The Annual Audit Letter for University Hospitals of North Midlands NHS Trust

Transcription

1 The Annual Audit Letter for University Hospitals of North Midlands NHS Trust Year ended 31 March 2016 July 2016 Jon Roberts Partner T E jon.roberts@uk.gt.com Emily Mayne Manager T E emily.j.mayne@uk.gt.com 2016 Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July 2016

2 Contents Section Page 1. Executive summary 3 2. Audit of the accounts 5 3. Value for Money conclusion Quality Accounts 16 Appendices A Reports issued and fees Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands 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 University Hospitals of North Midlands 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 the Trust and its 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'. We reported the detailed findings from our audit work to the Trust's Audit Committee as those charged with governance in our Audit Findings Report on 27 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 the Trust's financial statements (section two) assess the Trust's arrangements for securing economy, efficiency and effectiveness in its use of resources (the value for money conclusion) (section three). In our audit of the Trust's financial statements, we comply with International Standards on Auditing (UK and Ireland) (ISAs) and other guidance issued by the NAO. Our work Financial statements opinion We gave an unqualified opinion on the Trust's financial statements on 27 May Value for money conclusion We were satisfied that the Trust put in place proper arrangements to ensure economy, efficiency and effectiveness in its use of resources except for the matter we identified in respect of sustainable resource deployment, the Trust had proper arrangements in all significant respects. Specifically, the Trust: was non compliant against its statutory break even financial target. has a historic cumulative financial deficit of 39.3 million. received million cash support during 2015/16 in the form of an interim revenue support facility. has set a deficit budget for 2016/17 and is currently forecasting that it will require a further 9.4 million cash support during 2016/17 which is factored into cashflow forecasts to achieve this position. This takes account of the 20.9 million Sustainability and Transformation funding included in the updated Financial Plan following the acceptance of a Control Total from NHS Improvement. We therefore qualified our value for money conclusion in our report on the financial statements on 27 May Consolidation template We also 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. 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. The Trust was selected as a sampled component in the group audit instructions. We completed this work on 2 June 2016 and there were no matters to report Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

4 Use of statutory powers We referred a matter to the Secretary of State, as required by section 30 of the Act, on 12 May The Trust Board agreed a deficit budget of 16.8 million for the year ending 31 March 2016, which led to an planned cumulative deficit at 31 March 2016.We reported that the Trust's expenditure was therefore likely to exceed income for the three year period ending 2015/16. The Trust had therefore taken a course of action which gave rise to a duty on us to report under section 30 of the Act. The audited financial statements report an actual deficit of 26.9 million for the year ended 31 March 2016 and a cumulative deficit position as at 31 March 2016 of 39.3 million. Certificate We certify that we have completed the audit of the accounts of University Hospitals of North Midlands in accordance with the requirements of the Code of Audit Practice. Quality Accounts We completed a review of the Trust's Quality Account and issued our report on this on 29 June We concluded that the Quality Account and the indicators we reviewed were prepared in line with the Regulations and guidance. Other work completed We provided bespoke training on the preparation of the Annual Report following changes in the Department of Health requirements. The process of auditing the final Annual Report was smoother than in previous years. Working with the Trust During the year we have delivered a number of successful outcomes with you: An efficient audit we delivered an efficient audit with you in May, delivering the accounts 6 days before the deadline, releasing your finance team for other work. Improved financial processes we worked with you to streamline your processes for the preparation of the Annual Report. Understanding your operational health through the value for money conclusion we provided you with assurance on your operational effectiveness. We highlighted the significant challenge you face in relation to your Cost Improvement Programme (CIP) which we acknowledge is already a focus for you. Improving your annual reporting we benchmarked your annual report and made recommendations for the layout of the document which you actioned. Providing assurance over data quality we provided assurance over two key indicators. We did not identify any areas where processes could be improved and it was recognised that the Trust had made improvements from previous years. Sharing our insight we provided regular audit committee updates covering best practice. We also shared our thought leadership reports. Providing training we provided your teams with training on financial accounts and annual reporting Providing information we shared the information with the Senior Management Team from our data analytics team highlighting health conditions and lifestyle needs in your area. Support outside of the audit our advisory team have met with your Senior Leaders to understand your business. Our tax advisors have also met with you to discuss potential support. Being flexible and pragmatic we worked effectively with you as you revised your planned approach to the valuation of Property Plant and Equipment We would like to record our appreciation for the assistance and co-operation provided to us during our audit by the Trust's staff. Grant Thornton UK LLP July Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

