Audit Committee Annual Report. Report of the work of the Audit Committee during 2014/15

Transcription

1 Audit Committee Annual Report Report of the work of the Audit Committee during 2014/15

2 Introduction by the Chair of the Audit Committee This Annual Report to the Board of Directors and the Council of Governors provides an overview of the Audit Committee s activities from April 2014 to March 2015 and sets out how the Committee has met its key priorities. In addition to the regular activities we initiated work with the Trust s information team on the importance of good quality data. We also spent time discussing the UCLH board assurance framework and are satisfied with the approach management are taking. Both of these issues will be followed up in 2015/16. I am fortunate to be supported on the Committee by excellent Non-Executive colleagues, who with the executive officers and the support of Internal and External Audit help us discharge our responsibilities to provide independent assurance on the effectiveness of the Trust s system of integrated governance. I firmly believe that an effective Audit Committee can both improve processes within UCLH leading to better financial management and patient outcomes and enhance confidence in corporate governance and internal control systems, this will be important in the coming year given the financial challenge facing the NHS. Rima Makarem Non-Executive Director Chair, Audit Committee

3 Contents Role of the Audit Committee page 4 Membership and Meetings page 4 Board Governance Arrangements page 5 Business of the Committee page 5 - Risk Management Assurance and Governance page 5 - Raising Concerns (Whistleblowing) Processes page 6 - Internal Audit page 6 - Counter Fraud page 7 External Audit, Review of Financial Statements and Annual Reports page 7 Self-Assessment and Briefing page 7 Looking forward to 2015/16 page 8 Conclusion page 8 Appendix A UCLH Audits 2014/15 page 9 3

4 Report of the work of the Audit Committee during 2014/15 Role of the Audit Committee 1. The Audit Committee s (Committee) main purpose is to provide independent assurance to the Board of Directors (Board) on the effectiveness of the Trust s internal control and governance arrangements. It follows best practice guidance as set out in the current NHS Audit Committee Handbook 1. Its responsibilities are described in more detail in its terms of reference. These were reviewed in January 2015 and can be found on the UCLH website Membership and Meetings 2. Four independent Non-Executive Directors are members of the Committee. Dr. Rima Makarem Member from July 2013 Chair from January 2014 Dr. Harry Bush Member from December 2011 Mr. Kieran Murphy Member from January 2014 Dr. Diana Walford Member from February 2012 Brief CVs of members including any declared interests can be found on the UCLH website. 3. The Committee met seven times during the year and attendance at the meetings is recorded in the table below. Two further meeting (21 April and 21 May 2015) were also held to review the accounts and annual reports for the year. Members 22 April May July Sept Nov Jan 2015 Rima Makarem Harry Bush x x Kieran Murphy x x 26 Mar 2015 Diana Walford x x Table above Member s attendance at meetings in 2014/15 4. The Internal and External Auditors, the Deputy Chief Executive, Finance Director and Deputy Finance Director, and the Director of Corporate Services regularly attend meetings to assist the Committee with its duties. Other directors and senior managers attend to provide assurance on specific items as required. The fraud service provider attends four times a year and the Chief Executive attends annually to discuss the annual accounts and report. The Chief Executive attended the meetings held in May. 1 Health Financial Management Association (HFMA) Governance and Audit Committee 4

5 Board Governance arrangements 5. There are four other Board committees: finance and contracting; performance; investment; and quality and safety (QSC), all with a monitoring and oversight role. Audit Committee members are familiar with the work of these four committees, attending all of them between them. This broad coverage strengthens the Audit Committee s effectiveness. This is particularly notable when it considers clinical risk issues. The QSC oversees all aspects of clinical governance and safety including clinical audit and provides assurance on the quality account. Business of the Committee 6. The following provides an overview of the business conducted during 2014/15 demonstrating how an effective Committee can bring benefits to UCLH. - Risk Management, Assurance and Governance 7. The Committee has continued to review the operation and management of the risk and assurance framework and the management of key risks. 8. It reviewed the Board Assurance Framework (BAF) at regular intervals and the adequacy of the assurance given. It discussed revisions to the format of the BAF to focus the process on managing the risks to the delivery of the strategic objectives of UCLH. The Committee agreed this will produce a more manageable document. Assurance regarding UCLH s operational objectives will be monitored through the CEO performance pack in 2015/16. This approach was also reviewed by the Board. 9. The Committee reviewed the quarterly risk report from the risk co-ordination board, the executive committee with oversight of risk. It sought additional information on the escalation and mitigation arrangements for a number of risks including delivering 18 week referral to treatment pathway (RTT) targets for which it received separate reports from management. It also made comments on a revised risk matrix in order to help management better describe the impact of a risk on the Trust. This new matrix will be introduced in 2015/16 and the effectiveness of its application will be reviewed by the Committee during that year. 10. The preparation of the Annual Governance Statement (AGS) is an important part of the governance process. To ensure that the AGS could be recommended for inclusion in the annual accounts the Committee received regular reports on the control framework and the internal assurance processes from management throughout the year. This included reports dealing with the write-off of aged debts, losses and special payments. It also received: - An advisory report on compliance with the Foundation Trust Licence which confirmed suitable assurance against the conditions of the Licence that were audited. - A compliance statement on how the requirements of the AGS had been met. - Revisions to the Standing Financial Instructions and Scheme of Delegation which were agreed and were subsequently approved by the Board. 11. The Committee also requested and received separate reports from management on items of interest including ICT resilience and assurance on data quality. The latter was requested to understand better the issues relating to RTT and data quality more generally. The Committee was pleased to note that data validation had improved and sample audits were being undertaken to provide assurance. It will follow up these issues in 2015/16. 5

