in the use of its resources. This is regulated, under the Audit Code, that states that auditors must discharge this responsibility by: reviewing the statement made by the Chief Executive of the Trust, as part of the Statement on Internal Control, which includes details of the arrangements put into place to secure economy, efficiency and effectiveness in the use of resources; reviewing the Directors' report produced by the trust to ensure it is prepared in accordance with the requirements of the NHS Foundation Trust Financial Reporting Manual; reviewing the results of the work of relevant regulatory bodies to determine if the results of the work have an impact on their responsibilities; making a negative statement within the audit opinion if the statement is not consistent with their knowledge of the Trust; and undertaking any other work necessary to discharge their responsibilities. As in previous years, we will have regard to the criteria to assess the adequacy of arrangements in relation to financial management, systems of internal control and value for money in non-foundation Trusts. Our assessment will identify whether the arrangements in place at the Trust are sufficient for ensuring effective use of resources and identify those areas where improvements should be sought. We will discuss the content of the Chief Executive s statement with him and other relevant Directors and staff at the Trust as well as make an assessment of the progress made against recommendations made in our previous use of resources audit work. We will ensure that the disclosures made in the SIC remain consistent with other evaluations, such as those for Standards for Better Health. We will continue to review the Trust s financial reporting procedures and consider both the adequacy of top level reporting to the Board for decision-making purposes and the robustness of the underlying reporting and monitoring arrangements at Board level.

9 Gloucestershire Hospitals NHSFT Audit Plan 7 Current issues and developments We are required us to issue a conclusion on whether the Trust has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. In meeting this responsibility we will review evidence that is relevant to the Trust s corporate performance management and financial management arrangements, and follow up work from previous years to assess progress in implementing agreed recommendations. There are a number of issues and developments within the Trust that will change and improve the delivery of activities and, as such, impact upon our use of resources conclusion. We consider the following principal areas to be of most significance, at this time, to our work: The Trust has approved programme UTOPIA (unscheduled treatment of patients in the acute sector) to assist in the redesign and improvement of the emergency care pathway. This will enable the Trust to assess a patient needs upon arrival at hospital and will look to improve the quality of the patient experience and reduce the average length of stay; The Trust is taking active steps to monitor and manage its financial position with regular reporting of the financial recovery plan to the Board. The Trust will face additional challenges to identify and deliver 40m of cost savings over the next two years; The Trust is currently updating its Estates Strategy. This will enable them to identify the specific accommodation requirements and prioritise future capital works to deliver their objectives effectively; The Trust has an ongoing number of significant and complex capital projects including the Women's Centre and St Lukes. There is a risk that the Trust fails to deliver these projects to time or budget, which could adversely affect the deliver of services. The Trust are working to ensure that more robust management arrangements are put in place to ensure the effectively delivery of these schemes and we will continue to monitor this throughout the year; The Trust has introduced a Performance Management Framework (PMF) project board to manage the design and implementation of a performance management framework and performance dashboard. This will enable the Trust to focus more resources on those areas that are underperforming and ensures that the Trust works to achieve outcomes that will enable them to meet their strategic objectives; The Trust has undertaken a detailed review of its vision and strategic objectives during and has developed a number of initiatives to help support the delivery of these. The Trust is moving its focus to take more of a strategic and long term view and should ensure that through this time of change and refocus, that arrangements are in place to continue to deliver its national targets and maintain its financial and operational performance; Improving the patient experience is a key priority for the Trust and arrangements are being implemented to address safety issues and deliver a better quality of care for patients. Both a Director of Patient Experience and Director of Safety has been appointed and new safety targets are to be developed to assist the trust in delivering these priorities; and Service Line Reporting (SLR) and Service Line Management (SLM) aims to help trusts develop a better understanding of the operational and financial performance of their various services and hence improve their strategic and clinical decision-making. The Trust is currently developing a pilot of SLR within orthopaedics, to explore the

10 Gloucestershire Hospitals NHSFT Audit Plan 8 benefits of this further enabling them to challenge outliers and identify where procedures need to be improved to improve performance and reduce costs across services. We will continue to hold regular meetings with the Chief Executive, Director of Finance and other relevant Directors at the Trust to discuss emerging issues and identify, where appropriate, the scope for any further work that we could undertake as a part of our use of resources work, at an additional fee. This could include specific reviews, as indicated within our proposal to the Trust, to assist the Trust in improving its current arrangements and delivering its strategic objectives.