5 Audit of the accounts Our audit approach Materiality In our audit of the Trust's 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 the Trust's accounts to be million which is 1.75% of the Trust's gross revenue expenditure. We used this benchmark as in our view, users of the Trust's financial statements are most interested in where it has spent the income it made in the year. We also set a lower level of specific materiality for certain areas such as cash, auditors remuneration and senior officer remuneration. We set a lower threshold of 0.25 million, above which we reported errors to the Audit Committee in our Audit Findings Report. This is consistent with the NAO requirements for Whole of Government Accounts which supports the consolidation of the NHS financial statements. 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: the Trust's 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 the Trust 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 the Trust's 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 University Hospitals of North Midlands 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 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. 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 tested material revenue streams Our audit work has not identified any issues in respect of revenue recognition. Management override of controls Under ISA (UK&I) 240 there is a presumed risk that management will over-ride controls. This risk is present in all entities. As part of our audit work we have: reviewed accounting estimates, judgments and decisions made by management tested journal entries reviewed unusual significant transactions Our audit work has not identified any evidence of management over-ride of controls. In particular the findings of our review of journal controls and testing of journal entries has not identified any significant issues. We set out later in this section of the report our work and findings on key accounting estimates and judgements. Going Concern Given the Trust's past financial performance and forecast financial outturn, there is a risk that the Trust does not adequately disclose uncertainties about the appropriateness of the going concern assumption for the Trust's financial statements. As part of our audit work we have: liaised with the Trust and NHS Improvement and obtained assurances over the Trust as a going concern at the date of our opinion written and submitted our referral to the Secretary of State regarding the Trust's breach of its breakeven duty Our audit work has not identified any significant issues in relation to going concern. The Trust has an ambitious cost improvement plan (CIP) and has previously delivered a significant level of non-recurrent savings which have been carried forward, The Trust's savings are around 5% of its turnover. As at month 2, Divisions have identified 16.9 million savings against a target of 38.0 million, giving a shortfall of 21.1 million. Divisions are being challenged to move away from income generating schemes to focus on genuine cost reductions. The Trust has received and accepted a control total for 2016/17 from NHS Improvement. A revised financial plan was submitted to reflect the revised financial forecast. Acceptance of the control total introduces a stretch target of 4.3 million to the Trust Financial plan which has been mitigated to 3.7 million Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

7 Audit of the accounts continued Risks identified in our audit plan Valuation of property, plant and equipment The Trust re-values its land and buildings on an annual basis to ensure that carrying value is not materially different from current value. This represents a significant estimate by management in the financial statements. How we responded to the risk As part of our audit work we: reviewed the competence, expertise and objectivity of the management expert engaged for the revaluation reviewed management's processes and assumptions for the calculation of the estimate reviewed the instructions issued to valuation experts and the scope of their work undertaken discussions with the valuer about the basis on which the valuation is carried out and challenged the key assumptions reviewed and challenged the information used by the valuer to ensure it is robust and consistent with our understanding compared the different valuation techniques to identify which is the most appropriate consulted with our own expert to confirm that the basis for the valuation is reasonable undertook testing of revaluations made during the year to ensure they are input correctly into the Trust's asset register The Trust engages an expert each year to inform its estimate for the valuation of its land and buildings. in 2015/16 the Trust engaged two valuers to provide valuations as at 31 March The Trust considered that the first valuation was not representative of the value of the estate and did not enable it to provide a consistent valuation year on year. It therefore engaged a second valuer, who had performed the valuation in previous years, which informed the valuation in the financial statements. It is unusual for a Trust to have 2 valuations at the same point in time and therefore we carried out work to: - review the evidence supporting the Trust's judgement - understand the movement in the valuation from the previous year - review the methodology used by the valuer - engage with an auditor's expert to provide assurance on the valuation used in the financial statements We were able to conclude that the valuation used was: - consistent with valuations approach in prior years and - the movement in the valuation in the prior year could be explained and was reasonable based upon our assessment using information from our own expert, Gerald Eve 2016 Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

