The Annual Audit Letter for South West London and St George's Mental Health NHS Trust

Transcription

1 The Annual Audit Letter for South West London and St George's Mental Health NHS Trust Year ended 31 March 2016 July 2016 Paul Grady Engagement Lead T E paul.d.grady@uk.gt.com Marcus Ward Manager T E marcus.ward@uk.gt.com 2016 Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July 2016

2 Contents Section Page 1. Executive summary 3 2. Audit of the accounts 5 3. Value for Money conclusion 9 4. Quality Accounts Working with you Grant Thornton in Health 13 Appendices A Reports issued and fees Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

3 Executive summary Purpose of this letter Our Annual Audit Letter (Letter) summarises the key findings arising from the work that we have carried out at South West London and St George's Mental Health NHS Trust (the Trust) for the year ended 31 March This Letter is intended to provide a commentary on the results of our work to you and your external stakeholders, and to highlight issues that we wish to draw to the attention of the public. In preparing this letter, we have followed the National Audit Office (NAO)'s Code of Audit Practice and Auditor Guidance Note (AGN) 07 'Auditor Reporting'. Our work Financial statements opinion We gave an unqualified opinion on your financial statements on 31 May Value for money conclusion We were satisfied that you had put in place proper arrangements to ensure economy, efficiency and effectiveness in your use of resources. We therefore issued an unqualified value for money conclusion in our report on the financial statements on 31 May We reported the detailed findings from our audit work to your Audit Committee as those charged with governance in our Audit Findings Report on 25 May Our responsibilities We have carried out our audit in accordance with the NAO's Code of Audit Practice, which reflects the requirements of the Local Audit and Accountability Act 2014 (the Act). Our key responsibilities are to: give an opinion on your financial statements (section two) assess your arrangements for securing economy, efficiency and effectiveness in your use of resources (the value for money conclusion) (section three). In our audit of your financial statements, we comply with International Standards on Auditing (UK and Ireland) (ISAs) and other guidance issued by the NAO Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

4 Consolidation template We reported on the consistency of the consolidation schedules submitted to the Department of Health with the audited financial statements. We concluded that these were consistent. Use of statutory powers We did not identify any issues that required us to apply our statutory powers and duties under the Local Audit and Accountability Act Certificate We certified that we completed the audit of your financial statements in accordance with the requirements of the Code of Audit Practice Quality Accounts We completed a review of your Quality Account and issued our report on this on 28 June We concluded that the Quality Account and the indicators we reviewed were prepared in line with the Regulations and guidance. We would like to record our appreciation for the assistance and co-operation provided to us during our audit by all staff. Paul Grady Grant Thornton UK LLP July Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

5 Audit of the accounts Our audit approach Materiality In our audit of your financial statements, we use the concept of materiality to determine the nature, timing and extent of our work, and in evaluating the results of our work. We define materiality as the size of the misstatement in the financial statements that would lead a reasonably knowledgeable person to change or influence their economic decisions. We determined materiality for our audit of your financial statements to be 3,154,000, which is 2% of your gross revenue expenditure. We used gross revenue expenditure as the benchmark as, in our view, users of your financial statements are most interested in how you have spent the income you received in the year. We set a threshold of 158,000 as the de minimus level above which we reported identified errors and adjustments to the Audit Committee in our Audit Findings Report. The scope of our audit Our audit involves obtaining enough evidence about the amounts and disclosures in the financial statements to give reasonable assurance that they are free from material misstatement, whether caused by fraud or error. This includes assessing whether: your accounting policies are appropriate, have been consistently applied and adequately disclosed; significant accounting estimates made by management are reasonable; and the overall presentation of the financial statements gives a true and fair view. We also read the annual report to check it is consistent with our understanding of your business and with the accounts on which we give our opinion. We carry out our audit in line with ISAs (UK and Ireland) and the NAO Code of Audit Practice. We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach was based on a thorough understanding of your business and is risk based. We identified key risks and set out overleaf the work we performed in response to these risks and the results of this work Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