6 12. During this year the Committee also followed up progress against risk issues it had previously identified (2013/14) including medical appraisal and strategic project evaluation. To support this work an action tracker is maintained. Medical Appraisal: The Committee noted that the timely completion of job plans and the link between job planning and appraisal had improved but was still not meeting the target. A feasibility study for an electronic system to support job planning was being undertaken: the Committee suggested that meantime management focus on the blockages to improve the current system. It will return to this in 2015/16. Project Evaluation: The Committee reviewed progress made to improve strategic project management and noted that a checklist was being used to ensure appropriate governance structures and clear documentation records were in place for each project. It suggested that a section on expected outcomes would further strengthen the process; this was included. - Raising Concerns (Whistleblowing) processes 13. The Committee reviewed the Raising Concerns (Whistleblowing) process and discussed how concerns raised both inside and outside UCLH are investigated. It was pleased to note that the improvements made in 2013/14 to explain how staff and others can raise concerns appeared to have made a difference. It also explored how a concern was dealt with if it was raised outside UCLH for example to the CQC and was satisfied that a response to the issue would be provided to the CQC. The Committee will return to this in 2015/16 when the policy is reviewed. - Internal Audit 14. Baker Tilly has provided an effective internal audit service for seven years. This included comprehensive quarterly reports on a range of audits agreed in the audit workplan in April Each assurance report included an opinion and a management action plan to address any weaknesses. The responsible director or a senior member of their team attended the Committee to present the action plan for a report assigned an amber/red opinion; the Committee subsequently followed up the actions. A summary of the reports and the associated level of assurance, with comparative figures from 2013/14 are shown in the table below. The 2014/15 reports are listed in Appendix A. This year we were pleased to note that there were no red opinions. Assurance Audits 2014/15 Audits 2013/14 number percent number percent Green - Substantial Assurance Green / Amber - Reasonable Assurance Amber / Red - Some Assurance Red - Cannot take Assurance Total reports Advisory The Committee refer some reports to other committees for a more in depth discussion for example the report on the process for completion of the WHO safe surgery checklist to the QSC. 6