8 Audit of the accounts continued Risks identified in our audit plan Changes in payroll arrangements at 1 January 2016 The Trust transferred the payroll for employees based at the Royal Stoke Hospital from 1 January 2016 to the payroll service provided by Royal Wolverhampton NHS Trust. We identified a risk to the accuracy and completeness around any transfer of service between payroll providers. How we responded to the risk As part of our audit work we have: reviewed the arrangements the Trust has put in place to oversee the transfer considered the work of Internal Audit in providing assurance to the Trust for its payroll service increased our level of testing on transactions post transfer where we consider there to be greater risk of material misstatement Our audit work has not identified any significant issues in relation to the risk identified Healthcare revenues Accounting for contract arrangements with commissioning bodies may not be consistent with terms Contractual adjustments with commissioning bodies may not be adequate As part of our audit work we have: documented the processes and controls in place around the accounting for healthcare income carried out a walkthrough test to confirm the operation of controls is in line with our understanding agreed a sample of healthcare income to contracts for the period 1 April 2015 to 31 March 2016 reviewed the month 12 agreement of balances exercise to identify any issues or imbalances reviewed estimates of contract income where agreement with CCGs has not been reached Our audit work has not identified any significant issues in relation to the risk identified. The agreement of balances exercise identified over 15 mismatches in excess of 250k, which have not been able to be resolved with counterparties during the accounts timetable. We were required to report these to the NAO as part of the consolidation process. The Trust is continuing a dialogue with the local CCGs to resolve these balances Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

9 Audit of the accounts Audit opinion We gave an unqualified opinion on the Trust's financial statements on 27 May 2016, in advance of the national deadline. The Trust made the accounts available for audit in line with the national timetable for submission. The draft financial statements presented for audit were again of a high standard which is a credit to the Finance Department considering the challenging year integrating County Hospital, the increased workload and changes in personnel. Working papers of a good standard were provided covering all areas of the financial statements Issues arising from the audit of the accounts We reported the key issues from our audit to the Trusts Audit Committee on 27 May In addition to the key audit risks reported above, we identified the following issues throughout our audit that we have asked the Trust's management to address for the next financial year: a continued area for improvement is the agreement of balances exercise as in previous years, there was a large number of mis-matches in the agreement of balances which the Trust should seek to address prior to the accounts being produced the timeliness of responses to our queries from some clinical departments continues to be slow e.g. stock valuations. Annual Governance Statement and Annual Report We are also required to review the Trust's Annual Governance Statement and Annual Report. We confirm that the disclosures reflect other key documents reported within the Trust's governance framework, e.g. the Board Assurance Framework, Corporate Risk Registers and the Head of Internal Audit Opinion 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 On 12 May 2015, we referred a matter to the Secretary of State under section 30 of the Act. The Trust Board agreed a deficit budget of 16.8 million for the year ending 31 March 2016, which led to an planned cumulative deficit at 31 March 2016.We reported that the Trust's expenditure was therefore likely to exceed income for the three year period ending 2015/16. The Trust had therefore taken a course of action which gave rise to a duty on us to report under section 30 of the Act. The audited financial statements report an actual deficit of 26.9 million for the year ended 31 March 2016 and a cumulative deficit position as at 31 March 2016 of 39.3 million 2016 Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