6 Audit of the accounts These are the risks which had the greatest impact on our overall strategy and where we focused more of our work. Risks identified in our audit plan The revenue cycles (healthcare and nonhealthcare) include fraudulent transactions Under ISA (UK&I) 240 there is a presumed risk that revenue may be misstated due to the improper recognition of revenue. Management override of controls Under ISA (UK&I) 240 there is a presumed risk that management will override controls. This risk is present in all entities. How we responded to the risk As part of our audit work we have; Documented our understanding of management's controls over revenue recognition Reviewed and tested revenue recognition policies Reviewed the agreement of balances with other NHS organisations Tested material healthcare revenue streams Tested non healthcare revenue streams Undertaken cut-off testing i.e. ensuring transactions are recorded in the correct year Tested accruals and unusual / unexpected receivables, including focus on receivables raised at year end. As part of our audit work we have; Reviewed accounting estimates, judgments and decisions made by management Performed a walkthrough of journals to gain assurance that the in-year controls were operating in accordance with our documented understanding Tested large and unusual journal entries Reviewed unusual significant transactions including the capital to revenue transfer of income. Valuation of property plant and equipment You revalue your land and buildings on an annual basis to ensure that carrying value is not materially different from fair value. This represents a significant estimate by management in the financial statements. As part of our audit work we have: Reviewed whether the experts used by you were sufficiently knowledgeable and independent for us to rely on their work Reviewed your instructions to the valuer and the information on the assets it gave them Reviewing the valuer's report to understand the method used and any key assumptions. Discussed with management the key assumptions about the basis of valuation, including asset lives, to ensure these were appropriate. Checked that the valuation had been correctly reflected in your asset register Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

7 Audit of the accounts Risks identified in our audit plan Healthcare revenues Revenues fraudulently recognised Accounting for contract arrangements with commissioning bodies / health insurance not consistent with terms Contractual adjustments with commissioning bodies / health insurance not adequate How we responded to the risk As part of our audit work we have: performed a walkthrough to gain assurance that the in-year controls were operating in accordance with our documented understanding compared the expected income to the actual income received from commissioning bodies. Where these variances were significant we carried out testing to verify the figures in the accounts are accurate reviewed the NHS agreement of balances tool to verify that the healthcare year end balances agree with commissioning bodies returns tested a sample of healthcare revenues from private commissioners. Non-healthcare revenues Revenues fraudulently recognised Recorded revenues and debtors not valid As part of our audit work we have: performed a walkthrough to gain assurance that the in-year controls were operating in accordance with our documented understanding Tested non-healthcare revenues to verify cut-off has been correctly applied verified that the non-healthcare revenue included within the financial statements are completed via review of the reconciliations between Accounts Receivable system and the General Ledger Undertaken substantive testing on the non-healthcare revenues balance 2016 Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

8 Audit of the accounts Audit opinion We gave an unqualified opinion on your financial statements on 31 May 2016, in advance of the national deadline. You made the accounts available for audit in line with the national timetable for submission, and provided working papers to support them. The finance team responded promptly to our queries during the course of the audit. We reported the key issues from our audit to your Audit Committee on 25 May There were no audit adjustments that impacted on your financial position. We recommended a number of adjustments to improve the presentation of the financial statements. You amended your financial statements accordingly. Annual Governance Statement and Annual Report We reviewed your Annual Governance Statement and Annual Report which were prepared in accordance with the Department of Health guidance. Whole of Government Accounts (WGA) We issued a group assurance certificate to the NAO in respect of Whole of Government Accounts, which did not identify any issues for the group auditor to consider. Other statutory duties We are also required to refer certain matters to the Secretary of State under section 30 of the Local Audit and Accountability Act We had no matters to report Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