7 17. It also reviewed the internal audit annual report for the year including the Head of Internal Audit s (HOIA) opinion. The opinion was one of significant assurance which was subsequently included in the AGS. 18. The HOIA met with the Chair privately and has access to members to raise issues without the presence of management this has not been required. 19. In quarter 4 the Committee approved the appointment of TIAA Ltd as internal auditors following a competitive process. They will provide service from 2015/16 onwards; a draft risk based workplan was approved by the Committee in May 2015 for the coming year. - Counter Fraud 20. Baker Tilly the Local Counter Fraud Services (LCFS) provider presented quarterly updates on fraud and the Counter Fraud Annual Report to the Committee. These detailed the fraud policy work and gave an analysis of emerging fraud risks across the provider sector and the wider NHS. They showed that more pro-active antifraud work was being carried out and also included information about cases under investigation. The Committee was pleased to note that counter fraud and the workforce staff were working closely together. External Audit, Review of Financial Statements and Annual Reports 21. In April 2014, the Committee agreed the external audit plan with Deloitte LLP and reviewed quarterly audit progress reports and briefings throughout the year. The reports highlighted changes to accounting policy, recommendations for improvements in internal controls and included the management response on how any recommendations would be implemented. 22. The final audited accounts had an unqualified opinion, with no weaknesses identified. The Committee reviewed the Annual Report and Quality Report. Both reports provided a narrative on the achievements for 2014/15 and on the delivery of the Trust s top 10 objectives and quality indicators. The finding on the Quality Report included a modified opinion in respect of RTT. The Committee had previously been advised of the data quality issues relating to RTT and reviewed a management report which demonstrated what action was being taken to improve performance in this area. Internal Audit will be asked to carry out a follow up audit on RTT in 2015/16. The Committee recommended the 2014/15 Annual Report and Accounts to the Board. 23. Committee members met privately with Deloitte, without the presence of management; no issues of concern were raised. The Committee assessed the Auditors work in June 2015 and agreed it was satisfactory. Deloitte has provided the external audit service for four years; the Committee recommended to the Council that their appointment should be extended for a further year; this was supported. Self-Assessment and Briefings 24. The Committee conducted an assessment of its own performance, based on the checklist in the Audit Handbook. No significant issues were identified and it considered that it could provide assurance to the Board that it functioned well. 25. Committee members also attended a selected topic workshop on the complexity of and risks to the delivery of the ICT strategy to assist them with their responsibilities. Also, an annual session on risk management and assurance was held jointly with the Board to improve the strategic focus of the BAF. 7

8 26. The Internal and External Auditors also provided regular audit, governance and legal briefings for the Committee. Looking forward to 2015/ The Committee will give priority to the following areas during 2015/16: review the effectiveness of the revised board assurance process; review the processes that relate to the anti-fraud and corruption policy; review the proactive LCFS work and emerging fraud threats; review a follow-up audit on the RTT operational processes; progress the appointment of external auditors for 2016/17 onwards; and follow-up progress on the effectiveness of clinical audit. It will also keep under review the working arrangements of the Committee and continue to develop its practice to improve its own effectiveness. Conclusion 28. The Committee feels it has demonstrated how it has added value to the overall governance of UCLH. It has held management to account during the year in particular for the implementation of improved internal control on the management of data. In completing its work the Committee places considerable reliance on the work of both internal and external audit and is able to conclude that the Trust s systems are generally sound. It has had no cause to raise any issues of significant concern with the Board arising from its work during 2014/ In making this statement, the Committee thanks Richard Alexander, former Finance Director for the support he has given to the Committee, in particular in managing the appointment of the new internal audit team, and Baker Tilley outgoing Internal Audit partners. It also acknowledges the support given to it by management and the External Auditors. 30. The Board is asked to endorse the Annual Report of the Audit Committee which will also be circulated to the Council of Governors for information. Rima Makarem Chair, Audit Committee July

9 Appendix A UCLH Audits 2014/15 No. Audit Assurance Opinion 1 Carecast / CDR Amber /Red 2 CQC Governance Green 3 Sterile Supplies Green 4 Staff engagement / Bullying and Harassment Amber / Green 5 Policy and Monitoring Arrangements Review (ADDITONAL REVIEW) ADVISORY 6 Temporary Staffing Amber / Green 7 Backlog Maintenance Green 8 World Health Organisation (WHO) Surgical Safety Checklists Amber / Red 9 Readmissions Amber / Green 10 Discharge Process Amber / Green 11 IG Toolkit ADVISORY 12 Preparation for inquests Amber / Red 13 General Ledger and Feeder Systems Amber / Green 14 Fixed Assets Register Asset Management Amber / Green 15 Data Quality Performance Management Amber / Green 16 Education Centre Amber / Red 17 CGI Contract Management Amber / Red 18 Assurance Framework ADVISORY 19 Order to Cash & Treasury Amber / Green 20 Consent Amber / Red 21 Procure to payment including non-purchase order items Amber / Green 22 Payroll Amber/Green 23 Research and Development Amber / Red 24 Safeguarding Vulnerable Adults Amber / Green 25 IT Service Continuty / Disaster Recovery Amber / Green 26 IM & T Project Management Amber / Green 27 Monitor Licensing ADVISORY 28 Income Assurance on Data Capture and Processing Green 29 Diagnostic Activity and Waiting Times Amber / Green 30 Certificates of sponsorship compliance review ADVISORY 31 Paying Patients Follow up review ADVISORY 32 Clinical Divisional / Service Reviews Amber / Green 33 Lessons Learned and Incidents Managed Amber / Green Key: Green Substantial Assurance; Green /Amber Reasonable Assurance; Amber/Red Some Assurance; Red Cannot take Assurance. Advisory; no assurance rating provided 9

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