10 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. 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. Recommendations for improvement We discussed findings arising from our work with management. The Trust is aware that it needs to improve its financial position and is working closely with NHS Improvement and the Sustainability and Transformation Plan area to deliver this. We have recommended that the Trust develop and strengthen its arrangements for developing and agreeing the delivery of cost improvement plans going forward. Overall VfM conclusion We are satisfied that, in all significant respects, except for the matter we identified below, the Trust had proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March Based on the work we performed to address the significant risks, we concluded that: except for the matter we identified in respect of sustainable resource deployment, the Trust had proper arrangements in all significant respects. We therefore gave a qualified 'except for' conclusion on your arrangements for securing economy, efficiency and effectiveness in your use of resources. Our judgement which supports this 'except for' conclusion is as follows: Planning finances effectively to support the sustainable delivery of strategic priorities and maintain statutory functions : - The Trust was non compliant against its statutory break even financial target. The Trust has a historic cumulative financial deficit of 39.3 million. The Trust received million cash support during 2015/16 in the form of an interim revenue support facility. - The Trust did not put together and agree a balanced budget. There were weaknesses in its arrangements for managing delivery of its budget and savings plans for 2015/16. - The Trust has set a deficit budget for 2016/17 and is currently forecasting that it will require a further 9.4 million cash support during 2016/17 which is factored into cashflow forecasts to achieve this position. This takes account of the 20.9 million Sustainability and Transformation funding included in the updated Financial Plan following the acceptance of a Control Total from NHS Improvement Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

11 Value for Money Value for money risks: We set out below our key findings against the significant risks we identified through our initial risk assessment and further risks identified through our on-going review of documents. Risk identified Work carried out Findings and conclusions Financial resilience / challenging health economy The Trust has delivered a deficit of 26.9 million in 2015/16 and is forecasting that it will incur a deficit of 29.6 million in 2016/17. This increases the cumulative historic deficit position to 68.9 million. The Trust is not able to move the Trust to financial balance without ensuring that the whole health economy is working together and has the same overall strategy. Risk The Trust will not be able to deliver financial balance due to inefficiencies within the Trust's delivery and misaligned strategies within the health economy Risk - The Trust does not have relationships within the local health economy which enable it to work in partnership and deliver services which support the needs of the patient and facilitate the financial transactions which appropriately support the various commissioners and providers We will review the arrangements the Trust has for reporting its in year financial position, as well as considering progress against the 2016/17 financial plans and assessing the key assumptions included to deliver the forecast out-turn position going forward We will review the arrangements the Trust has in place for agreeing the delivery of efficiencies and how these arrangements support the year end financial position We will review progress of the Sustainability and Transformation Plans (STP) and the impact this will have on the Trust The Trust has spent considerable time developing its financial model. This supports the IBP which was refreshed in April All figures evidenced within the financial plan and the IBP have been reflected in reports to the Board and the information submitted to NHS Improvement. The cost improvement programme (CIP) is challenging and the Trust has not consistently delivered its savings in previous years. There has also been a significant increase in non-recurrent savings, rather than recurrent. Progress with the delivery of the CIPs for 2016/17 is being monitored closely and in response to the level of risk and the size of the challenge relating to the 2016/17 programme, the Chief Operating Officer has recently appointed a clinical lead for CIP and Transformation that will support with key schemes, particularly those requiring clinical engagement. The 29 months of transitional funding comes to an end in March This was to coincide with the completion of the NHS England system side review. However, this was delayed and has now rolled into the STP. We concluded that The Trust did not put together and agree a balanced budget. There were weaknesses in its arrangements for managing delivery of its budget and savings plans for 2015/ Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

12 Value for Money Value for money risks continued. Risk identified Work carried out Findings and conclusions Management capacity at Board level Within 2015/16 the Trust has had changes to the Director of Finance and Chief Executive posts. These two key positions have significant influence at a Board level and the interim arrangements result in other Senior position 'acting up' which may impact overall on the capacity of the Senior team. Risk The Trust has a challenging agenda to deliver and using existing capacity to cover senior positions results in pressure lower down the management structure which is not sustainable without appropriate backfilling We will assess the Trust's arrangements to manage its own risk of management capacity at a senior level The Trust has had some key changes in personnel within the financial year. The Director of Finance left in August 2015 and the Chief Executive left in February These posts have both been filled on an interim basis by the deputies and the Trust is currently actively recruiting for a Chief Executive. The Trust has also had some changes at a Non-Executive level and the changes made have strengthened the skills and capacity of the Board. There are further NED appointments which have been made and will impact on 2016/17. The Board continues to develop through dedicated workshop and development days. It has recently confirmed its strategic objectives and assessed how these are used and reported on throughout the Trust. The Trust has also had a significant governance review which strengthened risk management and made greater links between the strategic objectives and the work on each committee. The four Clinical Chairs which sit below the Board provide support to the Board on clinical matters and provide a link with the clinical divisions. Work continues on the development of an overall culture. There is a focus on continuing to integrate services across all sites, increase recruitment and oversee the overall transformation of the Trust. We concluded that there were sufficient arrangements in place for the Trust to manage its management capacity at a senior level Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