11 Gloucestershire Hospitals NHSFT Audit Plan 9 4 Reporting 4.1 Accounts - reporting matters to those charged with governance International Standards on Auditing (UK & Ireland) (ISAs) require auditors to report audit matters to those charged with governance. This report should be considered by the Committee reviewing and approving the accounts. In previous years, this report has been considered by the Trust s Audit Committee. A report will be produced in respect of both the main financial statements prepared by the Trust and the Funds held on Trust. The ISA 260 report will include: a disclosure that there are no relationships that may bear on the auditor s independence; details of any unadjusted misstatements in the Trust s accounts, along with reasons why the adjustments have not been made; details of any material weaknesses in the accounting and internal control system and the Statement of Internal Control; a qualitative assessment of the accounting practices and financial reporting arrangements in place; and our conclusions and recommendations in respect of value for money. Included within this report will be our conclusions and, if appropriate, any systems weaknesses, accounting or audit issues which have emerged from our work. These reports will include the results of our work on reviewing financial systems and financial standing. Agreed reports will include an action plan detailing the management response, which will include a named responsible officer for implementing the revised procedure and also a deadline for the implementation of our recommendations. 4.2 Annual Audit Letter All significant matters arising from the audit will be summarised in an Annual Audit Letter to the Trust Board and Governors. Our Annual Audit Letter for , covering the work undertaken within this Plan, will be issued in September 2010 to the Chief Executive and the Director of Finance for discussion and agreement, prior to submission to the Audit Committee, Board and Governors. We will present the principal findings from our Annual Audit Letter to the Audit Committee, and will be pleased to discuss any matters arising from our Letter or other aspects of our audit with them.

12 Gloucestershire Hospitals NHSFT Audit Plan Statutory Opinions and Reports We will issue formal audit opinions in accordance with the Code of Audit Practice in respect of the: Trust s annual accounts; and summarised financial statements included in the Annual Report. In addition, we will provide a separate audit opinion for the Charitable Fund accounts in accordance with relevant legislation and the 2005 SORP.

13 Gloucestershire Hospitals NHSFT Audit Plan 11 5 Audit Team, Administration and Fees 5.1 Proposed Fee Our proposed fee for the Trust s audit is 55,000 plus VAT, in line with our original proposal. Our fee, reflects our assessment of risks facing the Trust, and the balance of work that we will need to undertake to discharge our responsibilities. This will be kept under review throughout our audit to accommodate changing risks where necessary. A detailed breakdown of our fee for , as set out in our tender, is shown in Exhibit Three below. Exhibit Three: Breakdown of audit fees Audit Area ( ) ( ) Overall Management and Direction 8,000 7,000 Accounts Audit 24,000 25,000 Financial Systems 15,000 13,000 Use of Resources 5,000 7,000 Charitable Funds audit fee (separate engagement) 3,000 3,000 TOTAL AUDIT FEE PAYABLE 55,000 55, Billing arrangements Our proposed fees will be payable in accordance with the timetable below. Proposed billing schedule September ,000 March ,000 March 2010 Charitable funds 3,000 Total 55,000

14 Gloucestershire Hospitals NHSFT Audit Plan 12 The Team The key members of the audit and inspection team for are shown in Exhibit Four. You will recognise that we have aimed to maintain continuity and experience of the Trust, where possible. We welcome all feedback on the work of the team on an ongoing basis and we propose to introduce a formal debrief process as a key part of the annual cycle. Exhibit Four: Key team members Name Barrie Morris Engagement Lead barrie.morris@gtuk.com Responsibilities Responsible for the overall delivery of the audit including the quality of outputs, signing the opinion and conclusion, and liaison with the Chief Executive, Director of Finance and the Audit Committee. Julie Masci Audit Manager julie.masci@gtuk.com Manages and co-ordinates the different elements of the audit work. Key point of contact for the Finance team Llinos Williams In-charge Auditor llinos.williams@gtuk.com Responsible for delivering the onsite fieldwork during the accounts and use of resources audits. Audit timetable We set out below the anticipated timetable for undertaking the various aspects of our audit at the Trust. Exhibit Five: Audit Timetable Audit Task Anticipated Timetable Planning March / April 2009 Review of Financial Systems February March 2010 Financial Standing review Ongoing Review of Financial Statements and Annual Report May June 2010 Review of SIC procedures and Use of Resources opinion ISA 260 Report governance Report to those charged with May June 2010 June 2010 Annual Audit Letter to management September Complaints Procedure Grant Thornton UK LLP is committed to achieving and maintaining the highest quality of service. To help us achieve this objective the Director, Barrie Morris, will ask you, at least

15 Gloucestershire Hospitals NHSFT Audit Plan 13 once a year, to identify any areas in which you would like to see the quality of our service improved. If at any time you wish to discuss with us how our services to you may be improved, or if you are in any way dissatisfied with the service you are receiving, please contact Richard Tremeer, Head of Government Audit. We undertake to look into any complaint carefully and promptly. You may, of course, take up the matter with the professional body of which your auditor is a member.