9 Value for Money conclusion Background We carried out our review in accordance with the NAO Code of Audit Practice, following the guidance issued by the NAO in November 2015 which specified the criterion for auditors to evaluate: In all significant respects, the audited body takes properly informed decisions and deploys resources to achieve planned and sustainable outcomes for taxpayers and local people. Overall VfM conclusion We were satisfied that you have made proper arrangements to secure economy, efficiency and effectiveness in your use of resources for the year ending 31 March Key findings Our first step in carrying out our work was to perform a risk assessment and identify the key risks where we concentrated our work. The key risks we identified and the work we performed are set out in the table below. Risk identified Work carried out Findings and conclusions Strategic vision and governance It is important for every organisation to have a vision for the future. As the financial environment continues to be challenging, you will need to know how you can get more out of the funding you will receive over the next five years. Related to this, change programmes will become more important, as you seek to do things differently to achieve better results. Discussion with officers to understand where they see the organisation to be in 2020 Review of how the Executive communicates with the Board Review of your governance arrangements regarding strategic project management and accountability Review of your corporate risk register Understand how you use benchmarking to improve results We were satisfied that you have proper arrangements to secure economy, efficiency and effectiveness in your use of resources for the year ending 31 March Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

10 Value for Money conclusion Risk identified Work carried out Findings and conclusions Financial sustainability You are currently forecasting a surplus position of 3m although this is dependent on achieving your CIP savings in the final month of the year. The financial environment will continue to be challenging in future years and so a Medium Term Financial Plan (MTFP) which is linked to the strategic vision and built on realistic assumptions is an important planning tool. Review of the MTFP, including the assumptions that underpin the plan and how the strategic vision is reflected in the MTFP Understand how savings are identified, owned and monitored to ensure that they support the delivery of budgets. Review of financial performance indicators We were satisfied that you have proper arrangements to secure economy, efficiency and effectiveness in your use of resources for the year ending 31 March Transformation You have a number of transformation projects, including the largest capital project in the Trust's history. Speak with officers to understand how projects are identified and prioritised Review of consultant and internal audit work Review the management, accountability and reporting of change programmes, including CIPs We were satisfied that you have proper arrangements to secure economy, efficiency and effectiveness in your use of resources for the year ending 31 March Delivering sustainable Cost Improvement Programmes (CIPs) You have a challenging savings target of 12m over the next two years. In order to achieve this you not only need the right structure in place around your CIP schemes, you also need the right people to take responsibility for delivery. Review the process for identifying, prioritising and approving CIP schemes Examine a sample of live projects to understand the delivery process Look at your actual results in 2015/16 against forecast outcomes We were satisfied that you have proper arrangements to secure economy, efficiency and effectiveness in your use of resources for the year ending 31 March Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

11 Quality Accounts The Quality Account The Quality Account is an annual report to the public from NHS Trusts about the quality of services they deliver. It allows Trust Boards and staff to show their commitment to continuous improvement of service quality, and to explain progress to the public. We confirmed that the commentary on indicators in the Quality Account was consistent with the reported outcomes Our testing of two indicators included in the Quality Account found that these were materially reasonably stated in accordance with the Regulations and six dimensions of data quality. Scope of work We carry out an independent assurance engagement on your Quality Account, following Department of Health (DH) guidance. We give an opinion as to whether we have found anything from our work which leads us to believe that: the Quality Account is not prepared in line with the DH criteria; the Quality Account is not consistent with other documents specified in the DH guidance; and the two indicators in the Quality Account where we carry out detailed work are not compiled in line with the DH regulations and meet expected dimensions of data quality. Key messages We confirmed that the Quality Account had been prepared in line with the requirements of the Regulations. We confirmed that the Quality Account was consistent with the sources specified in the Guidance. Quality Account Indicator testing We tested the following indicators: percentage of patients on Care Programme Approach (CPA) followed up within seven days of discharge percentage of admissions to acute wards gate kept by the Crisis Resolution Home Treatment Team (CRHT) We reviewed the process used to collect data for the indicators. We checked that the indicator presented in the Quality Report reconciled to the underlying data. We then tested a sample of cases to check the accuracy, completeness, timeliness, validity, relevance and reliability of the data, and whether the calculation is in accordance with the definition. Based on the results of our procedures, nothing came to our attention that caused us to believe that the indicators we tested were not reasonably stated in all material respects. Conclusion As a result of this we issued an unqualified conclusion on your Quality Account Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