13 Value for Money Value for money risks continued. Risk identified Work carried out Findings and conclusions Integrated Business Plan / Sustainability and Transformation Plan / future strategy The NHS Five Year Forward View requires all NHS bodies to have Integrated Business Plans (IBP), but for 2016/17, they are required to additionally work together to produce a multi-year Sustainability and Transformation Plans (STP), showing how local services will evolve and become sustainable over the next five years ultimately delivering the Five Year Forward View vision. Risk The Trust will not be able to deliver its IBP, nor agree a suitable STP due to the local NHS system and Social Care not working together to narrow the gaps in the quality of care, their population s health and wellbeing, and in NHS finances We will review the arrangements for preparing and reporting the IBP as well as considering the key assumptions within this to deliver the overall strategy We will review progress of the STP and the impact this will have on the Trust We will review the arrangements the Trust has in place for agreeing the delivery of efficiencies and how these arrangements support the year end financial position The Trust has an appropriate focus on external issues each month. The Trust's Integrated Business Plan (IBP) has recently been refreshed following the departure of the Chief Executive in February This was presented to the April 2016 Board. All Directors and clinical leads have input into the IBP so there is ownership throughout the organisation. The overall plan is to stabilise the Trust's internal performance before growing tertiary services. There is a commitment to the 2025 Vision, but the pace of change is slower than previous iterations. There needs to be a balance at Board level between supporting staff, but still keeping a level of pressure on to drive forward this change. The link between Workforce, Quality and Finances needs to be balanced so that the Trust can grow in an organic and safe way. The STP wlll be the vehicle to make the Staffordshire health economy sustainable. There needs to be agreement on what care is required, what estate is required and where should it be situated. The focus needs to shift from emergency care to more elective and preventative work. This will require a change to the way organisations have historically worked together in Staffordshire. This is a long term plan. Work continues to develop the relationships within the health economy (including social care where appropriate) and this is part of the STP work. The STP 'Board' has the Trust Chair and the Chief Operating Officer on so there is a strong provider representation. The STP will focus on patient flows across the whole of Staffordshire with the key focus on capacity and emergency. Once these are addressed, other patient flows will be easier. There is a requirement to take 200 million out of the Staffordshire system. We concluded that the Trust is actively developing its IBP with an understanding of how this sits within the overall health economy. There is a strong focus on the needs of the local population and how the whole health economy can work together to deliver this Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

14 Value for Money Value for money risks continued. Risk identified Work carried out Findings and conclusions A&E 4 hour target / patient flows / emergency care pathway / Sufficient bed capacity The Trust is not achieving its access targets, most notably the A&E 4 hour wait target, the 31 and 62 day wait cancer targets and the 18 week referral to treatment target. The A&E performance is indicative of the Trust needing to work with the wider health economy to develop an appropriate emergency flow patient pathway. The lack of these arrangements currently hampers the Trust's delivery of efficient and financially sound services. Risk The Trust will continue to struggle to deliver services which meet national targets and are financially sound if the patient flow is not made efficient and appropriate for local demand We will review the Trust's arrangements for streamlining services to maximise efficiency for the patient flow, resulting in improved performance against patient targets and better financial performance We will review progress of the STP including interaction with the wider health and social care economy and the impact this will have on the Trust The Trust has largely delivered the TSA (Trust Special Administrator) model and now needs to optimise the use of the County site. Patient flow across all sites is a focus for the Trust. It is working with ECIP (the Emergency Care National Improvement Programme) to look at the changes which are required. The Trust's A&E Department is using a safety matrix to trigger an organisation-wide response. NHS Improvement has circulated this to other trusts as exemplar. The Trust has not seen the improvements it had hoped from the interventions put in place on emergency care. The additional capacity put in place has absorbed growth of 11%, but the Trust is working hard to motivate staff to maintain this focus. The number of patients medically fit for discharge who remain in the hospital is a risk for the Trust so it has recently commissioned some domiciliary care and have taken on a number of step down beds. The KPMG model for the local health economy being used to plan winter capacity. Staffordshire is a pilot site for the NHS England nationwide capacity model, covering primary, secondary, tertiary and community care. Staffordshire and Stoke-on-Trent Partnership NHS Trust and the Trust are using patient flow models to design and quantify step down and step up pathways. The Hospital Director at County Hospital is focusing on the step down bed project and reports to both the Chief Nurse and Chief Operating Officer. We concluded that considerable work has been undertaken to deliver against the emergency care access targets. Whilst no improvements have been seen in reported data, there is an overall understanding of why and how the Trust will continue to progress this initiative Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