16 Gloucestershire Hospitals NHSFT Audit Plan 14 A Summary of Respective Responsibilities NHS Foundation Trust Responsibilities It is for the Board of Governors to appoint or remove the auditor at a general meeting of the Board. To establish a committee of non-executive directors as an audit committee to perform such monitoring, reviewing and other functions as appropriate. To keep accounts in such form as Monitor may with the approval of the Treasury direct. In preparing its annual accounts, to comply with any directions given Monitor by with the approval of the Treasury as to: the methods and principles according to which the accounts are to be prepared; and the information to be given in the accounts. To: lay a copy of the annual accounts, and any report of the auditor on them, before Parliament; and once it has done so, send copies of those documents to Monitor. To prepare annual reports and send them to Monitor. To give information as to its forward planning in respect of each financial year to Monitor To provide the auditor with every facility and all information which he may reasonably require for the purposes of his functions under Chapter 5 of Part 2 of the 2006 Act. The directors must take any public interest report into consideration as soon as practicable after receiving it. Auditor Responsibilities To be satisfied that the accounts comply with the directions provided, i.e. that the accounts comply with the NHS Foundation Trust Financial Reporting Manual. To be satisfied that the accounts comply with the requirements of all other provisions contained in, or having effect under, any enactment which are applicable to the accounts. To be satisfied that proper practices have been observed in compiling the accounts. To be satisfied that proper arrangements have been made for securing economy, efficiency and effectiveness in the use of resources. To comply with any directions given by Monitor as to the standards, procedures and techniques to be adopted, i.e. to comply with the Code. To consider the issue of a public interest report. To certify the completion of the audit. To express an opinion on the accounts To refer the matter to the Monitor when a NHS Foundation Trust, or an officer or director of an NHS Foundation Trust, makes or are about to make decisions involving potentially unlawful expenditure or takes or are about to take potentially unlawful action likely to cause loss of deficiency.

17 Gloucestershire Hospitals NHSFT Audit Plan 15 B Disclosure under ISA (Communication of audit matters to those charged with governance) To: Gloucestershire Hospitals NHS Foundation Trust Auditors appointed by the Trust are subject to the Audit Code for NHS Foundation Trusts (the Code), as revised with effect from 1 December 2007, which includes the requirement to comply with Statements of Auditing Standards (SAS) when auditing the financial statements. ISA requires auditors to communicate to those charged with governance, at least annually, all relationships that may bear on the firm s independence and the objectivity of the audit engagement partner and audit staff. The SAS defines those charged with governance as those persons entrusted with the supervision, control and direction of an entity. In the case of the Trust, it has been agreed that the appropriate addressee of communications from the auditor to those charged with governance is the Audit Committee. The auditor reserves the right, however, to communicate directly with the Board on matters, which are considered to be of sufficient importance. Auditors are required by the Code to: carry out their work with integrity, independence and objectivity; exercise their professional judgement and act independently of both the Regulator and the audited body; maintain an objective attitude at all times and not act in any way that might give rise to, or be perceived to give rise to, a conflict of interest; resist any improper attempt to influence their judgement in the conduct of the audit. In relation to the audit of the financial statements for Gloucestershire Hospitals NHS Foundation Trust for the financial period ending 31 March 2009, we are able to confirm that the Regulator s requirements in relation to independence and objectivity, outlined above, have been complied with. Under the requirements of ISA 260.3, we are not aware of any relationships that may bear on the independence and objectivity of the audit engagement partner and audit staff, which are required to be disclosed. Grant Thornton UK LLP.. April 2009

18 "Grant Thornton" means Grant Thornton UK LLP, a limited liability partnership. Grant Thornton UK LLP is a member firm within Grant Thornton International Ltd ('Grant Thornton International'). Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered by the member firms independently. This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this publication