12 Working with you Working with you in 2016/17 We will continue to work with you and support you over the next financial year. Nationally we are planning the following events: Health and Social Care Integration we are working with the Manchester authorities so that we are able to share insight into how best to integrate health and social care. We will share the outcome of our work early in 2017 Thought leadership we are preparing thought leadership reports on Future of Primary Care and on NHS commercial structures Audit updates - we will continue to provide regular audit committee updates covering best practice and emerging issues in the sector Providing training we will continue to provide financial statements and annual reporting training Improving your annual reporting we will benchmark your annual report and highlight potential areas for improvement Providing insight we will update our Health and Well Being analysis and share our information on key health conditions and lifestyle needs in your area Locally our focus will be on: An efficient audit continuing to deliver an efficient audit. We have attended a wash-up meeting with the Director of Finance and members of the finance, quality accounts and communications teams. We will continue to build on the good progress in streamlining the financial statements preparation and audit processes Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

13 Grant Thornton in Health We are proud of our position as the largest supplier of external audit services to the NHS and the contribution we make to the challenges it faces. Here are some of our credentials showing how we deliver on this responsibility. Our client base and delivery We are the largest supplier of external audit services to the NHS We audit over 120 NHS organisations 99% of 2015/16 audit reports were issued by the national deadline Our clients scored us 8 out of 10 or higher Our connections We meet regularly with and second people to the Department of Health, CQC, NHS Improvement and NHS England We work closely with local government and blue light services We work with the Think Tanks and legal firms to develop workshops and good practice We provide thought leadership, seminars and training to support our clients and to provide solutions. In 2016 we issued reports on Mental Health Collaboration, and NHS governance and finance. We will publish reviews on the Future of Primary Care and on NHS commercial structures later this year. Our quality We fully meet the criteria for appointment as external auditors. Our audit approach complies with the NAO's Code of Audit Practice, and International Standards on Auditing. We are fully compliant with ethical standards. We have passed all external quality inspections including QAD and AQRT. Our support for the sector We are sponsors for HFMA and work with the provider faculty, mental health faculty and commissioning faculty. We regularly speak at HFMA events to share best practice and solutions. We provide auditor briefings into what is happening with department policy, sector regulation, and at other NHS organisations to help support our clients. We provide Key Issues Bulletins that summarise what is happening in the sector. We hold regular 'free to access' financial reporting and other training sessions for finance staff to ensure they have the latest technical guidance. Our technical support We are members of all of the key NAO, ICAEW, and HFMA technical forums. We have specialists leads for Public Sector Audit quality and Public Sector technical. We provide national technical guidance on emerging auditing, financial reporting and ethical areas. Local teams are supported on information technology by specialist IT auditors. We use specialist audit software to identify and assess audit risk. Our people We have over 30 engagement leads accredited by ICAEW to issue NHS audit reports. We have over 300 public sector specialists. We invest heavily in our people including technical and personal development training. We invest in the future of the public sector and employ over 80 Public Sector trainee accountants Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July 2016

14 Appendix A: Reports issued and fees We confirm below our final fees charged for the audit and confirm there were no fees for the provision of non audit services. Fees Planned Actual fees 2014/15 fees Statutory audit 57,713 57,713 76,950 Charitable fund independent examination 1,800 1,800 1,800 Total fees 59,513 59,513 78,750 Fees for other services Service Fees Assurance on your quality report 10,000 Reports issued Report Date issued Audit Plan 24 March 2016 Audit Findings Report 25 May 2016 Annual Audit Letter July Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July

15 2016 Grant Thornton UK LLP The Annual Audit Letter for South West London and St George's Mental Health NHS Trust July 2016