15 Value for Money Value for money risks continued. Risk identified Work carried out Findings and conclusions Response to Care Quality Commission report / performance against the quality targets The Trust has been assessed by the Care Quality Commission in 2015/16 as requires improvement. This is compounded by the failure to deliver against the key quality targets. Risk The Trust is measured against a series of national targets and failure of these is an indicator to NHS Improvement and the wider public that systems and processes are not appropriate We will review the Trust's arrangements for the reporting of key performance metrics and consider the actions being taken to improve performance The Trust has made a significant investment in the refurbishment of the County site to meet building regulations and fire and safety requirements. This investment has also improved patient dignity. The increased satisfaction with work conditions is supporting nurse recruitment, although this still remains a challenge for the Trust. The Trust is looking to use a rotational programme to promote retention of staff. There are some specialities which are harder to recruit to, but this is a national issue. Internally, the Trust is working hard to manage quality. Arrangements are in place and the focus is now on consistency in their application. Critical Care capacity is key to delivering this. The Trust is actively addressing the recommendations from the CQC report. These have been split between strategic issues which are monitored at Board level and transactional tasks which are delegated to the appropriate Committees. There is a much greater focus on the people agenda as this drives staff commitment and makes people feel valued. Ensuring this happens across all sites is a priority for the Trust. The Trust has developed a Clinical Assurance Framework (CAF) which has been built up to allow the Trust to interrogate its data. This has been built up over a number of months and supports self-assessment which is based upon the requirements of CQC. We concluded that the Trust has developed its quality arrangements and acknowledged that it requires motivated and engaged staff at all levels to deliver this. Performance now needs to be consistent to demonstrate improvements. Work has been undertaken to progress the CQC recommendations and support overall delivery of the access targets Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

16 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 the Trust's 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: Rate of Clostridium Difficile infections: selected from the subset of mandated indicators based on risk and agreed with the Trust Percentage of patient safety incidents resulting in severe harm or death: selected from the subset of mandated indicators based on risk and agreed with the Trust We reviewed the process used to collect data for the indicator. 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 University Hospitals of North Midlands NHS Trust July

17 Appendix A: Reports issued and fees We confirm below our final fees charged for the audit. Fees Planned Actual fees 2014/15 fees Statutory audit 90,264 90, ,532 Additional audit fee resulting from increase in income and expenditure due to the Mid Staffordshire NHS Foundation Trust transaction to be agreed with PSAA 32,284 32,284 31,117 Section 30 report Nil Nil 3,990 Chartable fund 4,740 TBC 4,740 Total fees 127,288 TBC 160,379 Reports issued Report Date issued Audit Plan 29 January 2016 Audit Findings Report 27 May 2016 Quality Account Report 29 June 2016 Annual Audit Letter July 2016 Additional fee relating to the increase in expenditure as a result of the transfer of services from Mid Staffordshire NHS Foundation Trust are yet to be agreed. Discussions will take place with Public Sector Audit Appointments (PSAA) once the final expenditure for the financial year is confirmed. The fee for the Charity audit is still being agreed with the Trust (subject to PSAA approval) as the scope of the audit work may increase Fees for other services Service Fees Assurance on your quality report 10, Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July

18 2016 Grant Thornton UK LLP The Annual Audit Letter for University Hospitals of North Midlands NHS Trust July 2016